Geopolitical rivalry is forcing a rethink of trade, investment, and security
GEDION TIMOTHEWOS is the foreign affairs minister of Ethiopia.
Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
Geopolitics is replacing globalization as the world’s governing philosophy. Economic decisions are increasingly subordinated to geopolitical calculations. Supply chains are rewired to optimize national security rather than economic efficiency. Trade and critical resources are weaponized.
The rules-based system of multilateral political and economic relations underpinned by a single hegemon has given way to fierce power-based rivalry and zero-sum competition. The competition is not just for global dominance among world powers but also among middle powers intent on carving out a sphere of influence that places their economic and security interests at the center of a regional order embedded in a broader and fragmented global order.
This context poses multiple challenges for sub-Saharan African countries. Official development assistance is declining, leaving a huge hole in the resources needed to finance development and social services. The uncertainty and anxiety associated with rising tensions and outright hostilities in various parts of the world are also harming investment and trade prospects.
The global political and economic order under which several Asian economies industrialized through outward-oriented export-led policies is no more. Sub-Saharan African countries that are trying to replicate the successes of the Asian Tigers face a daunting challenge to attract investment. Even if they get their infrastructure, regulations, and policies right, securing foreign direct investment needed for sustained economic growth looks increasingly out of reach.
There is also a marked resurgence of interest in Africa’s mineral resources and competition for critical minerals. A contest for control over logistics hubs and major trade routes is prompting global and middle powers to engage with sub-Saharan African countries aggressively and in a manner that undermines their sovereignty. Such competition between external actors is exacerbating conflicts on the continent.
The paralysis of the established world order also makes it more difficult to forge consensus on how such conflicts should be resolved. The multilateral peace-building playbook that gives the leadership of a singular powerful world hegemon and a host of regional and global multilateral organizations authority to work together to resolve conflict, deploy peacekeepers, and tend to the needs of those affected by conflict does not work anymore.
These days, the UN Security Council does not seem to agree on anything of substance. The global peace and security edifice built around this body is crumbling. The efficacy of the African Peace and Security Architecture, which was supposed to work in tandem with the global system, is coming into question.
The funds needed to finance peace-keeping missions and humanitarian agencies are not there anymore. Sub-Saharan African countries, which are under great economic strain, must therefore now pay for peace-keeping missions in neighboring countries and for hosting refugees from those countries. These resources should go toward more productive endeavors.
The emerging disorder requires and presents an opportunity for Africa to make an earnest effort to reform the existing system. The increased competition among global and rising middle powers also offers sub-Saharan African countries partnership choices. Used properly the resources that sub-Saharan African countries possess give them the leverage to craft partnerships or even temporary arrangements that could yield the capital, investment, and technology they need.
So the challenges we face present opportunities as well. But seizing these opportunities to secure arrangements with long-term benefits demands foresight and discipline. Transactional bilateral relations increasingly take center stage, leaving long-term institutionalized cooperation behind, but countries must pursue long-term strategies focused on core objectives, along with short-term flexibility.
Unless sub-Saharan African countries have a clear vision of what they want to achieve, what their long-term goals are, and what they need from each other and from the rest of the world to achieve them, meaningful long-term growth will be impossible.
It is important, too, that sub-Saharan African countries boost trade and investment within the continent. With a booming population and rapid urbanization, African economies have huge potential for intra-African trade and investment. Technological advances such as artificial intelligence also offer new opportunities for growth and progress. Both trade under the African Continental Free Trade Area and technological innovations associated with AI require huge investment in infrastructure and energy. Better road, rail, and air links are needed to boost trade. Investment in fiber, connectivity, and energy infrastructure, coupled with a more intentional approach to the value of Africa’s data resources, is essential.
African countries with the right policies and long-term perspective will be better positioned to take advantage of some of the opportunities that arise with the new geoeconomic realities. The familiar model that drove Asian prosperity is gone, and developing economies no longer enjoy the advantages it provided. The new development model is not clear and poses obvious challenges and difficulties. Nevertheless, there is hope for those who approach the new reality with agility and pragmatism.
For more than a decade Ethiopia attempted to transform its economy and attain middle-income status by following in the footsteps of the Asian Tigers. Amid domestic and international shocks and upheavals, Ethiopia has adapted its model to emerging and evolving realities, diversified the pivots of economic growth, implemented bold economic reforms, and mobilized domestic resources. The result is clear: Despite multiple shocks and challenges, Ethiopia has sustained its growth momentum. Exports are expanding, agriculture transforming, cities flourishing, and the physical environment healing.
A critical feature of Ethiopia’s approach is a focus on key growth pillars for sustainable development centered around renewable energy and emerging technologies. Africa’s untapped potential in renewable energy, its young population, and rapid urbanization can unleash a wave of green industrialization if channeled properly with the right policies and investment.
With the right mix of policies, implemented with an experimental and adaptive mindset, Africa can turn this crisis into an opportunity. But it must learn from its modern history of division and substitute damaging competition with mutually beneficial collaboration. Our fates as African nations are intertwined; we suffer or prosper together; we sink or swim together. Division guarantees the former, unity the latter.
