African Economies in a Multipolar World
After deepening for two decades, Africa-China economic relations are entering a new phase, owing to a variety of global, bilateral, and domestic factors. While China will remain a key player on the continent, African governments will need to keep their options open and be more mindful of a wider set of interests.
NAIROBI – Governments, businesses, and citizens are navigating a global economic slowdown and levels of inflation not seen in decades, and Africa is no exception. Economic scars from the COVID-19 pandemic, supply shocks from the Russia-Ukraine war, and severe droughts in the Horn of Africa have created significant economic strain. Africa’s public debt is approaching the unsustainably high levels of the early 2000s, and the substitution of low-cost long-term multilateral debt by private funds has driven up debt-servicing costs.
But it is not all doom and gloom. While startup funding declined globally in 2022, African startups had accumulated more than $4.85 billion by December – a 4.75% increase from the previous year. This partly reflects Africa’s increasingly dynamic digital economy, which is expected to grow sixfold by 2050, from an estimated $115 billion to $712 billion. African countries have also managed the COVID-19 pandemic fairly well, owing to a rapid and coordinated response, and it was South African researchers who quickly identified the soon-to-be-dominant Omicron variant in late 2021.
Perhaps most important, Africa-China economic relations are now maturing and entering a new phase, after having grown immensely over the past two decades. Looking ahead, Africa-China economic engagement will be influenced by four factors: Africa’s public-debt distress, China’s changing approach to development finance, a deepening focus on soft power and diplomatic relations on both sides, and the changing composition of African economic interests.