By Toyin Umesiri:
While the world is laser focused on the U.S. – China trade war something equally significant that will reshape the global landscape for the next 30 to 50 years is emerging in Africa. With the African Continental Free Trade Agreement (AfCFTA) entering into force, there is a repositioning of the continent that disrupts the old way of engaging with its individual nations.
Power is being centralized in the African Union (AU) and those looking to enter commercially in the future would have to realign – should they seek to move with speed on their trade & investment agenda. Ignoring the African Union policies and structures in your long-range ‘African strategy’ will be a missed opportunity. The African Union (AU) under AfCFTA has become a stronger negotiating trade bloc positioned to better serve Africa’s smaller countries. There is no doubt that the AU will play a much bigger role in the global landscape in years to come especially when it chooses to exert its influence on global matters.
External pressures on the continent is at an all-time low thanks to Covid-19, British Exit and Trump’s Presidency. Countries have turned inwards to face their own internal issues which has led to reduced foreign interference in African affairs. Africa’s leaders have used the opportunity to consolidate power and for the first time the continent has a window of opportunity to chart its own course by putting Africa’s own agenda center stage.
There are opportunities emerging on the continent but those who seek to engage must listen to the aspirations of Africans. Instead of creating artificial demands to sell products to Africa, tap into their quest. Listen to what African are trying to accomplish then offer your products and services as the ultimate solution. This would serve as win-win and is a more sustainable way of doing business. Afterall, if you seek to serve Africans as consumers of your products, understanding their pain-points should be your central focus.
Here are 5 ways that Africa will increasingly reshape and impact the global economic landscape:
- Supply Chain disruption – The global buying community has been disrupted by the ongoing U.S. – China “trade war” and they are now seeking alternative sources of supply to realigning to for future purchases and deals. Africa has always been the originating source for raw commodities used by the rest of the world. From Cocoa in Cote D’Ivoire to Cashew from Nigeria to Gold in Ghana to Diamonds in the Congo the rest of the world has been powered by Africa’s resources. Africa is now seeking new and innovative ways to power itself with its own resources. In the future entire value chains and industries will emerge on the continent creating wealth for its people and those who choose to invest.
- Agriculture – The missing link has always been Value Addition. With Africa owning 60% of the remaining arable land in the world, Agriculture initiatives would help create a brighter future for the region. Today Sustainable Agriculture conversations have heightened and investments in the Agriculture value chain is growing to ensure that Africa not only plays in the Cocoa business but in the Chocolate industry.
- Technology Adoption – Africa does not have the same limitations in new technology adoption that the western world struggles with. The region will leapfrog into 5G ahead of the rest of the world. While other regions are seeking business cases for technology adoption, African countries are quickly taking these concepts mainstream. From drone technology adoption in Rwanda to Kenya leading the world in digital payments, these technological innovations would be adopted much faster in Africa which will create unique advantages for the rising young population.
- Youth Workforce – Africa’s population is projected to double from 1.2 billion to 2.2 billion by 2050. While the rest of the world is struggling with an aging population, Africa’s youth population sits at 60-70% and will continue to grow. For example Nigeria is projected to become the world’s 3rd most populated country next to China and India by 2050. Its current population is estimated at 200 million. These figures will present opportunities and challenges; security and immigration challenges if not managed properly. Regions with current food insecurities would become more strained so it is in everyone’s interests to put plans in place and initiatives to drive productivity on the continent. If the region gets it right, the energy of the youth could be harnessed to power innovation and manufacturing.
- Manufacturing Epicenter– Africa will become the manufacturing capital of the future. With labor cost going up in China and the saturation they are facing, Manufacturing has steadily began shifting to the region. Africa is centrally located geographically and well positioned to serve the world faster and cheaper. Also with the AfCFTA, manufacturing products on the continent for a growing and emerging middle class is a no brainer. For example, demands for baby products would rise as the projected population rises.
*Toyin served in corporate America at both Walmart and Whirlpool Corporation headquarters leading strategic initiatives. She now runs her own company Nazaru llc. a U.S. based company that connects the world to Africa through market insights, export promotion, consulting and more. She is the Founder of the acclaimed Trade with Africa Business Summit where she convenes business and political leaders