Some might call this an opinion piece, but I call it an articulation of a new paradigm that Africa is an epicenter and gateway for global trade. It will be interesting to see what you think after reading it. 

After the G20 meetings in Toronto in June this year, it was very clear nations see a new era of a multipolar world.  Fareed Zakaria, host of CNN’s GPS and author of “The Post-American World,” applied the concept of a multipolar world to politics, or nation states.  In essence, the world agenda will no longer be dominated by one or a few nations.  Political power will be dispersed more broadly.

In a report by Accenture called, “The Rise of the Multipolar World,” it says that global economic power will no longer reside with the United States, Europe, and Japan.  It will disperse as,” developing economies contribute an ever-increasing share of the world’s output, trade and investment.”  In fact, developing countries are expected to account for 2/3 of global trade in 2050, according to “The World Order in 2050″ report by the Carnegie Endowment for International Peace.

In the backdrop of these dynamics, seemingly, is Africa. With little representation in the G20, reduced votes in the International Monetary Fund, and perhaps not enough impact in other international organizations like the United Nations and World Health Organization, it would seem Africa is a loser in this new era.

But political and economic dynamics are not the only things changing, forms of influence and power are also changing.  Power is also dispersing amongst spheres of society, who are interconnected.  The most common spheres are business, social, and government.  However, today these spheres are overlaid with transnational networks, global policy networks, advocacy networks, value networks, social networks gone viral, etc.  This will result in influence and power emerging in new and different forms, allowing more diverse and unique ways of articulating and acting upon influence and power.

While Africa may seem to be losing ground in some formal arenas, it may have gained ground where it matters – economics. And because new and different forms of influence and power are emerging, Africa will be able to find ways to leverage its growing economic influence.

The shape of Africa’s growing economic influence is centered on two areas – being a pole of growth and an epicenter of trade.  Africa is on a path to be one of the poles, or regions, of growth in spite of sub-Saharan Africa having the predominate number of Least Development Countries (LDCs). 

Africa demonstrated its ability to withstand the shocks of the global economic crisis and is moving towards recovery.  In fact, Africa is moving out of the global recession faster than the world with an expected GDP of about 4.5% in 2010 and 5.2% in 2011, according to the African Development Bank.

Africa also has natural resources and commodities in abundance to feed the requirements of domestic demand globally, including that of emerging markets like China and India as well as traditional markets like Europe.  Nwakego Eyisi, an economist and writer at Afribiz, also adds that, “the drive for re-invigorating exporting in North America and many countries in the Eurozone, so they can reduce their debt, as well as the fact that Asia, particularly China, will continue to export provides a double push for natural resources and commodities.  Africa is a natural location to seek these out since it can supply them less expensively.”

And, Africa has its own growing consumer markets totaling 1 billion people this year.  The combined markets are expected to exceed 2 billion in 2050. African regional economic blocs like COMESA, EAC, SADC, and ECOWAS are moving forward to consolidate fragmented markets into larger common markets, strengthening the buying and economic power of Africa not unlike the purpose of forming the European Union.

The other element in Africa’s growing economic influence has not been clearly articulated or stressed.   Africa is positioned as an epicenter and gateway for global business and trade.  To me it seems as if this element snuck up on the world while the world was focused on the economic crisis.

If you look at the number of trade agreements being introduced between Africa and the rest of the world at this time, e.g., between the United States and Angola, between China and many African states, between India, Brazil, and South Africa, you will see that they are increasing and expanding.  In the last few years, heads of states from around the world, e.g., Iran, Russia, Brazil, United States, France, have visited Africa to improve diplomatic and economic ties.

These activities do not occur unless there are significant benefits sought by these nations.  It’s obvious that Africa has something the world wants. During the Cold War era, Africa served as a geopolitical map of opposing political ideologies between the U.S. and Soviet Union.  But now, the primary focus is economic, because strong economies bolster governments, those in office, communities and citizens.  This is not to ignore other benefits that countries might seek, like cultural exchange, from ties with African nations.

Also, there is increased South-South and developing country cooperation, which means trade and business flows are moving in new directions.  The developing economies that will lead global trade in 2050 are increasingly trading more amongst themselves, but not to the exclusion of developed countries. In this, Africa is increasingly part of the engagement.  Look at the India, Brazil, South Africa (IBSA) Forum activities, the China-Africa Forum activities, and Southern African Customs Union’s (SACU) preferential trade agreement with the Southern Common Market’s (MERCOSUR) as examples.

In this context, Africa’s rising economic influence will translate to more political influence, which may be “soft” more than formal in the short- to mid-term.  For example, Nicolas Sarkozy, President of France, recently held the 25^th annual Africa-France summit focused not on politics, but on business. At the summit, Sarkozy said he would call for an expanded role of African nations in the United Nations when  he heads the G20 next year.  And this year, Canadian Prime Minister Stephen Harper personally invited additional African leaders like President Goodluck Jonathan of Nigeria and African Union Chairperson Bingu wa Mutharika to attend the G20 Toronto Summit in recognition of the need to include the region.

But another primary benefit of these political and economic processes is that Africa will serve as a global trade epicenter and gateway into Africa, into other emerging markets, and even into developed nations.  Africa has the ability to be a bridge to enter into other markets, as well as a key location for global value chains.

U.S. Honeywell has taken its Chinese connections to enter the sub-Saharan African market, so why couldn’t firms use Africa to enter other regions because of Africa’s increasingly favorable ties?  In another instance, Chinese firms are partnering with African governments to establish economic zones and manufacturing capacity in Africa based on the experience of economic zones in China.  This will create capacity for these firms to serve China’s domestic market and the African consumer markets in the future.

And finally, the question of “How well is Africa positioned to be an epicenter and gateway of global trade?” comes to mind.  Africa still faces many hard realities like poverty, lack of infrastructure, unemployment, and instability in some countries, but other developing nations also face the same or similar issues.  And, for the most part, African countries have proven to be economically and politically resistant to instability in the last decade.  Governance and the business climate have also improved while conflicts have reduced dramatically.

But in truth, Africa does not need everything in place, but it does need enough significant leverage points to take advantage of this position and use them to create a tipping point to solidly establish and maintain this position.  As indicated before, the increasing diplomatic and economic ties between Africa and the rest of the world, its natural resources, and large, growing consumer markets are key leverage points.  

Another leverage point is the image of Africa is changing.  The successful conclusion of the FIFA World Cup in South Africa may help to produce a tipping point.  

And one leverage point not used enough is that there are pockets in Africa, South Africa and Mauritius for example, where business is run on par, in many facets, with the world.  In fact, there are many more places where this is the case because of economic zones.   An economic zone, such as a free trade zone or export–processing zone, generally has a good climate, procedures, infrastructure, business support, laws and incentives conducive for business, even when the country in which it is located does not.

If you dig a little, you will find more significant leverage points and probably, hopefully, find out that my statement that Africa is an epicenter and gateway of global trade is not just my opinion, but a new paradigm.

Thanks to Nissi Ekpott, Kego Eyisi, Hartmut Sieper and Pat Wilson for their comments.

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Africa Positioned as an Epicenter of Global Trade originally appeared on Afribiz.net on July 15, 2010.

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