In a rapidly shifting global landscape, Africa finds itself at the crossroads of economic upheaval and technological advancement. The U.S. imposition of steep tariffs threatens to unravel trade relationships, particularly impacting nations like South Africa, which boasts a $4B trade surplus with the U.S. Concurrently, the continent is posturing to make strides in innovation, exemplified by Rwanda's hosting of the inaugural AI Summit. In other news, 11 sovereign credit ratings have improved and Mount Kenya's glaciers are almost gone. Dive into this week’s briefing to explore the developments shaping Africa's present and future.

Africa Trivia 

Graphic of the Week 

Minimal Trade, Minimal Impact?

The Big Picture: No surprise, trade flows between the U.S. and Africa are relatively small. In 2024, the U.S. exported goods worth only $32B to Africa and imported goods to the U.S. worth $39B, resulting in a trade deficit of $7B (Census.gov). But get this: In 2024, Chinese exports to Africa totaled $179B, and imports totaled $117B, resulting in a $62B trade surplus (Ecofin)! China not only trades 5x more with Africa, but is doing it at a surplus (Trading Economics), the result of China’s Belt and Road initiative.

What’s happening: 

• President Trump plans to impose steep tariffs on several African nations, potentially ending the African Growth and Opportunity Act (AGOA), a key trade deal aimed at boosting African development through preferential U.S. market access. 

• South Africa has a $4B trade surplus with the U.S., with exports predominantly including car parts, precious metals, diamonds, jewelry and platinum. 

• Nigeria, Algeria and Angola are all key trade partners with the U.S. and they primarily export oil. 

• Between the lines: The tariffs will most likely push Africa economically closer to China, already a dominant trading partner and investor in the region.

• Read more: Reuters, CNBC

Tariffs by Country: 

• President Trump’s plan includes 50% tariffs on Lesotho, 47% on Madagascar, 40% on Mauritius, 38% on Botswana and 31% on South Africa. ​

What We Are Reading

• Africa: The foreign ministers of Mali, Burkina Faso and Niger are visiting Moscow this week to strengthen ties with Russia and seek military support against jihadist insurgencies in the Sahel region (Reuters); The same countries have introduced a 0.5% levy on imported goods to fund their economic union, the Alliance of Sahel States, which started in 2023 after the countries left the Economic Community of West African States (ECOWAS) (Reuters). 

• Angola’s stock exchange confirmed Cristina Dias Lourenço, the president’s daughter, as the new CEO for a four-year term, following the resignation of the previous CEO and ahead of planned IPOs for major state-owned companies (Bloomberg).

• Botswana is facing a power crisis due to breakdowns at its 600-megawatt Morupule B plant and is relying on South Africa to fill the gap (Bloomberg).

• Egypt: ​A tourist submarine sank near Hurghada, Egypt, resulting in the deaths of six Russian tourists (​WSJ). 

• Ethiopia tightened rules for foreign banks, requiring minimum paid-up capital of $38.1M and limiting ownership to 49% (The East African).

• Ghana’s new Central Bank Governor Johnson Asiama raised the benchmark interest rate to 28% to combat inflation, marking his first policy move since taking office in February (Bloomberg).

• Mauritius: President Trump has signed off on the UK's decision to hand over the Chagos Islands to Mauritius, while allowing the UK to continue maintaining control of a joint military base on Diego Garcia for 99 years (The Guardian).

• Mozambique is revising its mining and energy laws to enhance local benefits, create jobs and improve transparency amid ongoing poverty and unrest (Bloomberg).

• Nigeria: OPEC's oil production fell in March, with Nigeria cutting output by 50,000 barrels per day, but OPEC+ plans to increase production from April (Bloomberg); The Nigerian Sovereign Wealth Fund experienced a 59% profit increase last year, reaching $1.2B (Bloomberg). 

• South Africa faces a 25% U.S. tariff on auto imports, overriding AGOA's duty-free benefits, threatening its economy as auto exports make up 64% of its shipments to the U.S. (Bloomberg); South Africa has granted eight Eskom coal-fired power plants exemptions from emission limits to ensure electricity supply (Bloomberg).

• Sudan: The Sudanese Armed Forces have reclaimed Khartoum from the Rapid Support Forces, marking a pivotal shift in Sudan's civil war and potentially setting the stage for further conflict in Darfur (The Economist).

• Uganda slashed power prices by 14%, its biggest cut in 20 years, aided by a strong shilling and Umeme Ltd.'s exit (Bloomberg); Uganda and Dubai-based Alpha MBM Investments signed a deal to develop a $4B, 60,000-barrel-per-day refinery, with Alpha MBM holding 60% and Uganda National Oil Co. 40% (Bloomberg).

• Zambia's inflation peaked at 16.5% in March and is expected to drop below 10% due to rains that are easing food prices (Bloomberg).

• Zimbabwe’s cities remained calm despite calls for protests against President Mnangagwa over fears he may extend his rule beyond 2028, amid economic turmoil and speculation of political infighting (Bloomberg).

Innovation in Africa

Rwanda's AI Summit; Morocco's User Surge

Data Source: BCG’s Center for Customer Insight surveyed 21,000 consumers from 21 countries across continents.

Rwanda's AI Summit: Africa's Tech Aspirations on Display

Over 1,000 policymakers, business leaders and stakeholders gathered in Kigali for Africa's inaugural Global AI Summit. President Paul Kagame emphasized the continent's commitment to integrating AI across sectors.​

Key Highlights:

• Regional Initiatives: Cassava Technologies plans to launch an AI factory in South Africa; Huawei launched cloud services in Nigeria.​

• Policy Frameworks: Nigeria, South Africa and Rwanda introduced AI policies to attract investment and develop local talent.​

• Rwanda's Positioning: Despite smaller tech inflows, government-led efforts aim to make Rwanda a central hub for AI discussions in Africa.​

This summit underscores Africa's growing role in the global AI landscape, highlighting both challenges and opportunities as the continent embraces technological advancements.

Read more from Semafor.

Business & Finance in Africa 

Sovereign Credit Ratings Up!

In a surprising turnaround, S&P Global Ratings issued 11 positive rating actions for African economies in 2024, more than doubling the previous year's count! Countries like Benin, Cameroon and Côte d'Ivoire saw upgrades, while Egypt, South Africa and Morocco were placed on a positive outlook.

But the recovery is fragile. Debt, inflation and political risks still loom large. While Africa's GDP is set to outpace the global 3% average, hitting 4.8% in 2025, some nations still struggle with high borrowing costs and currency devaluations. Meanwhile, Kenya and Mozambique faced downgrades and geopolitical tensions in West Africa and the Sahel could destabilize the region.

Key Findings:

• Positive Momentum: 11 African economies saw upgrades, with strong growth projections for 2025.

• Debt Challenges: Ghana and Zambia made progress on restructuring, but debt servicing remains a concern.

• Diverse Performance: While some economies boom, others, like Mozambique and Kenya, face credit downgrades.

• Costly Borrowing: Despite improved market access, countries like Nigeria and Angola are paying above 10% interest on bonds.

Can Africa’s rising stars sustain this momentum, or will external shocks such as President Trump’s tariffs derail the progress? Read S&P’s Africa 2024 Credit Ratings Review to find out more.

VC Ecosystem in Flux

The 2024 AVCA Venture Capital in Africa Report unveils trends in the continent’s venture capital and investment ecosystems. Investors are scrambling as funding patterns shift, valuations tumble and once-thriving sectors face turbulence. Will Africa’s startup gold rush survive or is this the beginning of a brutal funding winter?

Key Findings:

• Funding Takes a Hit: After years of record-breaking growth, VC investments in Africa are showing signs of a slowdown, but some regions are doing better than others.

• Who’s Winning? Who’s Losing? While fintech faces an unexpected downturn, AI and climate tech are doing okay.

• The Rise of Local Investors: Global capital is retreating, but African investors are stepping up to fill the gap.

Read more on Africa’s VC landscape.

US in Africa 

Analysis on USAID Cuts

Context: Experts say that the U.S. reductions in USAID funding mean that 83% of programs are being canceled, profoundly affecting African countries.​

The Big Picture:

• Major Reductions: Ethiopia, the largest African recipient, faces cuts exceeding $1.7B. Other nations like Somalia, Liberia and Mozambique also experience substantial funding losses ​(African Futures).

• Economic Strain: In 23 African economies, the withdrawal of USAID funding equates to over 1% of their Gross National Income (GNI), with eight countries experiencing a devastating hit of 3% or more (Center For Global Development).

• Program Terminations: Critical sectors such as healthcare, education and economic development are severely impacted, leading to the closure of numerous initiatives across the continent. 

Read more: USAID Cuts: New Estimates at the Country Level

Explorations in Africa

Mount Kenya's Icy Demise

Mount Kenya, Africa’s second-highest peak, is rapidly losing its glaciers due to rising temperatures and declining rainfall linked to climate change. Lewis Glacier, the most studied, has already lost over 90% of its mass since 1934 and experts warn that the mountain could be ice-free by 2030.

This glacier loss poses serious challenges. The melting ice threatens vital water sources that support agriculture, hydroelectric power and biodiversity. It also impacts local economies that rely on farming and ecotourism. As the glaciers continue to shrink, the effects of climate change on communities and ecosystems become increasingly evident, underscoring the urgent need for action (The Continent).

Africa Trivia Response

Answer: D. South Africa.

South Africa has a $4B trade surplus with the U.S., making it the African country most exposed to potential U.S. tariffs under President Trump’s proposed trade agenda.

Read More: Bloomberg.

See you next week!

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