Analyst breaks down how Africa could protect itself from economic shutdowns in future global shocks: Video
As a dependent economy, Africa has always suffered the most from any form of external or global shocks, including COVID-19, the Ukraine-Russia war and now the USA-Iran tensions.
But things could be different if proper planning, systems or structures are put in place, according to a financial analyst, Nelson Cudjoe Kuagbedzi, who spoke with Global South World.
Africa’s exposure to global disruptions is closely tied to its reliance on imports and limited intra-continental trade, Kuagbedzi said, arguing that recent crises have underscored the urgency of reducing that dependence.
“Well, I think that we have to deepen African trade,” he said, referencing the African Continental Free Trade Area (AfCFTA), which was created to boost trade among African countries but has yet to reach its full potential.
He warned that continued reliance on external suppliers for essential goods leaves African economies vulnerable when global supply chains are disrupted.
“We cannot continue as a continent to depend on, you know, others for our, you know, supplies in terms of crude oil, in terms of our cereals, in terms of sugar, in terms of everything that we actually import into this country.”
Economists have long argued that such dependence amplifies the impact of global shocks. Analysts, including Dani Rodrik, have pointed to the need for diversification and stronger domestic industries.
"Economic growth and development are possible only through the accumulation of capabilities over time, in areas ranging from skills and technologies to public institutions," wrote in his book, "The Globalisation Paradox".
Nelson, during the discussion with Abigail Johnson Boakye, intimated that Africa must move beyond exporting raw materials and instead invest in value addition. “I think that we need to diversify our economic basis by adding more value to the raw materials,” he said, pointing to Ghana’s plan to stop exporting raw gold by 2030 as an example of policy direction.
He added that heavy reliance on imports has implications for employment and economic growth. “Once you continue to import, you are creating unemployment in your country, and you are creating a corresponding employment in that country.”
For Nelson, strengthening intra-African trade is central to reducing vulnerability.
“We should try as much as possible to trade within ourselves. We should try as much as possible to deepen our economic and financial relations. And we should also try as much as possible to build our economies based on African solutions that can solve African problems.”
Watch the full interview attached above.
This story is written and edited by the Global South World team, you can contact us here.
