U.S. Economic Engagement in Africa
The AGOA
Since 2000, the African Growth and Opportunity Act (AGOA) has formed the foundations of US-African economic relations. The act provides duty-free access for African-made goods to enter the United States to advance Africa’s development.
Since its inception, the US has imported over half a trillion dollars worth of goods from eligible states. Initiatives from the US public and private sectors have a far-reaching impact on various industries, spanning energy, information technology, and manufacturing. Among these sectors, FDI input into African renewable energy dominates other industries as global demand increases. The United States allocates funding for projects in collaboration with its international partners, extending beyond the AGOA and other US-sponsored initiatives. This underscores Washington’s dedication to fostering a shift towards a renewable energy-oriented African continent. The Green Hydrogen Portfolio project, overseen by Niger, Egypt, Mauritania, Morocco, Namibia, and South Africa, is sponsored by the United Kingdom, France, Italy, and the United States, enabling the production of green hydrogen. International project partnerships aim to incentivise African nations to join US-led initiatives, such as the AGOA, by aligning with US policies, as participants are also more likely to receive further FDI support from US partners.
Participation in the AGOA requires African states to meet “rigorous” eligibility criteria. These include the “continual progress toward establishing a market-based economy, the rule of law, political pluralism and the right to due process.” There is additionally the expectation that African states refrain from “activities that undermine US national security or foreign policy interests” and “enact policies to reduce poverty, combat corruption, and protect human rights.”
On the economic front, the AGOA’s eligibility criteria intend to encourage African competitiveness in international markets while producing an economic climate supporting free enterprise domestically. On the political front, the AGOA is a vessel for the US to lead African development and set an agenda for the continent. For this reason, the eligible states in the AGOA are titled “partners” to the US, whereby investing in Africa’s development may also support US foreign policy interests. According to the CSIS Commission on Smart Power, the most rational strategy for the US concerning global development is the reinforcement of “American values”, including peace, justice, and prosperity.
The AGOA’s Political Complications
The AGOA’s eligibility criteria highlight the economic and political interests the US holds in African development. The AGOA’s success connects to broader US foreign policy ambitions of increasing cooperation with African nations, increasingly viewed as the next “swing states” in international politics.
In 2023, South Africa’s continued participation in the AGOA was questioned due to its close political cooperation with Russia. Amid accusations that South Africa had covertly supplied weapons to Russia and Pretoria’s refusal to condemn Russia’s invasion of Ukraine publicly, South Africa’s “non-aligned” position has interfered with US attempts to build a global consensus against Russia. US Senator James Risch said he was “disappointed” to learn of South Africa’s renewed eligibility in the AGOA given “South Africa’s continued actions that subvert US national security and foreign policy interests.”
Risch’s statement signals a concern in Washington DC that the White House does not robustly enforce the conditions of the AGOA, weakening US leadership amid a political climate that presents international issues through a binary East-West dynamic. The Biden administration has maintained the attitude of great power competition from the Trump administration, which held that Beijing’s “predatory” practices in Africa should be countered by increased US economic engagement.
AGOA is up for renewal in 2025. There is some bipartisan support for the AGOA’s re-authorisation as US congressional members have identified firms looking to “diversify their supply chains and reduce dependence on China.” Failing to renew the Act would limit the opportunity for American enterprises to find alternative sources of rare earth elements, which are critical for manufacturing high-technology equipment. It presents the opportunity for “friend-shoring”, a strategy aimed at building new strategic partnerships to access raw materials and reduce dependence on malign powers. With at least 20 African countries whose mineral sectors account for 25 per cent of exports respectively, the AGOA’s re-authorisation may enable the United States to maintain duty-free access to markets with growing mining and refining capacity, reducing reliance on China.
Despite South Africa’s souring relationship with the US, they remain an active beneficiary of the AGOA. US Census Bureau data compiled by Brookings underline South Africa’s importance to US mineral supply chains, as the US sources 98 per cent of its chromium ore and 37 per cent of its platinum from South Africa. Chromium is used to produce alloys, whereas platinum is used to develop fibre optics and hydrogen fuel cells. Both elements are essential for improving fuel efficiency, which President Biden has identified as critical to meeting his administration’s goal of reaching 80 per cent clean energy usage by 2030. Compared with the Central African Republic (CAR), which was removed from the AGOA in January 2024 for its security cooperation with the Wagner Group, CAR’s total exports to the US were valued at less than $1 million. CAR’s minimal involvement in the AGOA allowed the US to remove its beneficiary status without exposing the US to supply chain risks. South Africa’s continued place in the AGOA suggests that the conditions for removal from beneficiary status may depend on a nation’s importance to US strategic interests. While South Africa has pursued a foreign policy that has hindered the US's objectives of challenging Russia’s war in Ukraine and China’s growing presence in Africa, its mineral abundance provides the US with a robust route to supply chain diversification.
South Africa’s claim to neutrality in the Russia-Ukraine war demonstrates the increasing polarisation in world politics, where many African nations resist attaching themselves to one sphere of influence. Former Governor of Kaduna state in Nigeria, Nasir El Rufai, claimed that “African countries should be very, very careful about taking a side” on ongoing conflicts in Ukraine and Gaza. Of the 35 nations which abstained from the UN General Assembly vote to condemn Russia’s attack on Ukraine in March 2022, 17 were African. US Senator John Kennedy announced his support for renewing the AGOA, arguing that it “will play a pivotal role in helping Americans deter China’s growing influence” in Africa. While financial aid and political support are not the exclusive drivers prompting nations to endorse a US-led global agenda, they may contribute to gradually forming a positive perception of the US as a cooperative and valuable international partner. However, the US would continue facing the headwinds of African nations, which view the AGOA’s intended political reforms as burdensome to political support domestically and a strain to relations with US adversaries internationally.
The US and its African partners have experienced positive socio-economic advantages directly attributable to the legislation. In 2021, the top three countries in export revenue were South Africa ($15.7 billion), Nigeria ($3.5 billion), and Ghana ($1.7 billion). Ethiopia grew its clothing and leather exports by $273 million from 2000 to 2021, which also created almost 120,000 jobs in the US.
Ghana
The symbiotic relationship between the US and the African continent, indicated by mutual socio-economic benefits, is demonstrated further by increased US foreign direct investment in strategic African nations. In 2022, the US-Ghana commodities exchange reached $3.7 billion, elevating Ghana’s trade surplus by $1.8 billion. To further bolster trade, the US increased its FDI in the country to $150 million for agriculture, economic development, human rights, governance, security, and education. These include $32 million in agricultural aid and $25 million in support for micro to medium-sized agrarian firms. Furthermore, the US unveiled a $300 million investment strategy to foster digital economic transformation. Ghana’s main exports to the US are transportation equipment ($95 million), chemicals and related products ($79 million), and agriculture products ($56 million). US investments are meant to advance the nation's most successful industries and cultivate emerging sectors. Around 25,000 businesses in Ghana have been supported through USAID and Feed the Future, a US-financed food and security initiative, with $192.9 million in financial assistance, generating over $98 million in agricultural sales. Additionally, with the aid provided by US programmes, 798,000 producers could utilise new technologies in agricultural production. US public investment also spurred private initiatives in the region, as 3Farmate Robotics (an innovative agritech company in Ghana) received an angel investment from a Silicon Valley investor to develop their AI-driven technology further.
The high economic performance of AGOA-driven exports also supports funding for lagging industries, which have the potential to diversify national production further. The recent partnership worth $300 million between African Data Centers and the US International Development Finance Corporation will support the construction of a new data centre capable of sustaining up to 30MW of IT load. The project aims to bolster Ghana’s digital transformation and allow its data to remain within its borders. In doing so, Ghana will further its proliferation of digital services, including government services, fintech and mobile money, and digital agriculture. FinTech and mobile money are particularly significant for the country as 59.7 per cent of the population has a digital money account. Increasing national data security will stimulate digital economies by incentivising e-commerce, innovation hubs, and technological entrepreneurship. As such, Ghana has the potential to become a leading nation in digital transformation in the region and increase further investment opportunities, which could directly influence economic growth. Whilst these investments can not be credited solely to Ghana’s membership in the AGOA, their direct correlation with economic growth strengthens ties between the two nations, influencing private and public investment in the region.
Nigeria
Nigeria is also a significant trading partner with the US due to its AGOA membership. Its three most profitable goods are transportation equipment ($510 million), energy-related products ($222 million), and agricultural products ($376 million). Similarly to Ghana, Nigeria receives a lot of FDI in its key performing industries, which also coincides with current government policy, which aims to diversify the economy away from oil and gas. To achieve this, Nigeria aims to advance its manufacturing industry, the agricultural sector, and technological development. The United States adopted a Nigeria strategy similar to their strategy in Ghana, supporting key industries and those perceived as undeveloped but with significant potential. The DFC perceives Nigeria as one of the key countries in the region, which is why it holds a portfolio of $780 million predominantly concentrated in the energy and financial sectors within the country. In 2022, cumulative FDI from the United States amounted to $5.6 billion, focusing on sectors such as mining, information services, and professional, scientific, and technical services.
Numerous US-based firms facilitate projects to support Nigerian development. Most notably, a US-based company, Sun Africa, has pledged to invest in an energy infrastructure project worth $2.2 billion. The construction of a 961MWp solar photovoltaic coupled with a 455MWh battery storage facility would significantly aid the nation as it only has a total installed power generation capacity of 16,384MW, which is significantly below total demand.
The US also seeks to develop other sectors of the Nigerian economy, which could lead to mutual economic interests between the two nations. One of the most significant industries is mining, due to a recent discovery of high-grade lithium deposits. The lithium reserves could propel the country’s mineral production and exports, substantially influencing its economy and international trade. Membership in the AGOA could play a significant role in the lithium trade and could benefit Nigeria as the prices of raw materials continue to increase. For this reason, in 2023, Nigeria initiated funding discussions with the US for mining-related projects.
Social Benefits
Increased engagement with the US economy instigated the creation of the US President’s Advisory Council on Doing Business in Africa (PAC-DBIA), which aims to strengthen the administration’s commercial partnerships in Africa. The organisation recommends policies and programs in trade and investment engagement in various sectors, notably energy, finance, tech, food-water security, and health. Among the most recent recommendations is to increase funding for Prosper Africa, which is responsible for resource management and energy sustainability projects.
It is also important to note that membership in the AGOA is not the only factor that acts as a determinant for aid. A good example is Cameroon, which lost its status on 1 January 2020 due to its humanitarian record. Although Cameroon has yet to regain its status, US-led social initiatives in the country are still ongoing. A notable example is a US Trade and Development Agency-funded energy study in Cameroon that helped to connect 100,000 households in rural areas to the power grid; the Renewable Energy Innovators Cameroon (REIc) partnered with a California-based energy company, SimpliPhi Power, to deliver the project. Cameroon’s rural electrification is only 35 per cent.
In contrast, 96 per cent of urban areas have access to power. Enhancing energy accessibility in the region has the potential to drive economic growth and foster social equality and environmental responsibility. According to the African Development Fund, extending electricity to rural areas would enhance the quality of education and healthcare. This initiative would positively impact individual households by increasing the adaptation of domestic appliances, thereby reducing the time spent on daily chores. Consequently, more time can be allocated to income-generating activities, encouraging the development of artisanal workshops that stand to benefit from electrical tools like small sawmills and workshops. Moreover, electrification aims to decrease water-borne diseases by encouraging modernising water supply systems.
With rising electricity access in Africa, digitalisation has become necessary in the content industry as the demand for digital services continues to rise. Trends, such as population increase and urbanisation, accelerated internet and cell phone coverage as more people require access to e-commerce and government services. Covid-19 also played a significant role, forcing many to use the internet to access information and purchase goods. Consequently, many countries in Africa have focused on improving their internet penetration. Since 2010, Cameroon has experienced an increase in internet penetration by 123 per cent, and Kenya witnessed a rise of 114 per cent. Much of this is attributed to AGOA membership, which provides access to external mobile service providers that see economic value in the digitalisation of the continent. Services and mobile technologies in Sub-Saharan Africa added $155 billion of economic value in 2019 alone. The US has a significant role in this process as it invests in various projects on the continent. The Digital Connectivity and Cybersecurity Partnership (DCCP) aims to expand internet access to emerging markets, promote secure digital infrastructure, adopt cybersecurity practices, and export US Information and Communications Technology (ICT).
As Africa’s swiftly growing network supports economic activities and government services, it has become increasingly susceptible to cyber risks. AGOA initiatives work towards advancing digital security for citizens, promoting digital literacy, and encouraging the establishment of legal and regulatory frameworks. These measures are geared towards safeguarding privacy and upholding freedom of expression in the digital realm. The combination of digital infrastructure and funding initiatives from the US government, exemplified by the allocation of $100 million to the network operator Africell by the US International Development Finance Corporation, aims to support continental projects in expediting internet access, affordability, and security. Africell aims to enhance mobile network infrastructure across the Democratic Republic of the Congo, Gambia, and Sierra Leone.
The US also seeks partnerships with private US companies to promote further digitalisation efforts in Africa. The new Africa Tech for Trade Alliance created by the US Government’s Prosper Africa initiative invited US and African companies to promote e-commerce and address significant global digitalisation challenges. The alliance seeks to find solutions for existing regulatory bottlenecks and share existing technologies among the key companies to support critical sectors on the African continent, such as supply chains, digital payments, e-commerce, and digital skills and training.
The Politics Behind AGOA
In January 2024, the Central African Republic, Gabon, Niger and Uganda were officially removed from the AGOA after failing to uphold their AGOA conditions of protecting political pluralism and upholding human rights. Eligibility in the AGOA is reviewed annually, and Uganda’s removal follows the passing of the 2023 Anti-Homosexuality Act, which received international condemnation for including the death penalty for individuals found performing certain homosexual acts. Following its enactment in May 2023, President Biden described the law as a “tragic violation of universal human rights”, stating that his administration will “incorporate the impacts of the law into our review of Uganda’s eligibility for AGOA.”
Uganda’s subsequent removal from the AGOA indicates that advancing human rights remains an inflexible objective to US economic engagement in Africa. Uganda’s Special Presidential Advisor Odrek Rwabwogo remarked that Uganda’s removal from the AGOA was “a stick to beat the populace of African countries who vote in a way that offends the social sensibilities of the developed West.”
Rwabwogo’s statement reflects a widespread discontent among African nations for economic engagement conditional on political reforms. Survey data from Afrobarometer concludes that 45 per cent of Africans believe that economic engagement (including loans and developmental assistance) should be connected to promoting democracy and human rights. In comparison, 50 per cent thought that the domestic government should determine political reforms on democracy and human rights, free from international influence. Afrobarometer data suggests that the AGOA’s strict conditions surrounding political reforms are likely to be resisted by African nations, which oppose international interference in domestic politics, limiting its impact as a diplomatic device to drive political change in the region.
The AGOA’s success as a tool of political reform is likely to be a factor in the conversations US congressional members will have as they decide whether to renew the AGOA next year. A 2024 US Congressional Research Service Report highlights how the “rhetorical and policy emphasis” on political reform risks “complicating” certain US objectives abroad, challenges China and Russia are less likely to encounter.
The AGOA’s commitment to political reforms may limit its potential as a counterweight to growing Sino-Russian influence in Africa, which may weaken rather than strengthen US-African relations. Following Uganda’s removal from the AGOA, Ugandan President Yoweri Museveni has maintained a defiant tone against the US, asserting that Uganda can “stand independently from Western influence.” Pro-Kremlin broadcaster Tsargrad has used Museveni’s anti-gay stance to present Russia and Uganda as nations united against the “legalisation of sodomy,” binding both nations to cooperation borne from their mutual resentment of US policy. Uganda’s removal from the AGOA effectively functions as a sanction, similar to the World Bank’s freezing of loans to Uganda in August 2023 following the passage of the Anit-Homosexuality Act. Uganda’s bilateral trade with Russia more than doubled from $30 million in 2009 to $74 million in 2018, indicating that Uganda can meet its target of increasing commercialisation and international market integration with nations other than the United States. The AGOA’s commitment to political reform may push African nations to forge closer economic and later political partnerships with China and Russia, as neither nation includes human rights reforms as a condition of increased cooperation.
Value Chains
Failure to renew the AGOA would negatively impact the value chains that lead to increased production and exportation. South African President Cyril Ramaphosa argued that extending the AGOA may “encourage the further development of value chains” and “enhance the diversification of African economies.” In 2017, Intra-continental trade in Africa stood at under 20 per cent of total exports, compared to approximately 68 per cent in Europe and 59 per cent in Asia. Sustainable economic growth in Africa requires product diversification; 50 per cent of the continent’s exports to the rest of the world are mineral goods, leaving firms exposed to external shocks.
By renewing the AGOA beyond 2025, the US would provide certainty for prospective investors who intend to capitalise on Africa’s increasing industrialisation, supporting a more comprehensive range of industries that can better insulate Africa from external shocks. Reducing dependence on a limited basket of goods requires a long-term focus, which includes national governments undertaking major public works projects to improve access to regional markets. Expanding transport networks is essential to reducing the logistical inefficiency that dissuades investment in new industries.
Namibia’s Mineral Export Ban
On June 8 2023, the Namibian government announced an export ban on unprocessed lithium and other rare earth minerals (REMs). Namibia is the second African nation to impose an export ban on critical minerals, after Zimbabwe, highlighting the rise of resource nationalism, which aims to capitalise on rising global demand for sought-after commodities in the transition to net zero.
Namibia’s Domestic Interests
Rising demand for electric vehicles and consumer devices drove lithium prices to $75,000 per metric ton in March 2022, a 400 per cent increase compared to its previous five-year average of $15,000. The increasing profitability of rare earth minerals has prompted nations with known reserves to expand their processing capacity. China currently processes most of the world’s REMs, with 58 per cent of the world’s lithium processing taking place within its borders. Namibia’s ban on REM exports aims to improve domestic refining capacity. The International Energy Agency predicts that the country’s mineral export volume will triple in size by 2030. If it is all processed at home, Namibia will see a significant rise in the output’s added value.
Namibia’s President, Hage Geingob, views domestic mineral development as key to industrialisation. The Mines and Energy Minister, Tom Alweendo, asserted that there is “no way” Namibia could industrialise without processing its minerals. Mining and quarrying make up 9.3 per cent of Namibia’s GDP and 66 per cent of its total exports, driven mainly by uranium mining and rough diamonds. Lithium processing would allow for diversification in Namibia’s mining sector, reducing reliance on the fluctuating value of unprocessed mineral exports and forging a path toward sustainable growth. Banning the export of lithium is expected to increase the mineral supply in Namibia, enabling processing plants to purchase unrefined lithium at a discount. Minimising development costs is vital to incentivising domestic and foreign investment. Namibian wealth management firm Simonis Storm Securities projects that Namibia’s lithium refining industry could be worth nearly $1 billion annually by 2025.
Namibia’s Chamber of Mines, an association of mining and quarrying organisations, announced their support for the government’s ban on lithium exports. Chamber executive Veston Malango described it as “necessary” to “grow the economy in line with the African Mining Vision.” This refers to the African Mining Vision (AMV), an African Union strategy meant to enhance Africa’s utilisation of natural resources and “underpin broad-based sustainable growth and socioeconomic development.” The Union’s decision to include lithium processing within the AMV strategy underlines the government’s expectations for future lithium demand in the medium to long term.
International Significance
Namibia signed a trade agreement with the European Union in October 2022, in which it highlighted plans to become a reliable mineral processor. German Chancellor Olaf Scholz has shown explicit support for Namibia’s ambitions, stating that processing will “not only create greater local prosperity…we will ensure that we have more than just one supplier in the future.” Further, two months after Namibia’s announcement on the banning of lithium exports, it signed a joint REM exploration agreement with Japan.
The shift in mineral-related focus toward Southern Africa is part of broader efforts from Indo-Pacific and Western nations to reduce reliance on China for sourcing REMs - China began investing in Southern African mining before any other major economy. Namibia is one of five African nations included in Japan’s critical mineral strategy designed to reduce dependence on China, which imposed export restrictions on gallium and germanium in July.
Namibian mineral refining represents another opportunity for the United States to challenge China's position in the global mining market. Amos Hochstein, United States Security Envoy, called for more “competition” across “multiple countries,” emphasising the United States’ desire to access REMs without the risk of political friction. Rystad Energy, an energy consultancy, forecasts a significant increase in Namibian lithium output from approximately 5,000 tonnes of lithium carbonate in 2024 to 33,000 in 2030, lifting investor confidence in Namibia’s mining sector.
Whilst the capacity of Southern African nations to produce and process REMs may ease reliance on Chinese processing, China will remain a goliath. Africa’s six largest lithium mining nations could account for approximately 12 per cent of global supply by 2031, stressing the importance of multilateral trade cooperation in transitioning to net zero. Namibia’s mineral wealth means it can become a crucial stakeholder in REM supply chains.
Structural Challenges
Scaling up domestic lithium production will require firms to adjust to Namibia’s new regulatory practices, potentially delaying the launch of new processing plants. Included in the Namibian government’s mining plan is a provision which may allow for the lifting of lithium export restrictions in select circumstances, allowing the export of limited quantities of unprocessed ore at the direction of the Ministry of Mines and Energy. The government's authority in determining export arrangements may impede metallurgical testing, a vital component in the design phase of new facilities, which would further lengthen the testing period of new processing plants and negate potential marginal gains.
The Geingob government continues to battle allegations of corruption in mining, which first emerged in October 2022. Chinese mining firm Xinfeng Investments denies accusations of forgery, acquiring mining licences through bribery, and illegally exporting raw materials to China under the pretence of mineral testing; Namibia’s Business and Intellectual Property Authority has suspended two unnamed officials suspected of facilitating the purchase of lithium mining licences which Xinfeng Investments later acquired. Further, the technical advisor of the Ministry of Mines and Energy, Ralph Muyamba, awarded mining licenses to Orange River Mining, owned by his cousin, worsening suspicions of corruption.
Minister Alweendo’s subsequent amendment of the ministry’s mining licence application process indicates that the Namibian government may not have in place the requisite regulatory framework to eliminate illegal activity but also shows that it is willing to take steps towards mitigating corruption risks. Following the corruption allegations aimed at Xinfeng Investments, the Anti-Corruption Commission re-evaluated the trustworthiness of prospective investors and now requires organisations to provide comprehensive plans detailing how they intend to conduct mining operations in Namibia. The procedure aims to tighten licence procurement procedures and to stop licence-holders from selling them off to third parties. Eliminating shadow markets is essential to fulfilling Namibia’s ambition of increased value-addition in mining; failing to enforce the amendment may deter investment from capable organisations amid concern that Namibia cannot optimally exploit its mineral wealth under current regulations.
Namibia is not the latest African nation to restrict the export of unprocessed minerals. On July 27, the Ghanaian government approved its ‘Minerals of the Future’ policy, an export ban which intends to encourage domestic lithium processing. The broader trend of resource nationalism aims to empower mineral-rich states by increasing their stake in mining operations. Namibia’s decision to ban lithium exports underscores the urgency for the country to strengthen its regulatory framework to capitalise on this significant economic opportunity.
Scholz’s Visit to East Africa
German Chancellor Olaf Scholz arrived in East Africa on 4 May for a trip split between Ethiopia and Kenya, two of the region’s most influential actors, to discuss future environmental and political cooperation. The chancellor described the visit as preparation for a “multi-polar world.” Scholz’s recognition of the world’s increasingly complex international order has motivated a growing number of nations to develop relations with East African countries that are expected to grow in political and economic significance in the long-term. Germany’s decision to increase cooperation with East Africa follows a trend of major international actors dedicating infrastructure investment to a growing region facing economic headwinds.
On the first leg of Scholz’s visit, in Ethiopia, he supported calls for the African Union to be represented at the G20. Germany has joined a growing list of G20 nations including China, France, and the United States, in advocating for more African representation in the G20. Only one African nation, South Africa, is currently a member. Representation in international organisations would act as a significant step towards fulfilling a “partnership of equals,” something much of the continent has been pleading for. Scholz recognised that a seat at the table allows for a “louder African voice” in the world, which may elevate African concerns on issues that may otherwise be ignored.
During the second leg of Scholz’s visit, in Kenya, he pledged to provide $215 million to expand the Olkaria geothermal power plant in Nakuru. This investment into Kenya’s power grid provides a boost to Kenya’s ambitions of constructing a reliable and renewable electricity grid. Kenyan President William Ruto aims for the country to become fossil fuel free by 2030 - the country already satisfies 90 per cent of its energy needs via renewable sources. The transition to renewable energy has occurred fastest in Africa where levels of fossil fuel dependency are lower. Yet, advancements in renewable energy on the continent have not significantly negated Africa’s energy vulnerability during international crises. Approximately 43 per cent of Africa’s population remains without electricity. The lack of energy security which persists within the region remains a limitation to economic growth (For more detail on this topic check out our African Energy Crisis Report).
At COP27 in November 2022, President Ruto advocated for ‘loss and damage’ relief funds, an initiative to mitigate the consequences of climate change for nations who are exposed to its worst consequences. Loss and damage funds proved a difficult topic of negotiation at COP27, exposing African frustration with the international system. Ruto held that delays in establishing the funds were “cruel and unjust” while former Nigerian President Muhammadu Buhari had written to COP27 asserting; “don’t tell Africans they can't use their own resources.” Africa in total produces six per cent of global fossil fuels yet it faces disproportionately large climatic events. Berlin announced they would support the loss and damage scheme, with a contribution of $185 million. Scholz’s recent visit to Kenya, enhancing green technology cooperation with Ruto, embodied the “rise to the challenge” which Ruto petitioned for at COP27. Scholz’s support for environmental initiatives in Africa underlines Germany’s commitment to environmental action on the continent.
Scholz’s visit to the continent was his second in only 17 months in office. On the first visit in May 2022, he toured Senegal, Niger, and South Africa, focusing on private investment into sustainable energy production and the war in Ukraine. Scholz’s first visit to Africa was significant in timing. Both before and after Russia’s invasion of Ukraine, NATO member states have criticised Germany for failing to uphold NATO’s defence spending commitment and for hesitating to ship arms to Ukraine. Scholz’s widening of Germany’s diplomatic reach to include African nations furthers their commitment to multilateralism amid the Ukraine war, which has strained western relations with Africa.
While bilateral agreements have produced positive outcomes for African nations with German cooperation, Ruto’s frustration with the international system during COP27 has driven calls for the creation of a New Energy Pact at the African Climate Action Summit for September 2023 in Nairobi. Ruto’s claim that Africans were being “mistreated” during international conferences by non-African nations has inspired a pan-African response, where African problems are resolved by African solutions. The agenda of September’s Climate Action Summit includes: Energy systems, infrastructure, environment, and human development – important concerns in the midst of a cost of living crisis which has sparked demonstrations continent-wide. Ahead of COP28 in Dubai, Ruto’s focus on the African summit highlights the shift toward intra-African multilateralism, which may result in more constructive conversations between nations who understand Africa’s unique environmental challenges.
Ethiopia and Kenya are important nations in African affairs. The headquarters of the African Union is based in Addis Ababa and the regional office of the United Nations is based in Nairobi. This heightens the diplomatic status of both nations and has resulted in closer scrutiny of their economic management, which has drawn concern from Berlin. Loans used for infrastructure development have deepend concerns over the future economic stability of the region. Kenya, despite being at high risk of debt distress, has recently stabilised their debt load by maintaining resilient growth rates and cutting the budget deficit. According to IMF managing director Kristalina Georgieva, Kenya is “definitely” not among sub-Saharan nations at an increasing risk of default. Though both nations were negatively affected by Covid-19, drought, and the Ukraine War, Ethiopia has faced additional economic pressure due to the two-year civil conflict in Northern Tigray. Coupled with the IMF projection that Ethiopia and Kenya will become the third and fourth largest sub-Saharan economies on the continent, capitalising on their increased productivity is of growing importance to foreign governments and multinational firms.
Despite Kenya and Ethiopia’s current growth challenges, it is likely that their governments will position themselves as crucial actors in the fight against climate change. Africa holds 40 per cent of the world’s total cobalt, manganese, and platinum, minerals essential for green technology. Utilising the continent’s material wealth allows its population to develop domestic industry and improve energy security. Insecure and inefficient access to energy has frustrated the development of key industries in Africa, increasing dependence on imports. Sub-Saharan Africa currently spends 26 per cent of GDP on the imports of goods and services. A regional focus on improving energy security would involve improved regulation, which left unresolved, may negate Africa’s material advantage.
Scholz and Ruto’s common interest in the advancement of green technologies depends on levels of energy efficiency. Introducing building codes and efficiency standards which limit the use of inefficient appliances would contribute to a roughly 30 per cent fall in energy demand by 2030. Reducing total energy demand through improved efficiency would reduce energy imports and household expenditures, allowing more funds to be injected into home-grown infrastructure projects. Ruto’s ambition of making Africa the “clean, green factory of the world” centres on regional infrastructure projects which Germany has already invested in. With the African agenda increasingly focused on climate change, domestic technology development may allow Africa’s export volume to grow, relieving wider European and Asian dependency on Russian energy amid the war in Ukraine.