Biden’s trip to Angola underscores colonial legacies and resource dependency in Africa, exemplified by the Lobito Corridor project for exporting minerals. Africa’s heavy reliance on commodities restricts economic growth and integration into global supply chains, while trade deficits with China highlight ongoing challenges. There’s a critical need for investment in downstream industries to enhance value addition and promote sustainable economic development in the region.
Joe Biden’s December visit to Angola marked his initial trip to Sub-Saharan Africa as US president, spotlighting enduring colonial legacies in resource extraction and the risks posed by commodity dependence. A notable aspect of his visit was the Lobito Corridor project, aimed at efficiently exporting raw materials from Central Africa to global markets via Angola’s port city, which although progressive, reinforces a fragile economic model centered on resource extraction.
Today, Africa remains highly reliant on commodities, with a median export value of 90% of all merchandise exports, according to UNCTAD data. This dependency has inhibited economic progress for years, threatening to hinder integration into emerging global supply chains, thus leading to social and economic repercussions such as rising unemployment and migration pressures, exacerbated by climate change.
Infrastructure built during colonial times often connects mines to ports, serving as a lasting reminder of colonial exploitation, primarily designed for resource extraction. As a result, resource-rich nations in the Global South have been relegated to mere commodity suppliers, deepening economic disparities between developed and developing countries and perpetuating socio-economic challenges in Africa.
The Lobito Corridor will connect Zambia’s Copperbelt and the minerals of the Democratic Republic of Congo to Angola, supported by the US and EU. This railway aims to streamline the transport of essential minerals, crucial for manufacturing electronics and electric vehicle batteries, thereby enhancing supply chain resilience amid geopolitical tensions.
Biden’s trip had geopolitical motivations; primarily securing access to minerals essential for the global shift towards greener energy and countering China’s influence in Africa. China, established as a key economic player in the region, focuses on infrastructure and natural resource investment, having overtaken the US as Africa’s largest trading partner since 2009.
Despite diversifying trading partners, Africa’s trade patterns remain dominated by primary commodities, leading to significant trade deficits, particularly with China. Trade deficits soared to $63 billion in recent years, reinforcing the unsustainable development model of resource extraction.
Trade imbalances between Africa and China continue to persist, underscoring the limitations in exporting value-added products. Fundamental challenges rooted in this model have historically favored external trade over intraregional exchange, with intra-African trade stagnating around 15%.
Trade policy initiatives like AGOA have not significantly improved Africa’s trading status with the US, which constitutes less than 1% of total US trade. In contrast, Vietnam’s proactive strategies have integrated it into high-value global supply chains, demonstrating how a focus on industries beyond raw materials can stimulate economic growth.
Africa’s historical reliance on resource extraction has suppressed growth and macroeconomic stability. The ongoing global transition to net-zero emissions presents an opportunity to redirect investment into downstream industries, enhancing value addition from natural resources and fostering integration into emerging sustainable supply chains.
Boosting domestic value addition would not only create new trade opportunities but also mitigate foreign exchange losses that strain African economies. Transitioning to localized supply chains aligns with global environmental goals by minimizing emissions produced through raw material export and subsequent higher-price imports.
The sustainable processing of Africa’s resources benefits both local economies and global supply chains. As African nations enhance intra-continent trade, they can capitalize on resources and improve regional economic collaboration through initiatives like the African Continental Free Trade Area (AfCFTA). Long-term planning and investment focused on sustainable development are crucial for Africa to overcome its colonial history and contribute positively to the global economy.
Joe Biden’s trip highlights the significant issues related to Africa’s resource dependence and colonial legacies. The Lobito Corridor project, while aiming to bolster economic ties, risks perpetuating a model focused on raw material extraction rather than industrial growth. Addressing these challenges through investment in downstream industries and fostering intraregional trade can allow Africa to enhance its position in global supply chains and improve overall economic stability.
Original Source: www.cnbcafrica.com
