Understanding current geo-economics in a changing world

In a recent interview with CNBC Africa, Li Xiuzhu, Head of Global Markets, China at Standard Bank Group, discussed the economic impact of recent geo-economic shifts and the urge for African economies to join new alliances. The expansion of BRICS to include African countries has sparked discussions about the potential benefits and implications of these new alliances. Xiuzhu highlighted that the resources controlled by the new BRICS nations, such as zinc, copper, and lithium, are essential for the global economy's transition into an electrified age. African countries like Egypt, the Democratic Republic of Congo, and Ethiopia are among those showing interest in joining BRICS, signaling a positive trend for African economies. One of the key agendas surrounding the new BRICS alliance is the topic of de-dollarization and the internationalization of the Chinese currency, the renminbi. While there is speculation about the creation of a new currency for BRICS nations, Xiuzhu emphasized that the US dollar remains the dominant currency in global trade. However, the increasing utilization of the renminbi in African economies demonstrates a growing trend towards diversifying currencies to reduce vulnerability to US exchange rate fluctuations. The Global West's response to these shifts includes a cautious awareness of the potential impact of alternative currencies on international trade. Xiuzhu also touched on the currency swap deal between Nigeria and China, worth 16 billion renminbi or 2.5 billion US dollars. While the deal was recently renewed, its actual impact on managing currency volatilities in Nigeria has been limited. Despite the trade with China being denominated in CNY, the overall effect on Nigeria's economic landscape remains modest. However, the renewal of the swap agreement signifies confidence in the Nigerian market and reflects China's ongoing push for renminbi internationalization. As global traders anticipate the US dollar's continued strength and monitor economic data from the US and Europe, the conversations around geo-economics and currency alliances remain crucial for shaping future economic landscapes. The evolving dynamics of BRICS partnerships and the growing utilization of alternative currencies like the renminbi underscore the need for African economies to stay abreast of these developments and consider joining new alliances to enhance economic opportunities and mitigate risks.