Global economic uncertainty impacts African markets

Africa's markets are facing unprecedented challenges amidst global economic uncertainty. CNBC Africa had an exclusive interview with Tadesse Admassu, Group President of Trade and Development Bank, to unpack the impact of fluctuating commodity prices, shifting investor sentiments, and more on the continent's economies. Admassu highlighted the importance of development finance and trade finance in strengthening supply chains and building partnerships in the wake of global financial sector resets. While African sovereigns have made successful issuances in capital markets, the rates remain high, adding pressure on costs. However, there is optimism as interest rates are expected to improve due to inflation reduction in hard currency and local currency. Admassu discussed the vulnerability of African economies to volatile global commodity prices, emphasizing the need for diversification and improved agricultural production to enhance supply security. Additionally, he underscored the importance of supporting African financial institutions to fill the gaps left by global banks hesitant to take on African risks. He also highlighted the significance of regional trade agreements such as SCFTA in fostering resilience and cooperation among member states. Admassu emphasized the need for complementary production, robust financial systems, and structural reforms to bolster intra-regional trade and attract foreign direct investment. He noted that FDI is essential for sectors like mining and agriculture to drive value addition. Admassu outlined the megatrends favoring Africa's economic prospects, including domestic and continental demand growth. He emphasized the importance of policy stability and commitment to attract investors. Discussing African governments' efforts to diversify economies and reduce vulnerabilities, Admassu highlighted countries like Tanzania, Ethiopia, Egypt, and Nigeria making strides in addressing macroeconomic challenges to attract investments. He expressed optimism in governments making difficult decisions to create attractive investment environments. Admassu addressed the financial risks African businesses face amidst global uncertainties, stressing the importance of exploring opportunities in green minerals and value addition to create local industries and job opportunities. He noted the challenges in traditional financial frameworks and imbalances affecting African economies but highlighted new opportunities and emerging trends that could benefit African efforts. Admassu concluded by mentioning the dynamic nature of the global macroeconomic environment and the ongoing efforts to strengthen alternative mechanisms for trade and business within and outside Africa.