Pangea Risk on three possible trajectories of U.S.-Africa engagement

A recent report by Pangea Risk delves into the Impact of Political Change on Africa’s Credit Outlook in 2025, shedding light on the resilience of African borrowers amidst shifting geopolitical dynamics. As the continent grapples with the aftermath of crucial elections from last year and upcoming ones this year, coupled with the geopolitical implications of President Donald Trump’s re-election, the African landscape faces a myriad of challenges with potential paths to success. Zaynab Hoosen, Senior Africa Analyst at Pangea Risk, shared insights on the trajectory of U.S.-Africa engagement in the face of these transformations. Against the backdrop of escalating tariff discussions, African countries find themselves at a crossroads with diverging responses to Trump's tariff policies. While nations rich in mineral reserves can leverage these assets for strategic trade negotiations, others reliant on labor-intensive sectors, such as Lesotho, face heightened tariffs with limited bargaining power. The U.S.'s trade volume with Sub-Saharan Africa constitutes a mere 1%, posing challenges for individual African nations to secure favorable trade deals independently. This disparity underscores the necessity for African governments to explore economic cooperation with alternative partners to mitigate the impact of dwindling U.S. trade. The looming uncertainty surrounding the continuity of the African Growth and Opportunity Act (AGOA) post-Trump's tariffs prompts a shift towards bilateral engagements over multilateral agreements. As Trump favors transactional dealings, countries possessing valuable resources like copper, such as the Democratic Republic of Congo and Zambia, stand to benefit from potentially lucrative trade deals. Conversely, nations lacking such leverage face exclusion, fostering a divide in trade dynamics across Sub-Saharan Africa and pushing governments towards cultivating trade ties with the Middle East and Asia. Looking into the electoral landscape, upcoming elections in key African countries like Gabon, Cameroon, and Ivory Coast pose significant challenges amid heightened political uncertainties. Election-related risks intertwine with sovereign credit vulnerabilities, necessitating fiscal discipline and strategic debt management during election cycles to avert heightened borrowing costs. The White Paper's analysis underscores the imperative for African governments approaching 2025 elections to uphold fiscal prudence, as heightened sovereign borrowing costs and shrinking financial allocation for emerging markets demand enhanced commitment to debt management. In a climate rife with political instability and economic uncertainties, the Pangea Risk report unveils a roadmap for African nations to navigate the evolving contours of U.S.-Africa engagement. Amidst fluctuating tariff regimes, election-induced credit risks, and shifting global trade dynamics, Africa stands at a pivotal juncture requiring astute policy navigation and strategic economic partnerships to safeguard its financial resilience and propel sustainable growth in the years ahead.