US tariffs: AfDB President urges Africa to prepare for shockwaves

The President of the African Development Bank Group, Dr Akinwumi Adesina, has urged African nations to prepare for shockwaves following the new tariffs introduced by President Donald Trump’s administration in the United States of America in an attempt to correct trade imbalances.

He, however, warned Nigeria and other African countries against engaging in a tariff war with the United States, urging nations on the continent to prioritise strategic trade and investment partnerships instead.

Adesina spoke on Friday while delivering the 14th convocation lecture of the National Open University of Nigeria (NOUN) with the theme “Advancing Africa’s Positioning Within Global Development and Geopolitical Dynamics.”

He warned that the new US tariffs could send shockwaves through African economies, weakening local currencies, increasing inflation, and raising debt servicing costs.

Adesina emphasised that Africa’s trade with the US is minimal, making a trade war unwise. Instead, he called for a recalibrated trade and investment partnership with the US, highlighting Africa’s vast potential in infrastructure, agriculture, and minerals.

The Chairman of the AFDB, while stressing that the era of aid or free money is gone, called on African leaders to overhaul their approaches towards achieving fast-paced growth and development.

He added that African countries must now learn to develop through investment discipline, as they can no longer rely on aid for growth or count it as part of government revenue, as has been the case for decades. “Benevolence is not an asset class,” he stated.

He said, “As we meet today, the world is reeling from the effects of US tariffs. The increase in tariffs by the US is understandable from a domestic policy perspective, as it aims to correct long-term trade imbalances, with the US experiencing the largest trade deficit in the world, estimated at over $1 trillion.

“The focus is also to reverse the loss of local manufacturing industries to other parts of the world, create jobs, and raise government revenue.

“However, the US tariffs have sparked global uncertainty and market volatility. Already, there are tariff retaliations from leading world economies such as China, Canada, and the European Union. The global financial markets have been rattled as stock market prices fell across the world, from London to Tokyo, New York, Beijing, and others.

“I am especially concerned about what this means for African countries, as 47 out of 54 African countries have been placed under higher US tariffs. The immediate direct effects of the tariffs on African countries will be a significant reduction in exports and foreign exchange availability.

“This will send other shockwaves through African economies. Local currencies will weaken on the back of reduced foreign exchange earnings. Inflation will increase as the costs of imported goods rise, and currencies devalue against the US dollar. The cost of servicing debt as a share of government revenue will rise, as expected revenues decline,” he stated.

He maintained that there was a need and scope to simultaneously pursue greater flexibilities for expanded and mutually beneficial trade between the US and African countries, disclosing that Africa’s trade with the US, estimated at $534 billion, is minuscule compared to the over $3.2 trillion of trade between the US and the rest of the world.

According to him, “Africa represents only 1.2% of total US imports. Africa, therefore, should not get into a tariff war with the US. What is needed is more trade with Africa from the US.”

Adesina further noted that the global tariffs would also have significant indirect effects on Africa, as its exports to developed countries such as China and others in Europe and Asia would decline.

“This will be expected to reduce the amount of official development assistance that will come to us from those economies. Of course, today we have the Africa Growth and Opportunity Act. It’s a duty-free access of Africa to the rest of the world.”

Adesina urged African nations to “tariff-proof” their economies for future shocks by focusing on domestic consumption, value addition, and the effective implementation of the African Continental Free Trade Area, arguing that the era of aid is over and growth must now come through disciplined investment, better resource management, and improved governance.

“What is needed is more trade with the US. The current dynamics call for a recalibration of trade and investment between the US and Africa, which would expand trade opportunities between the United States and Africa.

“The US has huge opportunities in Africa to invest in rail, ports, corridors, agriculture, processing, and critical minerals. And I think I would like to encourage openness in dialogue on this tariff.

“I asked the Minister of Finance about that this morning, and we should prioritise negotiations to ensure that Africa is not underserved in this shifting geopolitically driven economic and investment landscape. Africa should also tariff-proof itself for future jobs,” he said.

He further emphasised that enhancing education and technological sectors is key to addressing Africa’s challenges, driving economic development, and fostering a more prosperous future.

According to him, by investing in education and technology, Africa can cultivate a skilled workforce, empower entrepreneurs, and position itself as a global player in the digital economy.

“There is no doubt that development aid plays a significant role for many economies in Africa, especially providing much-needed support for vulnerable populations that deal with shocks.

“However, despite its benefits, aid is not the way to develop. Indeed, no nation has ever developed based on aid. Let’s cast our minds back to the challenge of COVID-19. Africa must be 100% self-sufficient in the manufacturing of vaccines and medicines.

“In a world where it is becoming increasingly difficult to know allies or where long-time allies suddenly shift their priorities, there is no substitute for self-reliance. Africa must therefore treat health security just like we treat national defence.

“We must ramp up public and private sector financing for research and development. Our universities must be strongly supported to have world-class medical sciences facilities that will allow our countries to drive cutting-edge innovations in medicine and pharmaceutical sciences. We must then connect them to fuel the growth of medical and pharmaceutical industries,” he added.

Also speaking at the event, a former Chairman of the Independent National Electoral Commission (INEC), Prof Attahiru Jega, emphasised the need to graduate students of worthy character and learning.

Jega, who is the Pro-Chancellor and Chairman of the Council, Usman Danfodiyo University, Sokoto, said: “One can have learning and even be considered learned, as lawyers refer to, but with no good character, I’m sorry to say.

“Also, one can be certificated without learning anything or learning much and yet have good character. But the expectation is that university graduates are positioned for the ideal of having both learning and character.”

The Vice-Chancellor of the University, Professor Olufemi Peters, commended the guest lecturer for the insightful lecture addressing the issues facing the African continent.