By Adelaide Changole.
A trade war between the US and China could prove a silver lining for Africa’s exporters if the world’s two top economic powers start having to import from elsewhere.
Iain Williamson, Chief Executive Officer of Old Mutual, Africa’s biggest insurer by assets, said the region could see new markets created by shifting demand due to tariffs.
“There could be opportunities if we can substitute for some Chinese imports into America,” Williamson said in a Bloomberg interview. “For example, becoming a supplier, particularly for raw materials or agricultural goods.”
US President Donald Trump is set to unleash his first wave of tariffs on Saturday with 25% levies on goods from Canada and Mexico, while indicating that he would move forward with 10% tariffs on China, without stating a timeline.
China is Africa’s largest trading partner, accounting for as much as 20% of the region’s exports, according to the International Monetary Fund.
While exporters might gain, tariff threats have boosted the dollar at the expense of the rand and other emerging-market currencies, with negative implications for African growth if the region’s central banks keep interest rates higher than they otherwise would have.
Trump has also cast doubt over the future of billions of dollars in US assistance for the region.
Williamson said it could force Africa to ease its dependence on foreign aid.
“We can’t really rely on anyone to particularly help us,” Williamson said. “We really need to take control of our own destiny and just take advantage of the fact that you can be a little bit below the radar at the moment in the geopolitical realm.”