Online Reporter
Hannah Atkins
As we enter 2025, Africa Practice has considered the key trends to scrutinise and analyse, transcending geopolitics, climate and the economy.
We also revisit some of the predictions we made last year and forecast the key dynamics to watch in the year ahead.
Geopolitics, climate change and the energy transition
African agency reaches new heights
2024 represented a high-water mark for African agency, as states leveraged geopolitical tensions to bolster their standing and secure representation in new fora. Despite – or perhaps because of – the outcome of the US election, we expect African governments to exercise even greater influence in 2025, including at the BRICS and the G20 under the South African presidency.
The re-election of Donald Trump as US president in November 2024 looks set to usher in another era of American isolationism, accompanied by trade tariffs and cuts to funding for development and multilateral agencies.
As Donald Kaberuka, former President of the African Development Bank, has argued “Africa and Europe should not sit around working out the implications of Trump 2.0 for their respective continents – rather they should see it as a moment of clarity and press ahead with their international reform agenda.” In 2025, we expect African leaders to diversify their international alliances in order to minimise the fallout.
Progress is already in motion at the BRICS, which welcomed new joiners Ethiopia and Egypt, along with Iran, Saudi Arabia and the United Arab Emirates in January 2024. This year’s BRICS summit saw hosts Russia eager to decouple global trade from the US dollar and promote greater trade in local currencies, with ramifications for Africa’s own currency conundrum.
Over the coming year, we expect Russia to seek to promote greater trade in commodities among the BRICS nations by establishing dedicated exchanges for grain and precious metals, in a bid to evade Western sanctions. These measures could draw Egypt and Ethiopia closer to the alliance, as Cairo seeks access to discounted wheat and maize, and Addis Ababa spies opportunities to cut its food import bill in an attempt to conserve scarce forex.
The opportunity may be less compelling for South Africa, where the Kremlin-hostile Democratic Alliance leads the agriculture ministry, and local gold and palladium producers have historically competed with Russian counterparts. Nevertheless, such enhanced South-South collaboration is likely to appeal to Nigeria, Uganda and Algeria, all of which received official invites to join as “partner states” at the BRICS summit in 2024.
South Africa, meanwhile, assumed the year-long G20 Presidency in December 2024, under the theme “Fostering Solidarity, Equality, and Sustainable Development.” It becomes the third BRICS member in a row to hold the position, following Brazil in 2024 and India in 2023.
South Africa looks to pick up where its bloc colleagues left off, advancing dialogue on inclusive growth, food security, climate change and the energy transition, and the reform of multilateral institutions, including the international financial architecture.
With the African Union having been admitted as a member of the G20 forum in 2023, South Africa’s presidency provides an opportunity to further amplify the continent’s development priorities on a global stage. Look out for some major announcements at the concluding summit in late November 2025.
Climate summit delivers small sums but big hopes
Last year, we noted the Global North’s tendency to over-promise and under-deliver on climate finance. In the eyes of African negotiators at COP29, the Global North has now under-promised with its US$300 billion annual goal for climate finance to developing countries. While progress to raise this sum is likely to be slow, the agreement of regulation governing carbon markets provides cause for optimism among African issuers hoping to raise funds in 2025.
With most advanced economies facing elevated fiscal pressures and a climate change sceptic in the White House, African countries are likely to face deep reluctance from the Global North to scale up climate finance in 2025.
South Africa grapples with CBAM as Kenya develops its carbon market
In 2024, African economies accelerated efforts to adapt to shifting global trade and climate regulations, responding to the threat posed by the EU’s Carbon Border Adjustment Mechanism (CBAM), which mandates reporting obligations from 2026. Over the next year, we expect to see increased momentum in implementing mitigation strategies and regional carbon market integration.
-Critical mineral financing gathers pace, bolstering African mining
In 2024, we predicted an increase in green mineral processing on the continent, driven by African governments’ desire to maximise the benefits of the extractive industries, and their ability to capitalise on strong renewable power fundamentals. While persistently high interest rates and negative climate impacts have sapped momentum, we expect mineral rich states to recruit new partners from the Gulf to support their value addition goals in 2025.
In 2025, Saudi Arabia and the United Arab Emirates (UAE) are set to become increasingly important investors in Africa’s mining sector, deploying capital to offset Chinese dominance in critical minerals, develop alternative sources of supply, and act as a bridge to Western markets.
Economy and business – US protectionism prompts Africa to revisit regional trade ties and look to Europe
In 2024, African economies became ever more integrated in global trade, with Kenya progressing towards a trade deal with the US.
However, the continent remains vulnerable to externalities, including an impending American pivot towards protectionism, which threatens to complicate efforts to renew the African Growth and Opportunity Act (AGOA) beyond 2025. African governments are unlikely to let the crisis go to waste, revisiting existing trade agreements. With AGOA set to expire in September 2025, uncertainty around its renewal will likely hamper investment in sectors such as textiles, agriculture and the automotive industry.
However, Africa is unlikely to be the focus of Trump’s ire, given the modest American trade deficit with sub-Saharan Africa, estimated at US$11 billion.
A continental payment system emerges, as CBDCs become increasingly urgent
In 2024, Africa continued to lay critical groundwork to reduce its reliance on foreign currencies, with different regions adopting competing payment systems and nations exploring advanced digital currency frameworks. In 2025, we expect to see growing overlap between different payment solutions, as well as continental engagement with the BRICS-backed mBridge platform, which promises to expedite de-dollarisation globally.
Debt restructuring delays force G20 to revisit Common Framework
Last year, we lamented protracted debt restructuring negotiations in Zambia, predicted that the future of the G20’s Common Framework for Debt Treatments would hinge on success in Ghana, raised concerns around debt servicing amid persistently high interest rates in Kenya, and forecast sovereign default in Ethiopia. 2024 saw some breakthroughs, with Zambia securing an agreement with creditors after four years of talks, and Ghana sealing a deal with bondholders in half that time.
However, Ethiopia remains in limbo, while Kenya has paid dearly to refinance its debt. In 2025, Africa will continue to contend with elevated borrowing costs, while calls for reform of the international financial architecture are set to grow louder. –Africa Practice.
leeroy mupariri
