An IMF country focus published on 1 May 2023 noted that if geopolitical tensions continue to escalate, sub-Saharan Africa could experience an economic decline of up to 4% of real GDP after ten years. This estimate is based on a scenario where the world is split into isolated trading blocs centred around China or the US and EU. The countries of the sub-Saharan region must therefore build resilience to manage the potential changes in patterns of trade and foreign direct investment.

The economic and trade alliances developed with economic partners such as China are advantageous for African countries but they have become more reliant on imports of food and energy and are more susceptible to global shocks. They have experienced disruptions to trade as a result of the problems resulting from the Ukraine war and if geopolitical tensions escalate the countries could face higher import prices or difficulties in accessing important export markets.

In addition to this, there could be further losses if capital flows between trading blocs are disrupted due to geopolitical tensions. This could result in a loss of foreign investment into the region and of development assistance, amounting to USD 10 billion per year. This would also slow technology transfers.

In a scenario where only the US and EU cut ties with Russia and the sub-Saharan African countries can continue to trade freely (strategic decoupling) trade flows could be diverted towards the rest of the world. Countries of the region could find new trading partnerships that could increase intra-regional trade.

African countries need to build resilience by strengthening the ongoing regional trade integration under the African Continental Free Trade Area, reducing tariff and non-tariff trade barriers and strengthening efficiency in customs. Domestic financial markets can be deepened to reduce the volatility that results from too much reliance on foreign inflows. African countries can also build the skills and capacity for exports,

Countries can also identify potential trading opportunities, build the necessary skills and capacity for exports, and improve the business environment by lowering regulatory and tax barriers. Multilateral institutions such as the IMF can support these developments by continuing to facilitate international dialogue to promote economic integration and cooperation.