Global Trade War and the Africapitalism Gospel

Obinna Chima

Basic Economics textbooks teach that the basis for international trade lies in the principle of comparative advantage and the potential gains from specialisation and trade.

This means countries benefit by focusing on producing goods and services they can produce relatively more efficiently and then trading these goods for other products they are less efficient at producing.

Trading internationally is a common way for businesses to transform themselves into more profitable, successful, and stronger entities. It helps to expose their brands to new countries and open innovative markets for promoting their goods and services. It is an essential element in providing employment, raising living standards, and enabling the global population to enjoy a greater variety of products and services, giving it the power to control the world economy with a larger share of GDP devoted to imports and exports.

Unfortunately, since returning to the White House, President Donald Trump is gradually dismantling the basis for international trade and has wielded tariffs with unprecedented breadth and aggression.

On April 2, 2025, a date Trump proclaimed as ‘Liberation Day,’ his administration announced the most sweeping tariff hike since the Smoot-Hawley Tariff Act, the 1930 law best remembered for triggering a global trade war and deepening the Great Depression.

The levies were against roughly 60 of America’s trading partners.  As tariffs are essentially taxes on imports, costs of intermediate and final goods are expected to increase for consumers worldwide, even for countries that haven’t imposed any new tariffs.

According to the US President, part of the rationale behind the ‘Liberation Day’ was to correct decades of open US markets being met with asymmetrical foreign tariffs and other barriers that boxed out the country’s goods. He believes that only aggressive retaliation can reverse the damage and pull manufacturing back onshore.

But with major market turmoil that followed the announcement, with sell-offs sparking trillions in losses across the world and many Americans expressing concerns of prices rising as recession looms, the US President announced a 90-day pause on the policy.

However, as the thunderous drums of a global trade war echo, shaking the foundations of established economic orders, Africa finds itself at a critical juncture.  While some top US trading partners have since responded to the United States’ reciprocal tariffs, African countries that are certainly going to be hit by this global trade distortion are yet to outline proper measures to navigate this challenge.

Presently, Africa’s total exports to the United States have increased by 43 percent over the past two decades, from $28 billion in 2000 to $40 billion in 2024, even though exports to the United States from the continent have remained primarily raw and extractive.

The overall effect of the new US trade policy in the coming months would likely be slowly rising costs of goods in African countries as seen in the wake of the Covid-19, especially with the risks it poses to the African Growth Opportunity Act (AGOA).

But the raging global trade war presents both challenges and opportunities.  This is where the Africapitalism gospel becomes more relevant than ever. Africapitalism, which is championed by the Chairman of the United Bank for Africa (UBA) and Heirs Holdings, Mr. Tony Elumelu, advocates for a form of capitalism that prioritises long-term economic and social value in Africa. It’s a call for the private sector to play a leading role in the continent’s development, not just for profit, but for shared prosperity. In the face of global trade uncertainties, this philosophy offers a beacon of hope.

Africapitalism acknowledges that the public sector is insufficient to drive Africa’s development and provides an alternative to government-only methods of market regulation and the delivery of necessary social services.

It calls for the creation of a new Africa via the initiatives of a resurgent private sector that will deal with societal challenges by starting companies and creating wealth for the local community.

Indeed, Africa offers countless untapped economic opportunities as the last frontier of capitalism. That is why the continent needs an endogenous growth model in which it manufactures goods for its markets as a first foundation, spreading out regionally from that base and emerging as an economic power in its own right through competitive advantage.

One way to do so is to invest heavily and simultaneously in job-creation strategies and in education systems that will create skilled workers to take opportunities that will be created by expanding economies.

Africa’s growth profile is, among other things, driven by its rapidly expanding consumer markets as well as its private sector.  From Lagos to Nairobi, Accra to Lusaka and other major cities in the continent, with innovations in the mobile payment space, e-commerce, technology, agriculture and other critical sectors of the continent, promoters of Africapitalism strongly believe that African youths, if given the required support can compete with their peers in the global market, thereby expanding trade in the region. This would help lift the continent out of its present economic predicament.

Additionally, proponents of Africapitalism maintain that the private sector can also contribute to the continent’s development by making long-term investments in critical sectors that will foster social welfare and economic prosperity.

Elumelu preaches to anyone who will listen that with Africapitalism, Africa’s policymakers should “run government like a business,” with legislatures holding administrations responsible in the same way that they hold chief executives accountable. For him, the private sector should aggressively invest even in difficult socio-economic situations because the continent cannot flourish through government alone.

The founder of the Tony Elumelu Foundation strongly believes that entrepreneurship is a vital tool for eradicating poverty in Africa. More importantly, for him, entrepreneurship would get youths in the continent busy and keep them out of social vices as well as create employment opportunities in the continent.

According to the Chairman and Founder of Heirs Holdings, Africa’s development requires massive private global capital to fire and power investments in the area of infrastructure, to create employment and eradicate poverty.

For Africa, the global trade wars highlight the dangers of over-reliance on single markets. Africapitalism encourages the development of robust, diversified African economies, less susceptible to external shocks. By fostering intra-African trade through initiatives like the African Continental Free Trade Area (AfCFTA), the continent can build resilience and create its own economic sphere. 

Furthermore, Trump’s protectionist policies can be a catalyst for Africa to strengthen its own manufacturing and industrial sectors. In a world where capital flows are looking for stable returns, Africa, by embracing Africapitalism, can present itself as a region where investments do well. This, however, requires strong governance, transparent regulations, and a commitment to ethical business practices.

Therefore, while the storm rages and uncertainty beclouds global trade, Africa must seize this moment to forge its own path, guided by the principles of Africapitalism. By prioritising sustainable growth, inclusive prosperity, and responsible investment, the continent can not only weather the storm but emerge stronger than ever. The time for Africa to define its economic destiny is now, with Africapitalism gospel as the guiding light, illuminating the path towards a prosperous and equitable future.