The Global South rises to the forefront of the world’s geopolitical agenda: Botho’s predictions for 2020
recent blog
The Global South rises to the forefront of the world’s geopolitical agenda: Botho’s predictions for 2020
—
January 6, 2020
Welcome to 2020 and the start of a brand-new decade!
The last decade saw emerging markets in Africa such as Ghana become some of the fastest-growing economies in the world. Since 2010, economic growth in low-and-middle-income countries has been two to three times faster than in high-income countries. The ten economies with the highest projected growth rates for the next four years are all in Africa, Asia and Latin America.
Botho analysts have observed three key trends in emerging markets that our team believes will continue into the next decade. Have we got it right? Let us know.
PREDICTION 1
Saudi Arabia became the first Arab nation to take over the G20 presidency in December 2019, nearly a decade after the Kingdom first joined G20meetings at the 2008 Washington Summit. At the time, Saudi Arabia had the tenth largest Sovereign Wealth Fund (SWF) in the world and the second-largest oil reserves after Venezuela while the West suffered from an unprecedented economic crisis. As of 2019, Saudi Arabia still has the second-largest oil reserves globally (269 billion barrels) and Saudi’s SWF, the Public Investment Fund, is now the 11th largest in the world with over $320 billion total assets.
Initially, the Saudi entrance to the G20 reflected the key role the nation played in shaping the global energy market. Today, it’s about more than energy: Saudi’s voice on foreign affairs is increasingly critical due to its growing influence on the geopolitics of the Middle East and Africa as well as the country’s current economic and social transformation, guided by its Vision 2030. The ambitious framework is closely aligned with core G20 objectives of achieving macroeconomic stability, sustainable development, women empowerment, enhanced human capital, and increased flow of trade and investment.
The 2020 G20 summit will take place in Riyadh, Saudi Arabia’s capital, a significant location in light of the two main subjects that dominated the 2019 agenda: information flows and climate change. It will be the first such summit held in an Arab country and will present Saudi Arabia with an opportunity to shape global economic policy beyond just energy.
PREDICTION 2
With players such as Russia taking a more active interest in Africa, the continent’s bilateral and multilateral relations will shift considerably in 2020. While many developed markets have plateaued in their growth and others face a drop in economic growth, Africa is expected to attract many investors and governments who are looking for new partners and higher levels of return than many other emerging markets. And they are wise to take notice: the continent now boasts 5 of the 10 fastest growing markets globally.
Government level and private sector changes within Africa will play a major role in the realization of this prediction. More specifically, the recently implemented African Continental Free Trade Agreement (AfCFTA) indicates the willingness of African governments to work together to promote growth and economic prosperity within the continent. Read more on our view of the future of Russian-African relations here.
PREDICTION 3
Over the last decade, Saudi Arabia, the United Arab Emirates (UAE), Qatar, and Turkey have dramatically increased their physical, economic and political presence in Africa. Policymakers in Riyadh, Abu Dhabi, Doha and Ankara each describe this new power projection as seizing a long-overlooked opportunity. Hosting just a handful of embassies at the start of the decade, the continent now has at least two Gulf states or Turkish missions in nearly every country.
This growth has been particularly striking in the Horn of Africa where Gulf states now play a significant role in shaping political transitions. In 2018, for example, the Ethiopia-Eritrea peace agreement, also known as the “Jeddah Peace Agreement ‘’ was finally signed bringing an end to years of border tension between the two countries. Saudi Arabia played a key role in the mediation and provision of political and financial support in the negotiation of this deal. More on our take here.
Following the ousting of Sudanese President Omar al-Bashir in April 2019, Saudi Arabia and UAE pledged US $3 billion to aid in propping up the economy and bridge the interim leadership to the next election. Qatar has also not been left out: the country recently signed a US $4 billion deal to develop Sudan’s Suakin Island, which is home to one of the most strategic Red Sea ports.
Turkey also has signed free trade agreements with Egypt, Morocco, and Tunisia with agreements with Ghana and Sudan in the process of approval. Officials will also spend time in Kenya, Mozambique, Morocco, Nigeria, Rwanda, and Tanzania in 2020. These expanding relationships boosted bilateral trade between Turkey and Africa to nearly US $24 billion in 2018 from $5.5bn in 2003.
The presence of Gulf states in Africa may not match China’s presence in Africa in the near term. But their accelerating competition will definitely mean more investment for the African continent.
We explore these dynamics in some of Botho’s 2019 reports.