By Liesl Peyper
The Middle East is playing a growing role in funding Africa, reflecting changing trade and investment patterns in an more fragmented global economy.
Middle Eastern capital flows into Africa in 2022 and 2023 were “three times that of China”, while Middle East-Africa trade now surpasses US-Africa trade, according to Standard Bank Group chief economist Goolam Ballim.
Speaking at a breakfast discussion with speaker and author Bruce Whitfield on the sidelines of the Enlit Africa conference in Cape Town, Ballim said the Middle East is now Africa’s biggest provider of liquidity – in energy, logistics, hospitality and agriculture.
Deeper ties with emerging markets
Ballim framed the shift within a broader realignment of the global economy away from traditional globalisation towards what he called “curated blocs”.
He picked up on a reference by Whitfield to Canadian Prime Minister Mark Carney’s “Middle Nations” remarks at this year’s World Economic Forum in Davos, arguing that the concept was ultimately about the growing strategic importance of emerging markets.
Ballim argues that developed economies increasingly want deeper ties with emerging markets because “they know the US can no longer provide security in time of need”, while Gulf states have realised “the US cannot be their last saviour anymore”.
“I suspect there is no longer globalisation, but rather ‘curated blocs’ – friendshoring, allies shoring – and all of this will be built around commercial trust.”
He describes a new “geographical arch of prosperity” stretching across Africa, the Middle East and the Far East, with each region playing a distinct role in the emerging global order.
“We know the Far East is the world’s catch-up economy,” he said. “The Middle East, or the ‘Middle Kingdom’ is becoming a superpower in terms of liquidity.”
Africa’s growth prospects
Despite short-term disruption from conflict in the Middle East, Ballim believes Africa’s longer-term economic outlook remains strong.
“Africa – in terms of macro-economic prospects – is in 2026 at its best form in decades,” he says, although elevated fuel and fertiliser prices linked to the regional conflict would weigh on growth in the near term, saying “2026 and 2027 will be impaired by the war in the Middle East”.
He cautions that a prolonged closure of the Strait of Hormuz could amplify global economic pressure.
“If it stays closed until end June, the accumulated effect on the world could become more exaggerated,” he said.
However, over a 10-year period, Ballim projects African GDP growth of between 4% and 5%, with East Africa expected to expand by 6% to 7% and West Africa by 4% to 5%.
South Africa, while still likely to be the continent’s slowest-growing major economy, will bring “optionality” value in a more fractured world economy, he adds.
“In the world of friction and fragmentation – southern Africa offers optionality because of its access to critical minerals, energy transition and in terms of the world’s diplomatic search for neutrality.”
China and raw materials
Ballim says the changing flow of capital into Africa forms part of a broader reordering of global power, in which access to resources, rather than military strength alone, is becoming increasingly important.
However, he cautions against reading current shifts as signalling American decline.
“I want to be careful to stress – I’m not saying this is the end of America.”
He says the US still retains formidable advantages through its military spending, financial markets and economic scale.
American military expenditure currently stands at about $1 trillion a year and could rise to $1.5 trillion, while the country’s stock market accounts for 62% of global market capitalisation.
But he argues that the balance of power is increasingly being shaped by who controls the raw materials needed for 21st-century technologies.
“China’s command of precious, rare earth and critical minerals” has become one of the defining realities of the global economy, Ballim says. “China controls [the] upper echelons of the world’s minerals ecosystem required for this century’s consumerism – America doesn’t.”
Access and monopoly over critical resources will determine which nations lead.
He likens the race for dominance in artificial intelligence (AI), immersive technologies and critical resources to earlier industrial revolutions, where countries at the technological frontier shaped global leadership for generations.
“The lesson for this – if we go back to the Industrial Revolution and look at the nations that triumphed then – [is] it was those at the frontier of technology at the time.
“AI, immersive realities: these are the spinning jennies of our time.”
Ballim argues that Washington’s tougher posture towards China reflects an understanding that “America knows it doesn’t have all the cards”, while China has strengthened both its “soft power” and “hard power” through extensive bilateral relationships. – moneyweb