Developing economic trends and challenges in sub-Saharan Africa

We identify newly developing economic trends and challenges that investors and policy makers in sub-Saharan Africa will face over the next five years.

These include the ramifications of China’s need to secure mineral resources versus the impacts of its economic slowdown; the evolving landscape of US trade policies; and the introduction of new EU regulations affecting agricultural exports to the bloc.

We also examine the growing significance of remittances, expanding foreign direct investment from non-traditional sources, and the potential shift towards non-traditional reserve currencies.

We forecast mainland China’s imports of critical minerals from sub-Saharan Africa will remain strong, positioning the country as region's largest export partner by 2026. In 2024, exports to China exceeded 20% of GDP in countries including Angola, the Republic of Congo, the Democratic Republic of Congo, Guinea and Sierra Leone, primarily consisting of mining products such as critical minerals and crude oil.

Mainland China’s economy is slowing and entering a lower-growth phase. S&P Global Market Intelligence forecasts average real GDP growth in China of 4.3% from 2025 to 2030, compared with an average of 6.8% in the five years preceding the COVID-19 pandemic. This deceleration in economic growth, particularly the slowdown in China’s housing market, is likely to dampen SSA’s exports of metals such as zinc, nickel, lead and iron ore.

Counterbalancing this, China’s demand for the region's critical minerals, such as copper, cobalt and lithium, is forecast to remain high, driven by its commitment to green energy transformation and efforts to establish and maintain global dominance in the production of photovoltaic cells, battery cells, electrolyzers, and affordable electric vehicles.

The average Sub-Saharan African country’s total trade with the United States accounts for less than 5% of its GDP. Only South Africa, Nigeria and Madagascar approach this threshold, and all three maintain trade surpluses with the US. Major products traded with the US include motor vehicles from South Africa and textiles from Madagascar, both of which benefit from duty-free access to the US market under the African Growth and Opportunity Act (AGOA). For Nigeria, crude oil continues to be the predominant export.

Elsewhere, while several Sub-Saharan African countries do maintain small trade surpluses with the US, these amounts are relatively insignificant compared with those of other US trade partners. The threat of tariffs on selected US trade with Sub-Saharan Africa has increased, following President Donald Trump’s announcement on Feb. 13. He stated that the Commerce Department and US trade officials will present a report outlining the necessary steps to establish reciprocal trading status, emphasizing that “we will charge them, no more, no less.” In particular, South Africa imposes anti-dumping duties on certain imported goods, specifically targeting selected food products from the US.

AGOA is set for renewal in September 2025 and we project that a revised AGOA is likely to be introduced, rather than the treaty being terminated, as the US aims to enhance its access to critical minerals from Sub-Saharan Africa and to counter China’s growing influence in the region.

Sub-Saharan African countries face significant risk of country-specific issues with the US leading to their exclusion from the benefits of AGOA. South Africa is currently particularly under adverse scrutiny due to US dissatisfaction with its land policies and black empowerment initiatives.

In early February, US Secretary of State Marco Rubio announced his decision to forgo attendance at the Group of 20 (G20) meeting of foreign ministers, which is being hosted in Johannesburg on Feb. 20–21 by South Africa, holder of the G20 presidency in 2025. Following Rubio’s announcement, on Feb. 7, the US government issued an executive order terminating all financial assistance to South Africa, citing serious concerns regarding the country’s land policy and its ongoing genocide case against Israel at the International Court of Justice. The US has historically provided funding for health programs in South Africa.

The suspension of US aid is unlikely to have major impacts on South Africa’s overall fiscal position or access to foreign currency. It does threaten to damage implementation of high-priority AIDS and tuberculosis programs unless alternative funding sources are developed.

For countries where US trade is relatively limited, the US government has additional leverage tools to negotiate its objectives without exclusive concentration on trade tariffs. A notable example of this approach is the announcement in January 2025 of a 90-day suspension of funding for US aid projects, during which the US government will conduct a “review” to ensure that these initiatives align with the US’s priorities. The suspension of foreign donor aid from the US threatens damage to recipients’ fiscal positions and capital flows, particularly for nations such as Malawi, Mozambique, and Somalia, should the existing pause become permanent.

Sub-Saharan African trade diversification efforts with a broader range of counterparties are likely to continue. The development of trade flows with non-traditional trading partners such as Saudi Arabia, Singapore, Turkey and the United Arab Emirates is likely to enhance export volumes from Sub-Saharan Africa to these destinations and diversify the region's trade relationships over the medium term.

This diversification of trade partners offers several advantages, including reduced dependence on a limited number of traditional markets, increased resilience against economic fluctuations, and access to new investment opportunities and technologies. Additionally, engaging with a broader range of countries may foster innovation by broadening the region’s sources of foreign direct investment, with such investment potentially helping to create more-competitive pricing for Sub-Saharan African exports. 

Planned EU regulations threaten to curtail agricultural exports from sub-Saharan Africa and are facing pushback within the bloc to avoid damaging EU supply chains and competitiveness. Sub-Saharan Africa relies heavily on the EU as a market for its exports of agricultural products, particularly cocoa, coffee, tea, vanilla and citrus fruits. Since the COVID-19 pandemic, the demand for these products has risen sharply, with vegetable exports to the EU now accounting for nearly 40% of all vegetable exports from the sub-Saharan Africa region.

This reliance faces challenges from the EU’s new anti-deforestation regulations, which require food companies to prove that their imports of specific high-risk products, such as coffee, cocoa and palm oil, do not come from deforested land. As currently scheduled, these regulations will apply to large companies starting Dec. 30, 2025, while small companies must comply by June 30, 2026.  

In addition to the anti-deforestation measures, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) mandates that companies carry out thorough due diligence to identify, prevent and mitigate potential and actual adverse impacts on human rights and the environment.

These combined regulations represent a threat to sub-Saharan Africa's exports to the EU. In many cases, the necessary adjustments will prove difficult to implement and imply likely changes to sourcing and supply chains, leading to probable reductions of SSA’s market share in the EU. We identify two countries as particularly vulnerable to these potential policy changes: Côte d’Ivoire, which supplies approximately 40% of the EU’s cocoa bean imports, and South Africa, responsible for around 20% of the EU’s citrus fruit imports.

The pending risks to sub-Saharan Africa's agricultural exporters are likely to be mitigated by the postponement or relaxation of some of these regulations. Both France and Germany have urged the European Commission to delay the implementation of the measures and to reduce their requirements to avoid damaging European competitiveness, also suggesting that their complexity will damage European supply chains.

The sub-Saharan Africa region is expected to become increasingly dependent on remittances, with their inherent volatility presenting significant challenges for currency stability. Both remittances and official development assistance (ODA) face significant risks in the current political and economic landscape.

In sub-Saharan Africa, remittances have surpassed foreign direct investment and, while their growth may be slowed by US policy actions, we project that remittances will exceed ODA by the end of President Trump’s second term of office in January 2029, given the high likelihood of substantial reductions to ODA. The United States also remains the largest source of remittances to the sub-Saharan Africa region, with substantial transfers of money sent primarily to Nigeria and Ghana, according to the latest KNOMAD/World Bank Bilateral Remittance Matrix of 2021.

The immigration policies introduced by the US administration could impact the growth of remittances, likely exacerbating the economic consequences caused by reduced ODA. Proposed US government measures threaten to disrupt remittance flows to sub-Saharan Africa, increasing hard currency shortages and placing additional pressures on sub-Saharan Africa currencies and external balances. Countries most heavily reliant on remittances and ODA from the US include Gambia, Guinea-Bissau, Liberia and Somalia.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.