The US, under the directive issued on April 2nd, has declared tariffs of at least 10 percent on all incoming goods, with Nigeria facing a 14 percent levy. Speaking on the sidelines of the International Monetary Fund (IMF) and World Bank spring meetings held in Washington D.C., Okonjo-Iweala clarified that the African continent as a whole would experience a limited direct impact from these tariffs. She pointed out that only a modest 6.5 percent of Africa's total exports are destined for the US, while imports from the US account for an even smaller 4.4 percent of the continent's total imports.
However, the esteemed economist cautioned that these figures, while suggesting a limited overall impact, also highlight a concerning reality: "we're not trading much, which is not a good thing."
Delving deeper into the implications, Okonjo-Iweala highlighted the disproportionate effect on specific vulnerable nations due to reciprocal tariffs. "But the problem is that within Africa, there are a handful of countries that are very severely impacted because they’ve got high reciprocal tariffs put on them, and these are poor countries. I’ll just use two as an example," she stated.
She cited Lesotho as a prime example, a nation facing a significant 50 percent reciprocal tariff. Despite exporting $200 million worth of textiles to the US while importing a meager $3 million in goods from the same nation, Okonjo-Iweala warned that the implementation of these tariffs could shave off almost half a percentage point from Lesotho's GDP growth – a substantial blow for a developing economy. "It will lose a lot of its exports to the US, even though it might gain a little bit by exporting elsewhere. So, the issue is, how can we avoid having such reciprocal tariffs on Lesotho?" she questioned.
The WTO Director-General revealed that discussions are underway to urge the US to consider waiving these tariffs, particularly for the least developed countries. She further illustrated the varying impact across the continent, noting that Ghana faces a 10 percent tariff, while Cote d’Ivoire, a significant cocoa exporter to the US with nearly a billion dollars in trade, is grappling with a 21 percent tariff. Okonjo-Iweala emphasized the potential for Cote d’Ivoire's cocoa income to "disappear across the border if you have differential reciprocal tariffs."
"So, Africa is not scot-free. I’m saying as a whole, the continent is not as impacted. But certain countries are definitely hit, and we have to take care of them," the former Nigerian finance minister asserted.
A Call for Intra-African Trade and Value Addition
Okonjo-Iweala's message to the African continent was clear: the path forward lies in greater self-reliance, with a significant emphasis on strengthening intra-regional trade and adding value to local resources. "It’s very clear. Aid is disappearing [and] we need investment," she stressed.
She underscored the necessity for African nations to proactively mobilize domestic resources to build essential infrastructure and dismantle bureaucratic obstacles that hinder investment. "And this is what we need to do, and we need to trade more. We cannot trade more externally, where our trade is only 3 percent of world trade, or internally, where intra-Africa trade is 16 to 20 percent at most," she lamented.
Okonjo-Iweala passionately argued for a shift towards value addition in African exports to foster job creation and economic growth. "If we don’t add value to our products, we’ll keep exporting the same things: commodities that are not processed. We don’t create jobs. So, we must attract investment to change that, and then trade internally."
She poignantly illustrated this point with the case of Lesotho: "Can I give you one example? Lesotho is exporting $200 billion worth of textiles to the US, and we’re all lamenting [that] this market will be taken away. Guess what? Africa spent $7 billion importing textiles. So, why can’t Lesotho sell its textiles in the African markets? It’s making jeans."
Data from the Observatory of Economic Complexity (OEC) further highlights Lesotho's export profile. In 2023, the nation's total exports amounted to $1.14 billion, positioning it as the world's 158th largest exporter. Notably, its exports have seen a positive trajectory, increasing by $127 million from $1.01 billion in 2018 to $1.14 billion in 2023. The OEC identifies diamonds as Lesotho's primary export ($539 million), followed by non-knit men’s suits ($70.9 million), wool ($62.8 million), knit women’s suits ($61.4 million), and knit T-shirts ($45.1 million). The primary destinations for Lesotho's exports in 2023 were South Africa ($351 million), Belgium ($295 million), the United States ($228 million), the United Arab Emirates ($95.4 million), and India ($86.3 million).
Okonjo-Iweala's analysis underscores the urgent need for African nations to strategically reorient their trade relationships, strengthen their internal markets, and invest in value-added industries to build a more resilient and prosperous future in an increasingly complex global trade landscape.