Global trade in limbo as tariff war persists

As the global trade war persists between the United States and China, African markets are facing increased uncertainty and challenges. Kenneth Engola, Sales Manager: Global Markets at Stanbic Bank Uganda, joined CNBC Africa to discuss the impact of trade tariffs on African economies, with a focus on Uganda. Engola highlighted three key points that African countries need to consider in navigating the current trade environment. Firstly, the question of whether countries should maintain their current approach or adopt a more inward-looking strategy. Secondly, the feasibility of looking inward given the current realities and context of each country. And thirdly, the potential impact of global trade wars and tariffs on domestic markets. Uganda, as a net importer, is still in the process of growing its export base. Engola emphasized that while looking inward may not be sustainable in the long run, African countries can explore regional and intra-Africa trade opportunities to insulate themselves from the shocks of global tariffs. Uganda, a member of the African Continental Free Trade Area (AFTCA), has access to a potential market of $3.1 trillion and can tap into the $345 million market in the East African region. The recent strength of the Uganda shilling against the weakening dollar has been supported by strong inflows and demand. Engola expects the shilling to maintain its gains, driven by inflows from the coffee export sector. Despite the IMF's trimmed growth projections for Africa, Uganda's economy, as the second-largest in East Africa, is expected to remain resilient. However, the looming uncertainty in global markets and the impact of tariffs raise concerns about debt servicing for African countries. Engola emphasized the importance of fiscal consolidation measures, including domestic revenue mobilization and expenditure cuts, to manage debt levels and ensure sustainability. As African markets navigate the challenges posed by the ongoing trade war, Engola's insights shed light on the strategies and considerations that countries like Uganda can employ to mitigate risks and leverage regional trade opportunities for growth and stability.