Currency Manipulation: A Weapon Derailing African Development Agenda

By Victor MUJIDU

Currency crises in Africa, particularly in countries like Nigeria, Zambia, and Ethiopia, have often been viewed through the lens of economic mismanagement, weak fiscal policies, and external debt burdens.

But financial experts argue that the currency is a weapon that reveals a complex interplay of geopolitical interests, economic dependencies, and power struggles.

In recent years, there has been a growing discourse that suggests Western powers may be exploiting currency crises as a means to undermine China’s growing influence in Africa.

This feature aims to evaluate the currency crises in Nigeria, Zambia, and Ethiopia within the context of Western influence and its potential impact on China-Africa relations.

A Case Study of Economic Vulnerabilities Nigeria, Africa’s most populous country and largest economy, has been grappling with currency instability for decades.

The Nigerian naira has experienced significant devaluation, contributing to inflationary pressures, capital flight, and economic uncertainty.

While domestic factors such as corruption, poor governance, and over-reliance on oil revenues have played a role in Nigeria’s economic woes, external pressures cannot be overlooked.

Western powers, particularly the United States and European Union, have imposed sanctions and trade restrictions on Nigeria, exacerbating its economic challenges.

These actions, often justified on grounds of human rights violations or non-compliance with international standards, have further weakened Nigeria’s currency and hindered its ability to attract foreign investment.

Moreover, Nigeria’s deepening engagement with China through infrastructure projects and bilateral trade agreements has raised concerns among Western policymakers.

The Belt and Road Initiative (BRI), China’s ambitious global infrastructure development program, has expanded China’s footprint in Nigeria, posing a challenge to Western dominance in the region.

Debt Distress and Geopolitical manoeuvring Zambia, once hailed as one of Africa’s success stories, is now mired in debt distress and currency instability. High levels of external borrowing, coupled with declining commodity prices and fiscal mismanagement, have pushed Zambia to the brink of a full-blown currency crisis.

Western creditors, including multilateral institutions such as the International Monetary Fund (IMF) and World Bank, have capitalized on Zambia’s vulnerability to advance their own interests.

IMF-led austerity measures, imposed as conditions for bailout packages, have deepened social inequalities and exacerbated poverty levels in Zambia.

China’s growing presence in Zambia, particularly in the mining and infrastructure sectors, has been met with scepticism by Western powers.

Accusations of “debt-trap diplomacy” and concerns over China’s expanding influence have fuelled tensions between Zambia and its Western creditors.

Balancing Act in the Horn of Africa. Ethiopia, one of Africa’s fastest-growing economies, has witnessed remarkable progress in infrastructure development and industrialization.

However, persistent currency devaluation and foreign exchange shortages have posed significant challenges to Ethiopia’s economic stability.

Western influence in Ethiopia is multifaceted, ranging from development assistance and investment to geopolitical manoeuvring in the volatile Horn of Africa region.

The Ethiopian government’s strategic partnership with China, particularly in the construction of mega-infrastructure projects such as the Addis Ababa-Djibouti railway, has raised eyebrows in Western capitals.

Currency crises in Ethiopia, like elsewhere in Africa, are not solely the result of domestic mismanagement but also reflect broader geopolitical dynamics.

Western powers, wary of China’s expanding influence in the region, have sought to undermine Ethiopia’s economic ties with Beijing through targeted sanctions and diplomatic pressure.

Implications for China-Africa Relations

The currency crises in Nigeria, Zambia, and Ethiopia underscore the complex interplay of economic dependencies, geopolitical rivalries, and power struggles in Africa.

While domestic factors certainly contribute to currency instability, Western powers have exploited vulnerabilities to advance their own interests and undermine China’s growing influence on the continent.

For China, Africa represents a crucial frontier in its quest for global influence and economic dominance.

Through investments in infrastructure, trade agreements, and diplomatic engagements, China has sought to deepen its strategic partnerships with African countries, often bypassing traditional Western channels.

However, Western powers remain deeply entrenched in Africa’s economic and political landscape, leveraging their influence to shape outcomes and thwart Chinese ambitions. Currency crises, whether engineered or exacerbated by external pressures, serve as potent instruments in this geopolitical chess game, undermining China-Africa relations and perpetuating Western dominance.

Way forward 

The currency crises in Nigeria, Zambia, and Ethiopia are symptomatic of broader geopolitical tensions and power struggles in Africa. While domestic factors undoubtedly play a significant role, the influence of Western powers cannot be overlooked.

By exploiting vulnerabilities and leveraging economic dependencies, Western powers have sought to undermine China’s growing influence in Africa. Currency instability, driven by external pressures and geopolitical rivalries, poses a formidable challenge to China-Africa relations and the continent’s quest for economic development and sovereignty.

Addressing currency crises in Nigeria, Zambia, and Ethiopia requires a holistic approach that acknowledges the complex interplay of domestic and external factors.

By promoting transparency, good governance, and economic diversification, African countries can mitigate vulnerabilities and assert greater control over their economic destinies.

Moreover, fostering genuine partnerships based on mutual respect and cooperation can help pave the way for a more equitable and sustainable future for Africa and its people.

Additional reporting by The Economist Magazine.