Policymakers, especially in Africa, are facing unprecedented trade-offs between economic opportunity, national security, and climate sustainability.

This article has been in the making for a while and the rapidly evolving global context makes it challenging to account for all the nuances, but some fundamental considerations persist. This is the first in a series of reflections we will publish on current issues and their impact on economic development. These reflections are not intended to provide answers but to raise questions for consideration and we welcome contributions and collaboration.

The shifting landscape of development assistance

Since early 2025, there has been a resurgence of analysis and much introspection on the impact of development work and the seeming overreliance of African governments on development aid. Current discussions have been fuelled by the recent upending of US foreign assistance, coupled with concerns about the extent to which other countries may follow suit. However, the questions around the nature, focus, impact and longevity of development assistance are not new and have been brewing for some time.

We have been reflecting on Cenfri’s continued role in supporting sustainable economic development in Africa and across other developing markets. We typically feel at home in the realm of economic research, financial sector and digital transformation advisory, and data analysis but, presented with our insights and findings, stakeholders are increasingly asking us to tell them what they should do to solve the underlying problem rather than address a subset of challenges.

We are being asked to weigh in on complex trade-offs and suggest, and in some cases write, policies or regulations that would set the country or agency on a specific path. The requests pique our interest but are intimidating – straying further from the technical and closer to the political.

Trade-offs policymakers face

Previously, policymakers would have been referred to examples from other “more developed” markets or at least to a stylised set of options, but these examples no longer seem to hold and, perhaps, never did. Countries are grappling with charting (new) pathways to prosperity in a digitalising, climate-constrained and fragmenting global economy.

Policymakers everywhere face numerous complex trade-offs, but we think these are particularly tricky for policymakers in Africa to navigate as they pursue economic development with significant national debt burdens, longstanding challenges in getting fair value out of global value chains and during a time when the window for foreign financial assistance appears to be closing. These challenges play out against a backdrop of precarious geopolitical considerations, as well as the age-old tension between short-term interests and longer-term ambitions or national interest vs global prosperity.

While they are interlinked, we think the following categories of trade-offs are worth highlighting:

• Economic opportunity and security: On the opportunity side, this includes securing growth and, particularly, increased employment. On the security side, this includes ensuring the sufficient and reliable supply of critical goods and services, including energy, food and water. While we think it is useful to distinguish economic from national security, failure on issues of economic security may create fertile ground for domestic unrest and broader security concerns.
• National interest, security and sovereignty: While connected to economic security, national security relates particularly to the ability of governments to retain their agency to act in their national interest and manage the risks resulting from exposures beyond their sovereign control. This may include military risks, cross-border water dependencies, dependencies on undersea cables but also extends to digital dependencies resulting from e.g. the adoption of foreign-controlled, and increasingly cloud-based, infrastructure for government (i.e. digital public infrastructure or DPI) and business.
• Climate sustainability: We see climate considerations as a particular component of sustainability around which clear trade-offs are observed. We notice how advanced economies are making domestic trade-offs against climate sustainability in favour of national and economic security and opportunity while still prioritising climate sustainability in their foreign development programming and as requirement for funding. A key consideration is whether incentives around climate sustainability are likely to be completely undermined unless the other trade-offs are sufficiently dealt with.

Applying this framework to current global economic developments helps us to digest what is happening, to better understand how these could evolve and how they will affect the options for sustainable economic development as well as the “market for development” in which we work.

Geopolitical tensions and economic security

Political instability and conflict exacerbate national security and economic opportunity trade-offs. Current conflicts in Africa are causing severe harm to people and are also occupying political attention and undermining the ability of these countries to attract foreign direct investment or undertake productive economic activity.

Of course, the adverse effects of conflict are not confined to Africa. The decision by several European countries and the UK to bolster defence spending in response to Russia’s military actions and other perceived threats, comes at the expense of foreign aid spending and climate commitments. The apparent tolerance for challenges to sovereignty on the global stage risks encouraging further conflict on the continent of Africa and elsewhere.

Combining heightened national interest with countries’ views on their economic security results in the weaponisation of global value chains and trade wars. Wars of any kind impose binary choices, inevitably resulting in suboptimal outcomes for the African policymakers seeking to diversify their economic opportunities.

It is not just a reduction in foreign development aid that is of concern to policymakers in Africa (and other emerging markets). Issues of national interest and the fear of dependency on global partners have surfaced under headings such as “ally-shoring”, “global resilience” and “economic statecraft”. In its October 2023 special report, The Economist refers to “homeland economics” as the efforts to reduce the risks to a country’s economy (particularly those resulting from exposure to and dependence on global markets). Initiatives intended to ensure a national economy becomes less reliant on external suppliers will translate to protectionist policies and constrained opportunities to export to those markets.

Several African countries have raw materials necessary for these manufacturing efforts, which should present economic opportunities. Free and fair trade of these products is, however, being affected not only by illicit business, but potentially by a US approach to foreign policy that increasingly suggests it will proffer support in exchange for preferential access to rare earth elements and other critical minerals.

In a politically polarised environment, forging allegiances is tricky. The technology war between the USA and China may compel developing countries to choose between the USA or China as its ally. This may be an implicit rather than explicit choice – countries opting to use Chinese digital technology may find themselves precluded from integrating US digital systems (including those required for DPI) for example.

Decisions around partnerships will be affected by the past (previous alliances, but especially debt as a manifestation of past relationships) and the future (largely determined by the strength of the Chinese economy as the provider of future opportunity – and possibly debt). The combination of these factors could force developing countries into exclusive and suboptimal partnership decisions. If you have high levels of debt to the West, you may be forced into economic and tech decisions that may be suboptimal for your future. If you depend on Russia for military aid or quasi-military support to secure your government or strategic assets, you may not be able to secure partnerships with Ukraine-allied governments.

There is further nuance to be explored here, including the extent to which the EU exerts leadership, growing membership of BRICS and the alignment (or not) of powerful private sectors interests with stated national positions.

The problem is not just that these decisions are complex, but that they are happening at a time when the global political order is in flux and some traditional alliances may shift.

Climate sustainability vs energy security

Events over the past few months have delivered several examples of the apparent subsummation of sustainability objectives in favour of bolstering economic opportunity and security or to align with a new political agenda.

The US government under the Trump presidency is unequivocally prioritising economic opportunities and security for the US at the likely cost of sustainability considerations that extend beyond the USA. The Ukraine conflict may result in European countries favouring defence spending over climate finance. Political pragmatism saw the inclusion of climate financing in Germany’s extraordinary budget but this had a domestic focus without provision for international climate finance. The Netherlands has already experienced the complexity of making environmental choices at the perceived cost of economic opportunity.

And yet many African countries, with an inarguable need to stimulate economic opportunity creation, are being pressured to pursue renewable energy programmes that do not present a complete and sustainable solution to their existing energy insecurity and urgent need to bolster developments likely to translate to job creation. This is particularly relevant in countries with hydrocarbon energy reserves.

The Just Transition framework is an attempt to address some of the trade-offs but its application in emerging markets is still being tested. In the case of South Africa, funding via the Just Energy Transitions Partnership will deliver a relatively small amount of grant aid and a bigger proportion of concessional loans. In spite of the partnership, South Africa’s fiscal constraints, high unemployment rate, persistent (but improving) electricity supply crisis and the US’s withdrawal from the international Just Energy Transition Partnership will place continued pressure on these economic opportunity/ energy security/ sustainability policy trade-offs.

Navigating optimal choices

There are numerous other manifestations of complex trade-offs and those are not confined to countries in the Global South. What is clear is that, as alignment of development aid and strategic interests become more pointed and likely more contentious, African policymakers will need to carefully consider the trade-offs they are willing to make.

On the positive side (and we do agree with many commentators on the opportunities presented to Africa by the current crises), the crystalising of trade-offs may force decision-making that has long stalled. Those in a position to influence the progress of the SDGs to 2030 (and development targets beyond that) should expect developing countries to be bolder in opposing trade-offs that Global North countries appear to be reconsidering.

As we reflect on these complexities, several questions arise:

• What does economic development mean in this context?
• What are the available pathways to prosperity in a digitalising, climate constrained and fragmenting global economy?
• How can various stakeholders in the development space (including Cenfri) contribute to charting a new course while the world remains fragmented?

Some of this feels “above our pay grade”, but we think it is important to contribute to the growing discourse. Whether you agree or particularly if you disagree, we would value your insights.