Since the debt crisis hit developing countries in the 1980s, the International Monetary Fund and the World Bank have introduced structural adjustment programs in more than 40 Sub-Saharan African countries as a prerequisite for obtaining loans (Weider, 2024). These programs required recipient countries to liberalize trade, privatize state-owned enterprises, and cut subsidies and social spending (Weider, 2024). Four decades on, the legacy of these policies is still being felt. A recent IMF report indicates that the growth outlook for Sub-Saharan Africa has been revised down to 3.8% for 2025, whilst debt pressures and a decline in foreign aid threaten investment in vital sectors (UNDP, 2025). More than 40% of African countries are experiencing at least two macroeconomic imbalances simultaneously: high fiscal deficits, double-digit inflation, or low foreign exchange reserves (IMF, 2025b). Amid these fiscal constraints, African nations are facing new barriers in their key export markets. Through the European Green Deal, the EU has introduced policies such as the Carbon Border Adjustment Mechanism and the EU Deforestation Regulation. Although officially aimed at reducing carbon emissions and protecting the environment, these policies are feared to constitute a form of disguised protectionism that hinders market access for African products (Rademaekers et al., 2020; Kareem, 2024). This article analyzes how these two external pressures intertwine to create a structural trap for African development.
The structural adjustment programmes implemented by the IMF and the World Bank in Sub-Saharan Africa have left a complex and controversial legacy. On the one hand, these programmes succeeded in improving macroeconomic indicators in several countries. Ghana recorded GDP growth of around 5% per year following the 1983 SAP, with inflation falling from 75% in 1983 to 20% in 1985 (Weider, 2024). Nigeria also experienced an increase in GDP and investment in the early period following the adoption of SAPs in 1986 (Weider, 2024). However, this macroeconomic success did not translate directly into improved living standards for the people. Currency devaluation failed to boost Ghana’s exports because many other countries took similar measures, leading to a glut of cheap supplies in the global commodities market (Weider, 2024). In Nigeria, the removal of subsidies and currency devaluation triggered a rise in the prices of agricultural inputs and imported machinery, which hit the local agricultural and manufacturing sectors and led to redundancies in the public sector (Weider, 2024).
The legacy of past policies is intertwined with current challenges. The public debt burden in Sub-Saharan Africa averages over 60% of GDP, and debt servicing costs have risen sharply (IMF, 2025b). For low-income countries in Africa, debt interest payments have tripled to around 10% of government revenue (IMF, 2025b). In many countries, debt servicing absorbs more than 40% of government revenue, thereby eroding fiscal space for social services and infrastructure (IMF, 2025b). Faced with this situation, the IMF emphasizes the urgency for African countries to strengthen domestic resource mobilization, broaden the tax base, eliminate inefficient tax exemptions, and capture revenue from new sectors such as digital platforms (UNDP, 2025). However, the average tax-to-GDP ratio in Sub-Saharan Africa remains below 16%, lagging far behind the Asia-Pacific region at 19.3%, Latin America and the Caribbean at 21.5%, and OECD countries at 34.0% (UNDP, 2025).
Amid fiscal constraints and mounting debt pressures, African countries face new challenges in accessing their key export markets. The Carbon Border Adjustment Mechanism, which comes into effect in early 2026, imposes a levy on imports of carbon-intensive products such as steel, aluminium, cement and fertilisers at a rate of €86.68 per tonne (Gershon & Beaufils, 2026). The impact is significant for the African economy. Products subject to the CBAM account for 2.2% of South Africa’s exports but as much as 13% of Mozambique’s exports (Rademaekers et al., 2020). Raw aluminium and pig iron face effective tariffs of up to 30% and 37%, and when the full rate is applied, South African exports subject to the CBAM could contract by up to 26%, whilst Mozambican aluminium exports could fall by as much as 61% (Rademaekers et al., 2020). Ironically, Africa contributes less than 4% to global greenhouse gas emissions yet is disproportionately affected by European climate policies (Rademaekers et al., 2020).
In addition to the CBAM, the EU Deforestation Regulation requires exporters of products such as coffee, cocoa, timber and rubber to prove that their products are not linked to deforestation after 2020. The Prime Minister of Barbados has warned that this legislation will prevent millions of people in Africa from selling their products to European markets (Africa Confidential, 2026). Kenyan officials acknowledge that the majority of their smallholder farmers are unaware of this new legislation, putting them at risk of exclusion from the lucrative EU market (Africa Confidential, 2026). Empirical studies confirm that EU trade policies, particularly technical barriers such as sanitary and phytosanitary standards, have a negative impact on the export competitiveness of vegetables and cocoa from Africa (Kareem, 2024). Any additional technical regulation could reduce the export competitiveness of vegetables by 0.35% and cocoa by 2.14% due to limitations in Africa’s quality infrastructure and technological innovation in meeting the EU’s ever-increasing standards (Kareem, 2024). The EU also imposes tariffs of up to 18% on African agricultural products whilst simultaneously providing massive subsidies to European farmers, thereby creating an uneven playing field and making it difficult for African products to compete, even in their own markets (Kareem, 2024). As a result, Africa remains trapped as an exporter of raw materials and struggles to move up the value chain to higher-value-added finished products (Kareem, 2024).
When these two external pressures are analysed together, a pattern of systemic structural traps emerges. The IMF imposes fiscal austerity through structural adjustment programmes and loan conditionalities, thereby depriving African governments of the fiscal space needed to develop the processing industries, high-quality infrastructure and carbon measurement systems required to meet EU standards (Weider, 2024; IMF, 2025a). Conversely, the EU restricts access for African finished goods through various technical barriers, tariffs, the Carbon Border Adjustment Mechanism (CBAM), and the EU Green Data Regulation (EUDR), thereby forcing Africa to remain a supplier of raw materials (Kareem, 2024; Rademaekers et al., 2020). These policies perpetuate a colonial economic structure in which Africa functions as a supplier of raw materials for European industry without being able to build its own industrial capacity.
Amid this impasse, the circular economy has emerged as a promising alternative paradigm. Using macroeconomic modelling with the E3ME model, a comprehensive study projects that implementing circular economy measures across five priority sectors could boost Africa’s GDP by up to 2.2% by 2030 compared to a business-as-usual scenario (Rademaekers et al., 2020). More importantly, this transition has the potential to create around 11 million additional jobs, which could reduce the unemployment rate by 12% (Rademaekers et al., 2020). From an environmental perspective, the circular economy offers significant benefits, even though the modelling indicates a 0.43% increase in CO2 emissions due to higher economic growth. CO2 intensity per unit of GDP actually decreases, indicating that economic growth becomes more carbon-efficient (Rademaekers et al., 2020).
The agricultural sector offers significant opportunities through the reduction of post-harvest losses. The value of post-harvest losses in Africa amounts to approximately €22 billion per year, equivalent to 1% of Africa’s GDP (Rademaekers et al., 2020). Reducing these losses by 50% could significantly improve Africa’s food trade balance (Rademaekers et al., 2020). Initiatives such as Coldhub in Nigeria, which provides solar-powered cold storage, have been shown to extend the shelf life of fresh produce from 2 days to 21 days and increase smallholder farmers’ incomes by up to 25% (Rademaekers et al., 2020). In the construction sector, innovations such as Interlocking Stabilised Soil Blocks in Kenya and recycled plastic bricks in Côte d’Ivoire demonstrate how waste can be transformed into affordable and environmentally friendly building materials (Rademaekers et al., 2020). The electronics and plastics sectors also offer significant opportunities. Nigeria and Ghana have developed repair and refurbishment networks that employ tens of thousands of people, although these are still dominated by the informal sector (Rademaekers et al., 2020). Companies such as Mr Green in Kenya and Coliba in Côte d’Ivoire demonstrate how plastic waste can be processed into economically valuable products whilst empowering informal waste pickers (Rademaekers et al., 2020). Most importantly, the circular economy is inherently aligned with traditional African values. The practice of repairing broken items, reusing second-hand products, and minimising waste has long been part of daily life for African communities, particularly in rural areas (Rademaekers et al., 2020).
Based on the above analysis, there is a need for more strategic and equitable cooperation between Africa and the European Union. The European Union needs to reassess its trade policies to ensure they do not disadvantage its most vulnerable trading partners. The Generalized System of Preferences could be expanded to cover goods and services related to the circular economy, providing incentives for African countries that adopt sustainable production practices (Rademaekers et al., 2020). The implementation of existing economic partnership agreements must be strengthened by incorporating a stronger sustainability dimension, including specific provisions on the circular economy (Rademaekers et al., 2020). The European Union also needs to step up surveillance at its own borders to prevent illegal shipments of waste to Africa, as well as support capacity-building for customs authorities in African countries to inspect incoming imports (Rademaekers et al., 2020).
African countries require fundamental reforms to the global financial architecture. The IMF needs to recognize that a one-size-fits-all austerity approach is not suitable for all countries, particularly when it hinders the investment required for structural transformation (UNDP, 2025; Weider, 2024). Loans need to be designed more flexibly, allowing fiscal space for investment in strategic sectors such as quality infrastructure and renewable energy (IMF, 2025a; UNDP, 2025). New financing facilities specifically supporting the circular economy transition need to be developed with softer terms and longer maturities (Rademaekers et al., 2020). Closer collaboration between the national development banks of EU member states, European development banks, and African development banks such as the AfDB is essential to align priorities and avoid duplication (Rademaekers et al., 2020).
In order to meet EU standards and compete in the global market, Africa requires massive investment in high-quality infrastructure. The European Union can support the development of accredited laboratories, metrology institutes and inspection facilities that meet international standards (Kareem, 2024). Training programmes and knowledge transfer from European institutions can help strengthen the institutional capacity of African countries (Kareem, 2024). A more structured and institutionalised policy dialogue platform is needed between the European Union and the African Union, particularly one focused on the circular economy. The European Union should also consider joining as a strategic partner in the African Circular Economy Alliance, which would strengthen cooperation and demonstrate tangible political commitment (Rademaekers et al., 2020). Financial and technical support should be directed towards small and medium-sized enterprises and start-ups developing circular business models. European financial institutions such as the European Investment Bank could develop financial instruments tailored to the specific needs of circular businesses, which often require short-term, low-interest financing for pilot projects and scaling up (Rademaekers et al., 2020).
Africa stands at a critical crossroads. The legacy of the IMF’s structural adjustment programmes has restricted fiscal space for development, whilst the EU’s green policies often act as protectionist barriers preventing Africa from industrialising. Amidst this impasse, the circular economy offers hope for building a development model that is environmentally sustainable, socially inclusive and economically self-reliant. The European Union’s role in this transition is crucial. Will the EU be a true partner in freeing Africa from structural shackles, or will it be part of the problem that perpetuates injustice? The answer lies in the political will to reform unfair policies, open up genuine market access, and support Africa’s economic transformation in a sincere and equitable manner.