The Director-General of the World Trade Organisation, Ngozi Okonjo-Iweala, has identified the growing erosion of trust among nations as one of the biggest threats to global trade, investment, and economic stability. Speaking at a fireside conversation in Lagos on Thursday, she argued that rising mistrust is creating profound uncertainty that is directly harming businesses around the world. Her remarks came during the 20th anniversary celebration of commercial law firm Streamsowers & Köhn, where she reflected on the state of international commerce and diplomacy.
Mistrust as a barrier to economic growth
Okonjo-Iweala, a former Nigerian Minister of Finance and the first woman and first African to lead the WTO, said many countries that once viewed each other as reliable partners are now questioning each other's intentions. This shift, she explained, is leading to conflict, missed opportunities, and a fragmented global economy. The current atmosphere of suspicion is especially damaging because it injects unpredictability into business decisions. Companies are reluctant to invest across borders when they cannot anticipate tariff regimes, regulatory standards, or trade policies.
“The single biggest issue—the trust of countries in the world in each other has deteriorated because countries are seeing actions by those they thought were trustworthy that are no longer believable. This current mistrust is not good for the world. Mistrust leads to uncertainty, which is very bad for business,” she said.
The WTO chief nonetheless expressed optimism that global cooperation would ultimately prevail. She noted that no country, regardless of its political influence or economic might, can effectively tackle today's complex global challenges alone. The interconnected nature of supply chains, financial systems, and environmental crises means that isolationist approaches become self-defeating. Okonjo-Iweala stressed that rebuilding trust is not only necessary for trade but also for global peace and prosperity.
From cooperative multilateralism to rivalry
Okonjo-Iweala observed that the world has gradually shifted from what she described as “cooperative multilateralism” to a more competitive international order. In this new order, countries increasingly see each other as rivals rather than partners. This change is visible in the proliferation of sanctions, export controls, and tariff disputes that have escalated in recent years. The WTO has repeatedly warned that such measures can trigger retaliation and create a cycle of fragmentation that harms every economy.
She pointed to the US-China trade tensions as a critical example. The WTO intervened during those disputes, but the threat of further escalation remains. Retaliatory trade measures could force weaker economies to align with competing global powers, undermining their sovereignty and development prospects. Okonjo-Iweala argued that the international community must rededicate itself to the principles of multilateralism, which provide a predictable framework for resolving disputes and expanding trade.
Despite the political headwinds, she emphasized that the appeal of multilateral trading rules has not faded. Countries such as Australia, Singapore, New Zealand, and the United Kingdom continue to embrace the WTO framework because it delivers long-term benefits that outweigh the short-term gains of protectionism. These nations recognize that open, rules-based trade is essential for economic resilience and innovation.
Trade resilience under WTO rules
Delivering what she called a surprising statistic, Okonjo-Iweala disclosed that about 72 percent of world trade still operates under WTO rules. Even amid geopolitical tensions, global trade has proven remarkably resilient. This fact, she said, often shocks critics who assume that the WTO has become irrelevant. In reality, the organization remains the backbone of international commerce, setting the standards for tariffs, cross-border services, and intellectual property rights.
The former Nigerian finance minister explained that the WTO's dispute settlement system, despite its challenges, continues to provide a forum for nations to resolve their differences without resorting to trade wars. She acknowledged that the system needs reform, but argued that discarding it entirely would be a catastrophic mistake. The organization has already shown its value in stabilizing markets during recent crises, including the COVID-19 pandemic and supply chain disruptions.
Okonjo-Iweala called on member states to modernise the WTO to reflect the realities of the digital age and the green transition. She insisted that the rules governing e-commerce, digital services, and environmental standards must be updated to ensure that trade supports sustainable development and inclusive growth.
Opportunities and risks for Africa
Turning her attention to Africa, Okonjo-Iweala said the continent stands at a defining moment in its economic history. Africa is rich in critical minerals, renewable energy potential, and a young, dynamic population. These assets position the continent to play a central role in global supply chains for electric vehicles, batteries, solar panels, and other green technologies. Yet she warned that a lack of political coordination could prevent African countries from fully exploiting these opportunities.
“The opportunities for Africa excite me, but I am also dreading that we will miss those opportunities,” she said.
She urged African governments to negotiate collectively through regional and continental blocs rather than individually. The African Continental Free Trade Area (AfCFTA) provides a framework for continental cooperation, but its success depends on political will and consistent implementation. By bargaining as a unified block, African nations can strengthen their leverage in negotiations with global powers and secure better terms for investment, technology transfer, and market access.
Okonjo-Iweala also highlighted the need for infrastructure development, especially in energy and transportation, to unlock the continent's potential. She said African countries must improve their investment climates, combat corruption, and build the institutional capacity needed to manage complex projects. The private sector, she noted, has a critical role to play in driving innovation and job creation.
AI and the future of development
On the subject of artificial intelligence, Okonjo-Iweala described the technology as both an unprecedented opportunity and a potential source of disruption. AI can transform agriculture, healthcare, finance, and education, especially in developing countries where it can help leapfrog traditional infrastructure constraints. However, without effective governance, AI could exacerbate inequality, automate jobs, and concentrate wealth in a few powerful tech companies.
The WTO has been exploring how to incorporate AI into global trade rules, including issues like data flows, algorithmic transparency, and digital services taxes. Okonjo-Iweala stressed that any regulatory framework must involve developing countries in its design, ensuring that they are not left behind in the digital revolution. She called for "inclusive AI" that promotes shared prosperity and respects human rights.
She also cautioned against a fragmented approach to AI regulation, where different countries adopt incompatible standards. A global consensus on AI norms could facilitate cross-border data transfers and encourage investment, while protecting consumers and workers. The WTO, she suggested, could serve as a neutral platform for such discussions, building on its experience with intellectual property and digital trade.
Leadership lessons and institutional failures
Addressing the theme of leadership, Okonjo-Iweala said listening is one of the most important qualities of an effective leader. Throughout her career, she has faced resistance as a woman in positions of power, but she overcame it by remaining humble, competent, and open to the views of others. She said true leadership is not about having all the answers but about bringing out the best in people and forging consensus.
She also identified leadership, governance, and strong institutions as critical to Africa's development. The economist recommended the book Why Nations Fail by Daron Acemoglu and James Robinson, which argues that inclusive political and economic institutions are the key to national success. African countries, she said, are often rich in resources but poor in institutional quality, which hinders their growth.
“The failure of institutions and the failure of governance and leadership on our continent is what is holding us back. We have what it takes, but we somehow don’t get it right,” she said.
Her remarks underscored the need for a new generation of African leaders who are accountable, transparent, and focused on long-term development. She encouraged young Africans to engage in public service and to hold their governments to high standards.
Nigeria's reform experience
The event also featured senior investment banker Yewande Sadiku, former Executive Secretary of the Nigerian Investment Promotion Commission. Sadiku reflected on Nigeria's banking consolidation and debt relief reforms of the mid-2000s, noting that these measures, though difficult, laid the foundation for stronger financial stability and improved investor confidence.
She said recent improvements in Nigeria's sovereign ratings and renewed recognition as a frontier market indicate that the country is gradually rebuilding investor trust. This progress, she argued, is a testament to the importance of policy consistency and the courage to implement painful structural adjustments.
Sadiku's remarks echoed Okonjo-Iweala's broader message about trust and cooperation. Both leaders emphasized that rebuilding investor confidence and fostering international partnerships require not only sound policies but also a commitment to transparency and institutional integrity. As Nigeria and other African nations seek to attract investment, they must show that they are dependable partners in the global economy.
Source: MSN News