What Trump could mean for Africa – Graham Palfery-Smith, Board Advisor

What Trump could mean for Africa – Graham Palfery-Smith, Board Advisor

However unpalatable some of us might find it there is a very real possibility that Donald Trump could be the next President of the United States and ergo the most powerful man in the world.

What might this mean in practical terms for Africa?

Aside from the prosaic – some celebrities, such as Samuel L Jackson, have threatened to move to Africa if this happens – there could be a profound impact on the continent as illegal immigrants, including Africans, are returned to their countries.  Heightened scrutiny of potential refugees will also significantly affect some countries.  For the last several years, Sudanese, Eritrean, and Congolese people have consistently been in the top 10 countries of origin for U.S. refugees.

Of course the proposed ban on Muslims entering the US, even if temporary, is going to make it very difficult for a lot of Africans.  It is estimated that 30% of sub-Saharan Africans are Muslim.  Note this, approximately 50% of Nigeria’s population is Muslim, including President Muhammadu Buhari.

On another serious note, Trump’s military threat to put ‘boots on the ground’ to defeat ISIL could have a knock on effect by weakening African affiliates such as Boko Haram.  However conversely, by appropriating Middle Eastern oil controlled by ISIL, currently another of his proposed policies, he could spark a massive conflagration in a region that hardly needs another war and this would both directly and indirectly affect Africa. The fact that this could put up the price of oil again would likely not be the most significant of the possible consequences.

Trump’s attitude to trade, “America first”, is highly prejudicial to other countries as it is so protectionist so, whilst this might find some right-wing resonance in the US, it is not going to help producers in Africa at a time when the agri sector is expanding on the continent.

Picture – (By Michael Vadon (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons)

More worrying would be his highly negative attitude to foreign direct investment (FDI) and aid which could cause a great deal of pain on the continent.  Indeed his financial policies, if one can style them as such, have caused great concern across the global financial community.

According to Nomura, the Eastern Europe, Middle East and African (EEMEA) Region has relatively little exposure to US markets, with South Africa and Russia coming in at around only 10% of domestic value.  However, banking exposure data, showing the amount of US credit in various countries as a share of GDP for countries in the EEMEA region, is highest in South Africa, at 43% of GDP.

“This reflects the role of US banks in project and trade finance, as well as short-term financing through the balance of payments,” Nomura said.

A more protectionist US would mean much less investment in riskier markets, including African ones. Presuming his tough stance on aid played out in real time, this would also have a serious impact.  Rwanda, for example, reportedly relies on foreign aid for about 50% of its budget.

There is some good news though.  It looks likely, as I’m writing, that Trump will not make it into the White House mainly because of the recent videos released (and those yet to come apparently), so, like he said in the third and final presidential debate, we will have to wait and see.

Graham Palfery-Smith is a Board Adviser to a number of companies internationally including Executives in Africa

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