November 16, 2016

President Elect Donald Trump: What Could This Mean For Africa?

By Anointing Momoh and Joseph Ishaku

After a closely contested election; one that has been described as one of the fiercest in its history, the United States of America has elected Republican candidate and billionaire businessman Donald John Trump as its 45th president. On the eve of the U.S. elections, global markets experienced moderate upward swings even as investors hoped for a safer and more experienced Democratic candidate Hilary Clinton Presidency. Following the outcomes of the elections, major markets around the world have plunged as investors looked to dump their U.S held stocks for safer investment options including gold, and the Japanese Yen. Although the markets stabilized fairly after the President-elects acceptance speech, the sharp market swings is however a synopsis of the far-reaching impacts of the dynamics in the domestic U.S. economy on the global economy.

Throughout his campaign, Donald Trump made several promises of an overhaul of the U.S economy and a radical departure from status quo. He touched on several issues which though particular to the U.S, prove to have implications of global politico-economic magnitudes – U.S foreign policy, Immigration, U.S trade policies and climate change are some of these areas.

Now that it is determined, what does a Trump presidency mean for Africa, and Nigeria in particular? This short article, tries as succinctly as possible to examine and answer this question. It briefly touches on some keys areas of US engagement in Africa, and by extension Nigeria; notably trade, migration, climate change, diplomacy, foreign aid and the war on terrorism in Africa.

Firstly, U.S trade with sub-Saharan Africa remains underdeveloped. Exports under the African Growth and Opportunity Act (AGOA) declined by 50 per cent to $11.6 billion in 2014 mainly due to reduced petroleum exports to the U.S. – this was after a period of sustained increase from $7.6 billion to $24.8 billion between 2001 and 2013. Evidently, while the AGOA does not address all U.S-Africa trade concerns, it has provided preferential access for sub-Saharan Africa exports to U.S markets under its Generalized System of Preferences (GSP). AGOA, combined with the GSP, provides duty-free access to the U.S. for 6,400 product lines from 38 countries in sub-Saharan Africa. More so, of total U.S. imports from AGOA countries, around70 percent enter under AGOA[1]. Going forward, it is expected that greater engagement would be achieved for U.S- Africa trade relations under AGOA. However, on the platform of a Donald Trump Presidency, the prospects of greater trade engagement between Africa and the U.S. appears bleak.

President Elect Donald Trump rode to victory on the promise of a more protectionist America; one which will impose tariffs on other nations, tear-up existing trade deals involving the U.S. this will greatly jeopardize the open global economy. While it could be argued that this would be targeted majorly at industrialized nations which in Trumps opinion have taken American jobs, it does not in any way portend a better deal for African countries. Rather, a protectionist-America world will make it increasingly difficult for African businesses to compete globally, confine Africa to a shrinking share of international trade, and further diminish its attractiveness as a destination for investment. This is in no way good news for African countries which are currently engaged in trade negotiations as well as embarking on an ambitious programs of trade integration. Furthermore, Donald Trumps Presidency is likely to put a snag on International development assistance to developing and less developed countries – most of which are in Africa. And so the continuity of several U.S. government led development projects in Africa is threatened.

Secondly, significant number of immigrants in the US are from Africa. More particularly, 16 per cent of the about 1.5 million Sub- Saharan Africa born migrants in the U.S as at 2013 were from Nigeria[2]. To this effect, of the $21 billion which Nigerians at home received as remittances in 2015, 27.1% ($5.7 billion) was from the U.S. A close look at Trumps anti-immigration rhetoric might reveal that those that will be affected the most will be undocumented immigrants. This is not to say tighter immigration laws that may come would not reduce the rate at which lawful immigrants enter the US. If that happens, what may be of concern is the possible drop in remittances coming from Africans resident in the U.S. particularly remittances to Nigeria which makes up two-thirds of the total remittances to Sub-Sahara Africa[3]. Looking at immigration from another angle, the US labor market has benefitted tremendously from talents coming from all over the world. This has negatively affected Africa in the form of brain drain. If the US limits its demand of talents and expertise from around the world, the African labor market might benefit from having a better pool of human resource.

Thirdly, the strategic leadership of the next U.S. president is very important in terms of policy and engagement towards the attainment of the global climate change goals, as articulated in the United Nations Framework Convention on Climate Change (UNFCCC) the Paris Agreement. The U.S is currently the second largest emitter of Green House Gases in the world second to China. Considering the position of the U.S. as a leader in technological innovation, its next president will to a large extent determine whether the world can reach the global climate change goals it has set for itself. Although President Barack Obama was one of the world leaders who signed the Paris agreement, the next U.S. President (Donald Trump) doesnt seem to be a firm believer in the need to curb climate change. Republicans tend to be fairly strong supporters of the fossil fuel industry, and to various degrees deny that climate change is occurring. Particularly, in the past, the President elect has suggested that climate change might be a hoax invention from China, in order to undermine U.S. industrial interests and job creation[4].

Climate change is a major challenge for all countries across the globe, but for African countries it represents a particular threat. This is particularly so given Africas geographical position and limited adaptive capacity, exacerbated by widespread multi-dimensional poverty and existing low levels of development. In addressing climate change issues, the next U.S president should be seen to galvanize action, not only in reducing own (U.S) emissions, but also through its own example and via diplomatic engagements, which can serve as a powerful incentive for the rest of the world to stay on the necessary path towards the deep emissions cuts needed to stabilize the climate at lower-risk levels. In a case where this is lacking, the adverse impacts of climate change on the African continent will obviously get worst in coming years. On the flipside, the lackluster attitude of the U.S. president elect to the issue of climate change might present some quick wins for African countries whose economies are largely dependent on their exports of fossil fuels Nigeria is a case in point. This would mean that ongoing talks of restrictions to funding and investment in greenhouse gas emitting activities could be considerably stepped down. But then in the long-run, the harsh realities of a world on the precipice remains with the threat of climate change.

Fourthly, Donald Trumps stance in the area of U.S foreign policy has perhaps sent the most shivers down the spines of many observers on the international relations scene. In his campaigns, he made a case for U.S. allies to pay for a proportion of U.S defense budget. This would be a basis for continued military alliance and engagement by the U.S. in these countries. As observed by many, this call undermines the role of the U.S as the Police of the World – which it has played successfully to a greater degree since the end of the Second World War. The implications of such U.S. inaction – which Trumps foreign policy suggests – can only be left to the imagination. Meanwhile, a look at the foreign policy views expressed by the President-elect during his campaign, suggest a staunch determination to eliminate not only those directly affiliated with ISIS, but also their families. Given the growing number of terrorist organizations in Africa which have declared an affiliation with ISIS (including Boko Haram in North-East Nigeria), this could mean hundreds if not thousands of civilians killed in drone strikes during his administration[5]. This would prove to be an impetuous approach to counter-terrorism and one which does not cast good prospects for the politico-economy of Africa.

Finally, the impact of a Trump presidency on the dollar-naira exchange rate is of interest to Nigerians. The Nigerian Financial system (and for several other African countries) is not integrated enough to reflect immediate shocks from the information effects of the outcome of the U.S. elections. In the same vein, in the longer term the effect of any major crisis in the U.S. financial economy on the Nigerian financial system will be minimal as was the case during the 2008 global economic meltdown. However, due to globalization and interconnectedness of markets, the Trump Presidency could have some other channels through which it could eventually have an effect in the Nigerian financial economy. Here, a case is made for possible price fluctuations in commodity markets as a response to Trumps policies to have an impact on the exchange rates (especially for crude oil in Nigeria). Meanwhile it is expected that current economic, political and structural factors will continue to drive the dollar-naira exchange rate.

In conclusion, while there could be several other implications of the Donald Trump presidency for the politico-economy of Africa some of which could be positive they are quite less obvious at the moment. We can only watch with the hope that African leaders in their own right will step up to whatever occasion the Presidency of Donald Trump serves. While global events and more specifically a Donald Trump presidency – might have effects on African countries, more deterministic are the domestic policies put in place by respective countries. African countries could pursue greater regional and sub-regional integration while addressing political patronage and corruption in the drive towards sustainable development.