Comment: Trump's victory and the path ahead for Africa

353116961The US billionaire, businessman and celebrity Donald J. Trump today achieved the most improbable of political victories, storming the election polls to secure his position as the 45th president of the United States. But what does the result hold for US-Africa relations?

In a campaign unequivocally populist in nature and frequently dogged by personal rather than political point scoring, Trump defeated Hillary Clinton by securing the 270 electoral votes needed to unlock the doors to the White House on an unprecedented day for US, and world, politics.

Trump, 70, who at the start of the campaign was touted as an 150-1 rank outsider to become the leader of the free world, swept to key victories in states including Florida, Ohio and Pennyslvania.

In his president-elect speech, he pledged to "bind the wounds of division", in a clear link to his campaign motto to "make America great again". 

World markets shuddered this morning, as news broke of Trump's ascendance. The FTSE 100 shedded 2 per cent – a softer dip than the market expected – at the start of trading, before clawing back some of its losses throughout the day.

Germany's Dax Index opened with a heavier fall of approximately 3 per cent before paring back losses to trade down at around 1.5 per cent. Meanwhile, Japan's Nikkei 225 stock index was down about 5 per cent on the news.

However, Wall Street stood firmer, with the S&P 500 slipping a mere 0.4 per cent in early trade, the Financial Times reported earlier today.

The overall reaction to the Republican's win is perhaps no surprise, with markets interpreting a possible Trump victory  and any resulting impact on foreign trade  with caution in the last few months, during what has been a fractious campaign between Trump and Clinton.

"With so many years of low and non-inclusive growth, we are witnessing the politics of anger at play, a phenomenon that polls have underestimated on both sides of the Atlantic," Mohamed El-Erian, chief economic advisor to Allianz told the FT.

It is clearly too early to assess any definitive impact on the African markets until Trump is sworn in on the steps of Capitol Hill in January 2017. For now, we can mull over the possible implications of the result. 


The "Trump effect"

The "Trump effect" on markets in the sub-Saharan African region is expected to be "broadly neutral to negative", according to a cross-asset strategy paper from frontier markets investment bank Exotix. 

The firm detects that Africa is unlikely to be made a foreign policy priority in the same way president Obama's early trip to Ghana initially put continental relations in the spotlight.

As such, any initial economic benefit from higher commodity prices and lower funding costs could be offset by protectionism and domestic currency weakness, the firm suggests.

"After an expected market sell-off on increasing risk aversion, which might be negative for frontier external debt markets, including high-yielding SSA names (such as Ghana, Zambia and Angola) the expected impacts will flow through the usual channels of US policy settings and travel/remittances/investment," the firm said in its report.

"Our expectation of a more dovish path for US interest rates may be supportive of EM risk (as it keeps financing costs down), and hence help those with big financing plans (Nigeria, Angola, Ghana), but this may be offset by rising country risk premia (due to uncertainty over trade policy and threats of protectionism, as well as generalised economic uncertainty under Trump) while a weaker dollar (and any associated EM currency strength) and higher commodity prices, at least initially, may benefit some countries (commodity exporters such as Nigeria, Angola and Zambia)."

In the case of Nigeria, the company says it expects to see little impact on valuations in the country. US oil imports , which account for the vast majority of Nigeria's foreign currency revenues, continue to be low, and as such, lingering concerns over exchange rates are likely to have more of an impact on US appetities for invesment in Nigerian stocks and bonds, the paper notes.

"Having said that, a rise in oil prices would be clearly positive, but the same would apply to other commodity exporters," it said.  "As such, it is not clear that there would be country-specific conclusions for Nigerian bonds and stocks from a Trump presidency."

Leading African organisation the Institute for Security Studies (ISS), which provides research and expert policy advice to advance human security and sustainable development, offers a different view.

In an online post written prior to the announcement, Zachary Donnenfeld, researcher, African Futures and Innovation at ISS, said the election result would be particularly instructive for Africa's population.

NATO's withdrawal from Libya following the US's intervention to oust Gaddafi created a power vaccum that destabilised the region, he outlined, meaning the future for US-Africa relations is relatively unclear.

"A Donald Trump presidency could range anywhere from a return to the isolationism of the pre-9/11 Bush years, to a full dismantling of a national, bipartisan foreign policy that has remained largely unchanged since the Eisenhower administration."

He said that Trump's plans to "cancel billions in climate change spending for the United Nations" would serve a critical blow to Africa's ability to mitigate the effects of global warming.

Turning specifically to humanitarian aid, he added: 

"About a third of American foreign aid is directed to health programmes, and much of that at Africa. This means that any reduction in American foreign aid will have far-reaching effects on health outcomes on the continent."

Support for authoritarian leaders in the continent, is another cause for concern and heightens the risk of using counter-terrorism tactics as a way of repressing civil liberties.

"South Africa, a country Trump referred to as a 'total – and very dangerous – mess' in a tweet last year, is not immune from this treatment," he added.

"A Trump presidency is not only dangerous for the US, it is dangerous for Africa and the rest of the world as well."


Africa's leaders react

The continent's powerful reacted unanimously on social media to news of Trump's victory.

Congratulating Trump on Twitter, Nigeria's president Muhammadu Buhari said: "I look forward to working together with President-elect Trump to build on and strengthen relations between Nigeria and the USA."

Rwanda's president Paul Kagame said: "Congratulations to @realDonaldTrump for a well earned victory. Looking fwd (sic) to continued good relationship w/United States & new administration."

Gabon's president Ali Bongo added: "Congratulations to Donald J. Trump, 45th President of the United States, ally of Gabon."

Congratulatory echoes also came from Uganda's leader Yoweri Museveni, South African president Jacob Zuma and Burundi's leader Pierre Nkurunziza.

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