The outcome of U.S. presidential elections often shapes global investment trends and economic policies. Historically, however, the impact on Africa has been relatively indirect due to a bipartisan consensus in Washington. As a result, the U.S. core strategy towards Africa has remained consistent across administrations.
Significant investment to counter China’s influence in Africa
In 2023, the U.S. exported approximately 28.69 billion USD to Africa, with a commitment to invest 55 billion USD over three years, partly to counterbalance China’s growing influence in African infrastructure and investments.
The outcome of the 2024 presidential election could influence U.S. investments in Africa in several key areas.
Trade policies and economic relations
The election results may affect trade relations with Africa, especially about policies like the African Growth and Opportunity Act (AGOA). Depending on the victor, there may be shifts in trade priorities, affecting tariffs, trade agreements, or support for African exports such as textiles and agricultural products.
For instance, a more isolationist policy could limit U.S. engagement, while a globally-focused policy could expand opportunities for African exports. Trump’s « America First » approach, characterized by protectionist tariffs and policies favoring domestic industries, may lead to less favorable terms for African countries under AGOA, which could impact African exports. This policy stance could make investors cautious due to potential renegotiations or restrictions on trade.
Foreign Direct Investment (FDI)
Different administrations approach foreign investments in various ways. A victory by Kamala Harris, for example, might encourage more American companies to invest in emerging markets, particularly in Africa, leading to increased job creation, technology transfer, and skill development in areas like South Africa.
Alternatively, a policy that prioritizes domestic investments over international ones could reduce FDI flows to Africa. Trump has expressed skepticism about foreign aid, which could translate into decreased U.S. investment or development aid in Africa. However, if Trump maintains or expands initiatives like « Prosper Africa », which aims to increase trade and investment with Africa, this could present new opportunities for investors, though policy shifts may introduce unpredictability.
Geopolitical influence and stability
U.S. election outcomes can influence global geopolitics, potentially affecting market stability in Africa. Strong U.S. foreign policy engagement could limit other powers’ influence in Africa, stabilizing markets. Conversely, a reduced U.S. presence could increase competition and, potentially, conflict, making investors wary due to uncertainty.
Financial markets and economic policies
Election results also influence U.S. interest rates, inflation, and the dollar’s value, which could indirectly impact African markets. Lower interest rates or a weaker dollar could attract U.S. investors to African assets seeking higher returns, whilehigher rates or a stronger dollar might divert capital from Africa.
Direct policy initiatives
Specific policies or initiatives for Africa, such as aid, debt relief, or new trade agreements, could be affected by the election outcome. Continued support for programs like Power Africa or proactive responses to regional conflicts could directly influence the investment environment.
Stricter immigration policies under Trump could affect African countries by reducing remittances, which are crucial for many African economies, indirectly impacting economic stability and growth.
Preparing for different scenarios
In summary, while the U.S. election may not directly impact investments in Africa as heavily as in other regions, it could still shape trade agreements, FDI flows, geopolitical stability, and investor sentiment across the continent’s diverse economies.
If the new administration emphasizes resource extraction or infrastructure to counter China’s influence, sectors like mining, oil, or renewable energy could see increased investment, particularly in resource-rich areas.
This range of possible outcomes suggests that investors may need to prepare for different scenarios, each offering unique opportunities and challenges for investing in Africa.
