Beyond providing entertainment, should Africans be concerned about the US election and who is likely to win?
Unsurprisingly, Africa is not a major talking point in the election campaign. However, the election is a major talking point among Africans. Standard Bank group has just released a new report, “Africa: likely implications of US election outcome on Africa”, projecting what a win for either Donald Trump or Kamala Harris could mean for African economies.
According to the report, there are “significant differences” in how Republican versus Democratic presidencies influenced issues such as the strength of the dollar, trade policies as well as political policies on Africa.
What happens on aid?
Under Trump, US aid to Africa grew by an average of 3.6% year-on-year at constant prices. During Biden’s presidency, there was a contraction of -13.26% year-on-year in 2022.
“Republican administrations typically allocate higher levels of aid and a larger portion of the total aid budget,” says the report. “Consequently, aid levels tend to be higher when the same party controls both the House and Senate.”
American aid to Africa was strong under Republican George W. Bush, who drove the Emergency Plan for Aids Relief (PEPFAR) with bipartisan support in Congress.
Politics vs Business?
Standard Bank US political policies rarely ever change. However, the outlook may be influenced by each leader’s attitude to Africa.
“Thus, a Harris win could imply focus on human rights issues, while a Trump win would likely focus on business and investment,” says the report.
What about the dollar?
A stronger dollar will affect the global economy, including Zimbabwe where the currency dominates. According to the Standard Bank report, a Trump win is “potentially bullish for the USD due to expected inflationary policies such as increased tariffs and tax cuts. These policies could eventually lead to higher policy rates, which would support dollar strength.”
Trade wars under Trump
Standard Bank says Trump’s threats to impose tariffs on goods from China may spark a global trade war, which affects developing countries, including in Africa. The “trade wars between large economies spill over into smaller open economies”, the report says.
Commodities
Prices of commodities, such as minerals, are a big deal for countries like Zimbabwe, which depend on commodity exports. According to Standard Bank, “empirical studies imply that commodities historically fared better under Democratic presidents than under Republican presidents, with increased volatility under Republican presidents.”
They see Democrats pushing for green energy, which may drive demand for commodities needed in the transition, such as lithium.
