The result of the US Presidential Elections on November 8 will be critical in determining the future path of the United States, both politically and economically. Since 2000, when former President Bill Clinton signed the Africa Growth Opportunity Act (AGOA), Africa has been in the agenda of the subsequent presidents, namely George W Bush and Barack Obama. But the plans and promises made by the current presidential candidates, Donald Trump and Hillary Clinton, are so fundamentally different that the global economy, including the African continent, will be affected.
Since 2001, under the Bush and Obama administrations, 13 African countries have had the opportunity to host either of them. Although President Obama has made 5 official trips to Africa, more than President Bush's 4 trips, the latter visited 11 African countries, while Obama visited 7 countries during his two terms in office. But during the Obama administration, the US engagement with Africa has been more intensive, since the US found itself in a situation of catching up with its economic rival, China, in the African continent.
President Obama launched the $7 billion Power Africa initiative, that is aimed to provide 30,000 MW to 60 million households and businesses by 2030; and Africa's largest wind power project in Lake Turkana, Kenya, benefited from this initiative. Moreover, President Obama extended the AGOA till 2025, and to strengthen the US-Africa engagement on trade and finance, the US-Africa Business Forum was organised in 2014 and again this year in 2016. In his last official visit to Africa in 2015, President Obama has also had the opportunity to engage with the African Union in Addis Ababa, Ethiopia.
Despite all these engagements with Africa, the US trade with Africa is on a downtrend. This is because trade with Africa is mainly based on commodities - oil and minerals - and the drop in commodity prices has exacerbated this trend over the last few years. The top 3 trade partners of the US in Africa are Angola, Nigeria and South Africa. According to the US Census Bureau, US trade with the African continent peaked in 2008 with about $141 billion worth of goods being exchanged, whereas in 2015, trade was just $52 billion, representing only about 1% of the US global trade. Meanwhile, the African trade with China has been on a rapidly rising trend - from $10 billion in 2000 to $220 billion in 2014, and China-Africa trade is estimated to reach a staggering $400 billion by 2020, about 8 times more compared with the 2015 US-Africa trade figures.
With the global economy still very fragile, the US Presidential elections are being closely watched so as to forecast the future path taken by the United States, the world’s largest economy. On the one hand, the campaign of the Republican Party candidate Donald Trump seems to be more about protectionism, anti-globalisation and anti-free trade to 'Make America Great Again!'. On the other hand, although the Democratic Party candidate Hillary Clinton seems to be a continuation of the Obama administration, she has also expressed concerns about free trade agreements like the Trans Pacific Partnership. Hence, whoever wins the elections on November 8, the future political and economic engagement of the United States with the world will change. As a result, this will have direct and indirect impact on Africa.
If Donald Trump wins the elections and puts his campaign promises into practice, there will be a lot of uncertainties globally. The US stock markets will have knee jerk reactions and will drop significantly. This will also spread to the other financial markets, causing an increase in global volatility. Economic and political experts are also predicting that future decisions made by Donald Trump will put him at loggerheads with countries like Mexico and China. Moreover, adopting a more protectionist approach and reviewing trade agreements like the North American Free Trade Agreement, NAFTA, will put the United States on a trade war path with its main economic partners. Consequently, the US economic recovery may be sapped and may eventually bring the whole world into recession.
Although Hillary Clinton as president is being viewed as a continuation of the Obama administration, she is facing a slowing down American economy in an uncertain global environment. To assuage the feeling of the American electorate against globalisation, she has also raised doubts about the United States position on free trade and whether the United States will ratify in the future free trade agreements like the Trans Pacific Partnership. Even if she does not make any drastic changes, the monetary policy and imminent rate hike by the Federal Reserve will have an impact on the US and global economy.
To counter-balance the Chinese economic influence on Africa, the United States needs to continue and increase its future engagement in the continent. Compared to the $220 billion China-Africa trade in 2014, the United States has indeed lots of room to improve. To tap into the vast opportunities of Africa with its population of one billion and its $1.2 trillion economy, more American companies have to be encouraged to venture into the continent. Over the last few years, American technology giants like IBM, Facebook and Google have increased their involvement with Africa. Other American multinationals like Ford, General Electric, Starbucks and Walmart, as well as private equity firms like Blackstone, Carlyle and KKR, have also explored further and tapped into many African opportunities.
Whoever wins the elections will bring about global macroeconomic uncertainties, that may eventually affect Africa. For the US to maintain its global economic supremacy, the future US President will not only have to keep the American economy open, but also capture the economic potential of Africa.
The author, Richard Li, is a partner of Steel Advisory Partners, Singapore. This article was written specifically for NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation.