And so it came to be that Donald John Trump was elected the 45th President of the United States of America in an election that has sent shockwaves around the world. The immediate challenge is in trying to figure out what type of president he will be. His campaign was so improvised and make-it-up-as-you-go-along that it’s difficult to know what he will really do once he’s in the White House.
For Nigeria and Africa, it is even worse – he hardly ever spoke about them during his campaign, if at all. So how does one even begin to think about what a Trump presidency means for Nigeria? Let’s try a mixture of educated guesses and speculation.
Nigeria’s $1bn Eurobond
Nigeria’s plan to borrow money from the international bond markets has been known for more than a year. Somehow, the government has contrived to delay the process to the point where all we’ve heard now is that it will happen in December.
It is bad enough that Nigeria was planning to ‘disturb’ the markets for only $1bn when Argentina and Saudi Arabia have raised over $30bn this year alone. What’s worse is that the markets are likely to shut up shop for the next 3 months at least until people figure out President Trump’s direction. He’s known to not be a fan of the Federal Reserve Governor, Janet Yellen, so if he finds a way to get rid of her, that will likely signal change in direction for interest rates.
Foreign investors are unlikely to have time for Nigeria while they are still trying to figure out President Trump’s policy direction. Which means Nigeria’s desperately needed Eurobond issue will be delayed possibly till Q2 2017.
African Growth and Opportunity Act (AGOA)
The good thing about AGOA is that it was renewed in 2015 for 10 years. It is currently the centrepiece of America’s trade policy with Africa and has delivered many benefits especially around textiles. Walmart, for example, now sources a lot of its trousers from Ghana.
The fact that African goods under AGOA can get into the US market tariff free helps to make them competitive.
But if there is one thing everyone is clear about President Trump, it is his views on international trade. To put it simply; he’s not a big fan of international trade and he wants to take jobs back to America for Americans. If and when African exports become large enough to cause job losses in America (e.g. American firms setting up in Nigeria to produce and export to America), a President Trump is likely to take notice and do ‘something’ about it.
But there is another threat to AGOA – the Trans Pacific Partnership (TPP) trade deal. Barack Obama likes it and wants it to be his legacy but President Trump thoroughly dislikes it. If it doesn’t get passed before Mr. Obama leaves office, it might be a good thing.
But if it does, the Asian countries that are part of the TPP agreement will get the same benefits that African countries get through AGOA. In such a scenario, Africa will lose jobs and trade to Asia almost certainly.
If we work on the assumption that President Trump won’t sign the TPP and won’t scrap AGOA, then he might actually be good for Africa and Nigeria.
Drill Baby, Drill!
President Trump’s stated goal is to Make America Great Again. One of the ways in which he plans to do that is by making America ‘energy independent’. He also doesn’t care about or believe in climate change. Taken together, you can expect America to be relaxed about obtaining its energy from fossil fuels.
The shale industry is also likely to receive a boost. One of his top advisers during the campaign was Harold Hamm, a billionaire who made his fortune from fracking. He has been tipped to be Energy Secretary in a Trump government. Mr. Hamm grew up poor and only learnt how to speak English properly after he became a millionaire. He is a big believer in the shale and will certainly favour the industry as energy secretary.
One immediate effect of President Trump’s win has been a drop in the value of the US dollar. This automatically makes US exports cheaper. Combine that with friendly policies for the shale industry and you’re looking at a potential disaster for Nigeria.
As though things weren’t bad enough already.
A More Muscular America
Ultimately America cannot be ignored in the world. Even if President Trump’s administration is more focused on domestic matters, there will always be opportunities to engage and do deals with America. But it might be better to ask than wait to be given anything. These are the times we now live in.
Will President Trump launch a programme like the amazing President’s Emergency Plan For AIDS Relief (PEPFAR) that George W. Bush enthusiastically push? It’s unlikely. Or Barack Obama’s Power Africa? I doubt it.
But the man likes a deal and if there is business to be done that will benefit America and Nigeria at the same time, he will probably do it. He won’t do charity – a recent Washington Post article investigated all the claims of charitable giving he had made over the years and found very little evidence. He is a businessman without zero experience of government. He will not run America all by himself and the country has strong institutions that can withstand the executive. But he will set the tone of his government.
Maybe Nigerian diplomats and ministers should buy a copy of his book – The Art of the Deal – and start reading it.
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