How Trump could benefit Africa

(iStock)
(iStock)

Cape Town - Africa seems to be but a small item on the agenda for US President Donald Trump, but his infrastructure focus could create a bigger demand for commodities, which could benefit the continent, according to Dennis Dykes, chief economist of Nedbank.

"Africa is not high on the agenda for Trump and could slip on the radar," Dykes said at the GTR Africa Trade Finance Week 2017 on Thursday.

Dykes also cautioned that there seem to have been a lot of fake news about Trump and Africa.

"Don't believe it all, but it seems Trump does feel Africa is somewhat of a corrupt continent. It is not just about building the wall for him, but a lurch towards protectionism, isolation and populism. It can lead to a weaker (US) economy over time as the trend in the world has been globalisation," said Dykes.

"There is also uncertainty regarding Trump's relationship with Russia, while Dutch, French and German elections this year could bring about a difficult year for Europe as well as uncertainty."

In the view of Dykes, Trump's short-term policies could lead to more inflation due to the inward focus and this can initially lead to more employment and investment.

As for Brexit, Dykes said it has led to massive uncertainty and it now looks like the UK will exit in the next two years.

"After all the scare mongering it seems like the impact of Brexit was vastly over-estimated. I think it will impact negatively over the long term unless it is handled in an adult way," said Dykes.

"From an African point of view, however, Brexit might increase traditional (colonial) links and this could be positive for the continent."

For Dykes a positive sign for Africa is that business confidence regarding the continent seems to be picking up. It could be a sign of strong short term growth.

"Yes, there was a better start to 2017, but commodity prices may just have had a false start. At the same time I do think the commodity story will still be a compelling one," said Dykes.

He used Rwanda as an example of how a country can attract investments by making it easy for business.

"Solutions for Africa lie in Africa itself - by putting the right policies in place and establishing trade corridors. The continent still offers huge opportunities," said Dykes.

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