African businesses plot Trump-proof path
Business unusual
African nations are starting to adjust to Donald Trump’s new world order and investors are taking notice.Since returning to the White House in January, the US president has halted most aid to the world’s least-developed continent and imposed hefty import tariffs on a range of its products.
At the inaugural Bloomberg Africa Business Summit in Johannesburg this week, political leaders, diplomats and executives weighed in on the sweeping implications of Trump’s second term for Africa’s economic future. They concluded that nations across the continent are responding by attempting to diversify export markets and redirecting spending — with Ghana, Zambia, Kenya and South Africa among those boosting local production, encouraging local industries and improving power and other infrastructure.
“There are massive opportunities that are presented by the rest of the African continent,” Kenny Fihla, chief executive officer of South African lender Absa Group, said at the summit. The lender is on the lookout for deals outside its home market to build its regional footprint, he added.
JPMorgan Chase & Co is also beefing up its presence, upgrading its license in Nigeria and opening representative offices in Kenya and the Ivory Coast.
“I like what we are seeing in this country and other countries in the region,” Vice chair Daniel Pinto told the summit, which was held in the leadup to this weekend’s gathering of leaders from the Group of 20 nations — a sentiment echoed by several top executives.
The pickup in investor interest is evident in the financial markets. Ghana’s stock market ranks as the world’s best performer in dollar terms this year, followed closely by Zambia’s.
Trump this month also warned of possible military action in Nigeria, which he says has failed to halt the systematic killing of Christians. Days later, Africa’s biggest oil producer raised $2.35 billion in the international bond market to take advantage of lower lending costs.
Despite the good news, there are real concerns about the long-term impact of the US trade war and disengagement from Africa, with the viability of the automotive and textiles industries under serious threat. There’s also concern about infrastructure bottlenecks that could stymie moves to boost intra-Africa trade.
“It’s going to be a grind,” Stanlib Asset Management CEO Derrick Msibi said at the conference. “Can we finally solve the issue of the infrastructure backlog? That’s not going to happen overnight,” he said specifically about South Africa.
Washington’s funding pullback has already proved disastrous for some of Africa’s poorest citizens, with numerous humanitarian programs having been shut or scaled back, and thousands of workers losing their jobs.
-Bloomberg