Private investment is a surer path to sustainable development than aid. To reach these goals in developing economies like Africa, it is crucial to analyze how Trump or Biden’s succession would impact private investment in Africa.
If Trump succeeds and gets re-elected, he will likely continue the current path of his administration. One of the initiatives of his administration involved establishing the U.S. International Development Finance Corporation (DFC) in 2018, formed by merging the Overseas Private Investment Corporation (OPIC) and USAID’s Development Credit Authority to create one entity. It mainly deals in providing financial solutions and aid to the developing economies of the world, like Africa.
DFC introduces “new and innovative financial products to bring private capital to the developing world and gives U.S. more flexibility to support investments in developing countries to drive economic growth, create stability, and improve livelihoods”.
This shows that Trumps’ administration has benefited developing economies like the African economies and brought in investment opportunities from the US, by establishing a platform for successfully investing in these economies. His reelection would then continue to benefit these economies and Africa.
President Trump’s intention when establishing the DFC was to invest and make deals in African economies largely to thwart China’s commercial, security, and political influence in Africa. Despite the morals and merits of the reasoning, this is still good news for the possibility of investment in Africa because ultimately leads to money being invested in the economies from a foreign source.
However, this intention possess a risk at the same time, since African economies are vulnerable to the ripple effects of the US policies on China. For instance, private investment projects like the $825 million Zambia railway upgrade agreement with the China Railway Construction Corporation (SHA: $601186) can be hampered if Trump succeeds and continues his aggressive tariffs and trade war with China.
Conversely, if Biden succeeds it is likely that he will also adopt policies he advocated under the Obama administration. Such as rejoining some trade groups that Trump removed the US from so the US can trade more freely.
It is also likely that he might bring reforms that prop up private investments in Africa. This can be inferred from his interview with the Council of Foreign Relations (CFR) in August 2019, where he states that to prepare for the future, the US should collaborate with African partners to “Prioritize economic growth by strengthening trading relationships and boosting foreign commercial service posts to help drive economic ties and jobs – both American and African”.
Both Biden and Trump seem to recognize the importance of growing trade and investment in Africa.
Also, there is bipartisan support for African investment in congress since most of them realize it will be a mutually beneficial relationship, one that would be in favor of potential future investments in Africa and one that would be in favor of Congress’ interests.
All in all, this points us to the direction that either way, the elections go, private investment in Africa will grow.