Trump Effect on the African Oil

After the shock post November 8th with the results of the American presidential election, the world started studying what a Trump presidency in the USA would mean to the international markets and geopolitical environment. Africa is one of the largest exporters of raw commodities to the USA and will certainly experience changes in the trading dynamics with the world power once Donald Trump assumes his place in the White House, on 20 January 2017.

Among the raw products Africa exports, crude oil has a prominent place. The continent’s oil exporters had the USA as its largest buyer of the product until quite recently. In 2005, the USA imported 1.8 million barrels per day of crude oil from Sub-Saharan African countries. This figure remained fairly constant until 2010 when the USA’s domestic production of the commodity reached historically high levels.

By 2015, the USA was importing only 274 thousand barrels per day from Sub-Saharan Africa. The high revenues countries such as Nigeria and Angola extracted from oil, started to dry up. Could a Trump administration possibly revert this trend and propel the USA to buy more of the African crude oil once again?

Angola Beyond Oil

Angola has experienced rapid growth in the last decade, mostly propelled by the exploitation of its vast natural resources. Today, the country ranks as the third largest economy in Sub-Saharan Africa. Its history, like that of many African nations, is characterised by struggle and battle. After its independence from Portugal in 1975, Angola entered into a 27-year long civil war, where two major opposition parties, MPLA and Unita, fought for supremacy. In 2002, the two parties finally agreed on a cease-fire and started to focus on rebuilding the country. The rebirth of Angola started in 2002.

Mombasa and Dar es Salaam, Gateways for East Africa

The East African coast occupies a strategic position that allows maritime connections between the African continent and the Middle East and Asia. The ports of Mombasa, in Kenya, and Dar es Salaam, in Tanzania, are the most important in the region and, since the colonial times, compete to be the most relevant in East Africa. Million of tonnes of goods are imported through both of them from other coastal countries and continents and exported to the world.

Trump Effect on the Oil Industry

After the shock post November 8th with the result of the US presidential election, the world started studying what a Trump presidency in the USA would mean to the international markets and geopolitical environment. The vast majority of the polls and political analysts were wrong in their predictions on the outcome of this election. Hillary Clinton was the favourite, praised by the media and anticipated to defend Obama’s legacy in most policy aspects. The international markets would continue operating business as usual, and Brexit would have been the only bump in the road in 2016.

Angola Diversifying from Oil

Angola has experienced rapid growth in the last decade, mostly propelled by the exploitation of its vast natural resources. Today, the country ranks as the third largest economy in Sub-Saharan Africa. Its history, like that of many African nations, is characterised by struggle and battle. After its independence from Portugal in 1975, Angola entered into a 27-year long civil war, where two major opposition parties, MPLA and Unita, fought for supremacy. In 2002, the two parties finally agreed on a cease-fire and started to focus on rebuilding the country. The rebirth of Angola started in 2002.

Cassava Market in Nigeria

Cassava is a starchy tuber mainly produced in the tropical and subtropical regions, both north and south of the Equatorial line. The root was first introduced to the African continent between the 16th and 17th centuries by the Portuguese, who brought the stems from Brazil. From the delta of the Congo River, where it was initially planted in Africa, cassava spread throughout the continent and, today, the tuber is cultivated in more than 35 countries in Africa.

In many African countries it became the main source of carbohydrates and has replaced some traditional staples such as millet and yam. Cassava has been successfully incorporated into many farming systems across the continent.

Is Africa facing an Imminent Debt Crisis?

Following 2008, Africa embarked upon a borrowing spree fuelled by cheap and accessible foreign capital. Developed markets that were thought to be risk-free and attractive had the seal of safe investment shredded into pieces as a result of the financial crisis. Policy-makers sought to rectify the damage done to financial systems and economies by enacting a large set of financial reforms, both at the international and domestic level.

The restructuring of the developed economies involved, among other measures, lowering interest rates. This measure, together with an increasing awareness that investment diversification was necessary, made investors with an appetite for higher yields look elsewhere. Africa appeared to be the most promising place. With increasing infrastructure projects and large revenues from the commodities market, the continent enticed many investors looking for the next pot of gold.