Ahead of his return to the White House, Donald Trump has wasted no time clearly spelling out the economic, diplomatic and political route he wants to take in his second spell as US president.
In fact, the pace of his political appointments and economic policy pronouncements has surprised his most ardent supporters even though they had generally expected that he would move with speed in his second presidency.
Trump has threatened to slap punitive tariffs on China, Mexico and key ally, Canada, as well as take similar actions against BRICS should it try and set up a currency to rival the US dollar. He has also been quick to make his stance clear on the war in the Ukraine, the Middle East conflict and others.
Thus far, his plans for Africa have not been clear, but if his first presidency is any indication, Trump generally overlooks the continent in terms of economic or trade engagement, preferring a laissez-faire approach where his bureaucrats continue whatever relations were in place before he got in power.
Besides being part of African countries that could be impacted by Trump’s actions should he decide to pay attention to the continent this time around, Botswana also has specific areas exposed – for better or worse – to the US leader’s policies.
The country’s two primary foreign currency earners – diamond mining and tourism – are anchored by US consumers and priced in US dollars. The buying power of the American consumer has supported diamonds over the decades and the US accounts for about 54% of the market for the shiny stones.
American tourists are also the key clientele for the high-net worth Okavango Delta camps and lodges, where a $1,200 tab for a night is considered “affordable”.
As much as his abrasive approach rubs most of the world up the wrong way, Trump is great for the US economy and with it, the American consumer who will ultimately buy Botswana’s diamonds or visit the Delta.
The 78-year old generally pursues America-First policies designed to strengthen that country’s economy, boost the value of the dollar and raise the prestige of the US, something that has proven a winning strategy amongst voters.
“Trump is talking sometimes like he did in 2016 and you will never know what situation will come up as he comes in,” Bank of Botswana governor, Cornelius Dekop told Mmegi recently in a media briefing.
“The sentiment is that the economy (in the US) will perform well and he is coming in on the perception that he will improve the economy.
“If that happens, it will be good for us in terms of demand for commodities like diamonds, which will improve or ramp up our revenues.”
Prominent diamond expert, Avi Krawitz, agrees that Trump’s impact on the economy will ultimately be great for diamonds, which are still in a prolonged slump dating back to last year.
“I think the election result had a positive impact, not necessary because Trump won, but because it was a decisive result,” he told Mmegi.
“If there was any uncertainty about the election result, it would have spilled over to consumer uncertainty and I think already you are seeing more confidence which is good for the holiday season retail sales.
“I’m not too sure about policy, but there is more of a positive sort of momentum in general.
“The stock market is very important to him and you hear him say during his term in office the market grew.
“America is ripe for positive momentum.”
A stronger US dollar and revived American economy will certainly help Botswana, but as with most things, there are potential downsides to the Trump presidency.
These largely relate to the tariff threats he has made and the possibility that these will result in a broader trade war.
“He is a disciple of geo-fragmentation in terms of tariffs,” Dekop told Mmegi.
“When that happens, when there are tariff wars, the grass like Botswana will suffer because we are a commodity exporter.”
In addition, there is the possibility that Trump’s tariff war could lead to higher inflation in the US as producers and others in that country are forced to forego cheaper imports. Higher inflation would trigger interest rate increases by the US Federal Reserve, which in turn would reverberate around the world, impacting the monetary policies of countries including Botswana.
But the fears may be misplaced, Dekop said.
“In 2016 when he came in, people were talking about Trumpflation but it never happened and we hope for the same in this case,” the governor said.
Trump’s biggest and earliest impact, will come from how much energy he puts into the long-awaited renewal of the African Growth and Opportunities Act (AGOA), the trade deal between the US and more than 30 sub-Saharan African countries, including Botswana. The agreement was established in 2000 and provides relaxed access to the American market for participating African states.
However, AGOA expires in 2025 and despite the extended efforts of African countries in the past three years, with the support of US business leaders and governor officials, the deal’s renewal has been delayed.
The decision to renew lies with US lawmakers, but Trump has the latitude to rally his party and his government to extend the trade deal.
While countries like Lesotho which exports up to $300 million in textiles to the US annually under AGOA, will be hard hit by the delays, for Botswana, AGOA exports have declined over the decades, reaching zero a few years ago.
Last year, Botswana exports textiles and related products worth $6,539 to the US under AGOA, up from $1,418 in 2022. Figures for other non-textile exports were unavailable at Press time.
Government, working with the US, has however revised its AGOA strategy and is placing a focus on supporting the exports of meat and meat products, natural/indigenous products, handicrafts, jewellery, and semi-precious stones.
Last year, KGK Diamonds Botswana, a De Beers’ registered client which boasts the country’s largest jewellery plant, exported its first finished products to the US and is currently finalising more orders.
Trump’s voice could be key to pushing the renewal over the line.
However, what approach the incoming US leader will take to Africa in his second spell remains unclear, a good example of a “known unknown”.
