What Trump’s Second Term Means for the African Banking Sector

On January 20, 2025, Donald Trump was inaugurated as the 47th President of the United States, marking his second non-consecutive term in office. The ceremony, held within the U.S. Capitol’s Rotunda due to extreme cold weather, reignited global discussions on what his presidency could mean for various regions and sectors, including Africa.

Among the key areas of focus is the African banking sector, which has historically been influenced by U.S. policies and global economic trends. During Donald Trump’s first term (2017–2021), his administration’s “America First” policy led to shifts in foreign aid, trade, and investment policies that indirectly affected Africa’s financial landscape.

A Legacy of Deregulation and its Implications

Trump’s push for deregulation in the U.S. financial sector during his first term set a tone for global financial policy. While African countries maintain independent regulatory frameworks, global shifts in financial practices often resonate within African banking systems. If U.S. banks continue to operate with fewer restrictions, it might inspire similar deregulation efforts in Africa. However, this remains speculative, as local regulatory environments are primarily shaped by domestic needs and oversight from international bodies like the IMF and World Bank.

Trade, Investment, and Strategic Partnerships

The “America First” policy, while reducing foreign aid, emphasized boosting U.S. trade and investment abroad. Initiatives like Prosper Africa aimed to deepen economic ties with the continent, creating opportunities for the banking sector. Increased U.S. investment in African infrastructure, energy, and mining projects could provide banks with expanded opportunities for trade finance, project funding, and advisory services.

However, the long-term impact depends on how African countries position themselves in trade negotiations. The potential renewal or modification of the African Growth and Opportunity Act (AGOA), a key trade agreement, will also play a pivotal role in shaping trade dynamics and, consequently, the banking sector’s prospects.

Foreign Aid and Economic Stability

Historically, Trump has been critical of foreign aid, favoring transactional relationships over traditional assistance. Cuts to U.S. aid could strain economic stability in some African nations, indirectly affecting banks by reducing funding for development projects they often finance. Conversely, a shift toward commercial ties under initiatives like Prosper Africa could open doors for private-sector growth, offering banks new opportunities to support trade and investment activities.

Read: How the World Bank’s “Mission 300” Will Benefit Africa

Global Economic Policies and Their Ripple Effects

Global trade dynamics under Trump’s leadership could have a significant influence on Africa. For instance, his policies on tariffs and trade wars, particularly with China, might disrupt commodity prices and currency stability, creating economic volatility. This could challenge African banks by increasing the risk of non-performing loans and affecting overall market confidence.

The Role of Cybersecurity and Fintech

Trump’s focus on national security, including cybersecurity, could indirectly benefit Africa’s burgeoning financial technology sector. U.S.-Africa partnerships in technology transfer and investments in cybersecurity infrastructure could bolster digital banking and fintech innovation. For a continent rapidly embracing digital transformation, these developments may help African banks enhance security and improve customer experiences.

Diplomacy and Strategic Alignments

Trump’s transactional approach to diplomacy could require African nations to strategically align with U.S. interests to secure economic benefits. Countries that succeed in fostering favorable relationships may witness increased U.S. banking involvement and investment. However, this approach may also leave less-aligned nations at a disadvantage, potentially widening regional disparities.