U.S. Presidential Election Could Reshape U.S.-Africa Relations and Foreign Investments
On Tuesday, November 5, the United States will hold its 60th quadrennial presidential election, with major implications for trade policies and foreign direct investment (FDI) flows into Africa, particularly Nigeria.
The election pits controversial former President Donald Trump against Vice President Kamala Harris. Analysts believe the outcome could significantly impact the U.S.’s economic engagement with sub-Saharan Africa.
Should Harris win, experts predict continuity in U.S. policy, reinforcing initiatives like the African Growth and Opportunity Act (AGOA), Just Transition Partnerships, and the recently launched African Democratic and Political Transitions initiative. These programs have been pivotal in strengthening bilateral ties between Washington and African nations.
However, a potential second term for Trump could introduce greater policy uncertainty, as his first presidency was marked by a transactional and often unpredictable approach to global diplomacy. Political economists suggest that such uncertainty could dampen FDI flows into African markets, including Nigeria.
Central Bank of Nigeria to Auction ₦513.42 Billion in Treasury Bills
On Wednesday, November 6, the Central Bank of Nigeria (CBN) will auction Treasury bills worth ₦513.42 billion as part of its efforts to manage liquidity and maintain monetary stability.
The breakdown of the auction includes ₦20.75 billion in 91-day bills, ₦5.4 billion in 182-day bills, and ₦487.23 billion in 364-day bills. The CBN’s decision to roll over ₦374.67 billion in short-term debt in the previous auction and raise its key interest rate to 27.25% has contributed to a recent uptick in Treasury bill yields.
At the last auction, the one-year bills saw a notable yield increase to 26.02%, a reflection of the CBN’s aggressive tightening stance. Analysts expect similar demand for short-dated bills as investors continue to seek higher returns in a high-interest-rate environment.
The CBN plans to issue a total of ₦2.2 trillion in Treasury bills in the fourth quarter of 2024, a 41% increase over the third quarter. This issuance will coincide with the maturity of similar debt instruments, further tightening market liquidity.
Bank of England Expected to Cut Interest Rates
In the UK, the Bank of England (BoE) is expected to cut its benchmark interest rate by 0.25% on Thursday, November 7. Investors are betting on a rate reduction after BoE Governor Andrew Bailey signaled that borrowing costs are “gradually on the path down” following a period of monetary tightening.
The decision follows a slight moderation in inflation, which stands at 2.2%, slightly above the BoE’s target. Despite this, economists believe that further rate cuts are necessary to stimulate economic growth as the UK navigates a challenging economic landscape.
FAO to Release Global Food Price Report
On Friday, November 8, the Food and Agriculture Organization (FAO) will release its latest report on global food prices. September saw a notable rise in food prices, driven primarily by a 10.4% surge in sugar prices, due to poor crop forecasts in Brazil and changes to India’s sugar policy.
Additionally, cereal prices climbed by 3%, with wheat and maize seeing price hikes as a result of weather-related disruptions in key production regions. However, rice prices saw a slight dip, as trading activity remained subdued.
The FAO’s findings will be closely watched by commodity traders, especially in light of ongoing supply chain challenges and geopolitical factors influencing food production and distribution.
- U.S. Election: Investors will closely watch the outcome of the U.S. presidential race for potential shifts in U.S.-Africa trade relations and foreign investment flows.
- CBN Auction: The Central Bank of Nigeria’s upcoming Treasury bills auction will signal the continued tight monetary policy as part of efforts to manage inflation and liquidity.
- BoE Rate Cut: Market participants anticipate a rate cut from the Bank of England as the central bank navigates economic recovery amid modest inflation levels.
- FAO Food Price Report: The FAO’s report on global food prices will provide insight into commodity market trends, with sugar and cereal prices under particular scrutiny.
Investors in both developed and emerging markets should stay attuned to these events, which could shape short-term investment decisions and broader market dynamics in the coming weeks.