Last week, America elected a new president, Donald Trump and since then the question on everyone’s mind has not been whether things will be different but how different it’ll be this time.
For the tech community, the election results left clues as it triggered a surge in AI chip giant Nvidia shares, pushing them to a record high. The cryptocurrency market also reacted positively, with bitcoin prices climbing. Early indicators that Trump’s return to the Oval Office could fuel a significant boom in the tech sector. But it’s not without uncertainties.
America’s 47th president is tasked with weighty issues such as beating down rising inflation in America, calming geopolitical tension with the Russia-Ukraine war top on the agenda, and stiffening US deterrence of China.
Trump has repeatedly said he’d dismantle many of his predecessor Biden’s policies and initiatives. How could this play out in the US and trickle down to impact the African tech ecosystem?
More or less scrutiny on big tech and tax cuts
During his tenure, Trump will play a pivotal role in guiding AI’s development during a critical period and managing the influence of tech giants – Apple, Google, Meta, Microsoft, and Amazon – who hold immense power over global data and computing resources.
To do this effectively, Trump has promised to assemble a different cabinet, which will include business and tech leaders like Elon Musk who donated and openly campaigned for him. Many other tech leaders appear to be in his crosshairs.
Trump who initiated scrutiny against big tech during his first tenure won’t be hesitant to do that again. During the election, he called Google’s CEO, Sundar Pichai, to complain that the company’s search engine was not showing enough good news stories and even threatened to have the Justice Department prosecute the tech giant for election interference. He also threatened to jail Meta CEO Mark Zuckerberg if Facebook did “anything illegal” in the campaign.
Now that he’s won the election, would there still be a need to prosecute big tech? Chioma Joseph, an Investment Analyst at early-stage VC firm Microtraction foresees less scrutiny.
“Trump’s administration is expected to reduce antitrust scrutiny on big tech companies like Amazon and Apple, potentially encouraging consolidation and less competition,” says Joseph.
A plausible reason for less scrutiny is Trump’s liberal economic and pro-capitalism policies aimed at stimulating the economy. At the top of Trump’s agenda are tax cuts and reducing red tape around innovation.
Introducing tax cuts, especially lowering corporate tax rates is expected to boost US tech companies’ profits. This additional financial flexibility will enable these companies to invest more in research and development, infrastructure, and strategic growth, creating an environment ripe for ongoing innovation and competitiveness.
“This means that US companies and startups will likely generate better returns and VCs that invest in US companies will have better returns, meaning they’d make more money and raise more funds to invest more especially in new markets,” says Oo Nwoye, founder of TechCircle, an organisation that facilitates activities to help grow the Nigerian Tech ecosystem.
Support for Crypto, AI and Innovation
Over the past year, Trump who used to be a crypto skeptic, has become a vocal supporter of the crypto industry. During his campaign, he made campaign promises to different industry causes in exchange for millions of dollars in contributions from pro-crypto groups.
For many in the crypto space, his return is the dawn of a golden era. It’s expected that the crypto industry will get most of its requests including changing heads of regulatory bodies and cases against crypto companies by the US government dropped. A more favourable environment could also help crypto prices go to the moon, a fair reward for investors and crypto executives who spent millions backing Trump. African crypto investors and startups wouldn’t be left out sharing in the dividends of a pro-crypto American president.
“The liberalisation of crypto in the US will mean that other countries will follow suit. With Africa and Nigeria being one of the hotspots for crypto, this will benefit crypto startups, as they will be well positioned to take advantage of the surge,” Nwoye says.
America’s leading role in AI development is a source of national pride, and Trump is committed to maintaining this position.
Trump is expected to replace Biden’s AI Executive Order, which critics have argued has burdensome reporting requirements that effectively force companies to disclose their trade secrets, with a more accommodating one.
While Trump has promised policies supporting AI development rooted in free speech and human flourishing, the specifics of how he intends to achieve this remain unclear.
Trump’s stance on migration appears ambiguous, shifting between support and restriction. He has floated the idea of offering automatic green cards to graduates from US higher education institutions, this is expected to broaden the talent pool crucial for technological progress.
In the same vein, Trump has also stated his presidency would implement a stricter visa process, which is likely to affect H-1B visa regulations, which many tech companies rely on for skilled labour.
“This may drive tech companies to seek talent outside the US potentially increasing demand for skilled tech workers in Africa,” Joseph says.
Kwasi Boamah Tano, a VC analyst at Microtraction, fears that stricter visa regulations could create a significant barrier for African entrepreneurs and students, restricting their access to vital US accelerator programs and stifling innovation.
Make America, not Africa, great again
Despite his reputation for unpredictable behaviour, Trump’s core objective of restoring American dominance has remained consistent. His “America First” agenda during his initial term largely overlooked Africa, with any engagement with the continent often driven by geopolitical considerations, particularly in response to China’s growing presence.
Simply put, if it doesn’t make America great again, Trump isn’t interested.
An America First policy could lead to an increase in trade tariffs, which according to Tano, “could raise the cost of US services utilised by African tech firms, leading to higher operational expenses.” This may affect the affordability of tech products and services in the African market.
As Trump implements these policies, he must also contend with the looming threat of the US national debt US national debt, which currently exceeds $35.8 trillion. A potential debt crisis or default could trigger a global economic downturn, thereby reducing investment flows into emerging markets like Africa.
Trump’s second term is a leap into the unknown. The global landscape has shifted dramatically since his first presidency, and opinions on his impact are varied. Yet, if he can successfully implement even a fraction of his ambitious plans, the African tech ecosystem may emerge stronger.
