If you’re a business owner or founder in Africa, it’s easy to assume that political shifts in the U.S. are far removed from your day-to-day operations. But that’s no longer the case. Recent changes in U.S. funding and trade policies are beginning to affect African businesses and Investors, especially when it comes to access to capital, investor partnerships, and trade costs.
Let’s break down what’s happening and more importantly, what you as a founder can do about it.
1. The USADF Funding Cuts
One of the biggest blows is the decision to cut $51 million in funding by the U.S. African Development Foundation (USADF). This fund has historically supported African SMEs, startups, and cooperatives, especially in countries like Nigeria and Kenya. Nigeria alone has received over $20 million through USADF, helping to bridge the gap where venture capital and commercial banks typically hesitate. With these funds now being reduced, many early-stage businesses in agriculture, health, and technology are losing access to critical support.
2. Trump’s Tariffs and Trade Policy
Trump’s return to a policy of reciprocal tariffs could reshape Africa’s trade dynamics with the U.S. This approach targets countries that impose higher tariffs on American goods and in response, the U.S. may impose tariffs on African exports. This puts programs like the African Growth and Opportunity Act (AGOA) at risk. Nigeria, which has benefited from duty-free exports of oil and agricultural products to the U.S., could see significant impacts. Increased tariffs could mean lower revenues and higher business costs, affecting everything from trade to logistics and production.
3. Many Founders Have What It Takes, But Lack the Right Support
Many African entrepreneurs have the grit, vision, and ideas to grow but they lack the structure, guidance, and access to opportunities that help make that growth sustainable. This is where accelerators, incubators, and diverse funding ecosystems come in. Accelerators offer early-stage startups mentorship, access to networks, and sometimes, funding to help them grow faster. And as funding from the U.S. becomes less accessible, African founders must look beyond traditional paths to survive and thrive.
So, What’s the Way Forward for African Founders?
- Diversify your funding sources: The U.S. is no longer the only funding giant. The EU, UK, Asia, and even local African investors are becoming more active.
- Look toward grants, accelerator programs, and investors across multiple regions.
- Build local investor relationships: More funding is coming from within Africa. Tap into pan-African VCs, angel networks, and public-private partnerships that are starting to back more African-grown solutions.
- Leverage the work you’re already doing: Use your traction, customer base, and impact as leverage to pitch for new funding. Many programs want proof of potential—so don’t underestimate your progress.
- Expand your market focus: If U.S. tariffs affect your trade pipeline, it might be time to develop partnerships in the EU, Asia, or other emerging markets.
- Broaden your customer base and reduce reliance on a single region.
How does this shift affect investors?
For local and international investors, these changes should be seen as a wake-up call. It’s no longer enough to count on external economies. Instead, investors should shift focus to long-term growth strategies within the continent.
That means:
- Investing in local manufacturing and innovation.
- Supporting infrastructure for sustainable development.
- Backing scalable African startups that understand local problems.
The Bigger Picture
This isn’t just about politics, it’s about future-proofing African businesses. The U.S. will continue to play a role, but it’s time for African founders and investors to take more control. By diversifying funding sources, expanding into new markets, and building resilient business models, African businesses can thrive no matter what happens on the global stage.
Conclusion
At Halisi Consults, we’re committed to helping African entrepreneurs build stronger, more prepared businesses. Whether you’re navigating funding shifts, expanding your market, or preparing for investment, this is the time to rethink your strategy.