August 4th-6th 2014, more than 40 African Leaders across the continent Joined U.S President Barack Obama for The U.S Africa summit held in the city’s capital, Washington D.C. At the Summit, key areas and opportunities for Investments and trade in Africa were highlighted with the aim to strengthen ties between The United States and one of the world’s fastest growing regions.
It is a common stereotype amongst Africans that we have a notorious reputation for always being late, we all remember attending the wedding where the Nigerian bride took 3 hours to arrive at the altar or the Kenyan Pastor’s 60th birthday that was meant to start at 6pm beginning at 9pm. Now it seems the opposite is in effect with regards to U.S. investment and involvement in Africa. Similar to this review post, which is 2 weeks overdue, it appears the U.S. are also late to diverting their attention to the ‘party’ on the continent. Given China’s current annual trade volume with Africa stands at $200bn compared to the U.S. account of $85bn, the Americans have some distance to catch-up. In reaction, Barack Obama recently initiated a three-day U.S.-Africa Summit between 4-6 August 2014, the largest event any U.S. President has held with African heads of state and government. With the International Monetary Fund (IMF) forecasting that the economies of sub-Saharan Africa will grow at an average of 5.4% this year and 5.8% in 2015, it is primetime for the U.S. to build and develop their pathway in Africa.
The theme of the Summit centred on “Investing in the Next Generation”, with over 40 African heads of state in attendance discussing methods to stimulate growth, unlock opportunities and ultimately create an enabling environment for the next generation. Notable organisations present included African Development Bank, Nubuke Investments and American powerhouses from private-equity, Carlyle and KKR, to the groceries giant, Wal-Mart.
What is the U.S. offering?
The U.S. primarily appears to be concentrating their efforts on improving their trade and investments links, this is highlighted by platforms such as the ‘Africa Private Capital Group’ and ‘Benchmarking the Business of Agriculture (BBA)’. Schemes that will help transform private sector investment in development of key areas such as agriculture, energy, trade, infrastructure and health. In addition, it appears unlike China, the U.S. is willing to spread their investment more evenly around the continent with the development of the ‘U.S.-African Trade and Investment Hubs’ to be located in Ghana, Kenya and Botswana, covering all corners of Africa.
Although it is apparent that there was a particular focus on trade and investment, there was still conversation on the improvement of gender equality, environment and overall security and safety. The Summit specifically highlighted aims to expand economic opportunity for women and the promotion of political leadership for women and girls. There were also open talks discussing the enhancement of African security and terrorism protection especially in light of the recent surge of terrorist groups such as Boko Haram and Al-Shabaab in Nigeria and Kenya respectively.
Who will get the largest meat in the pot?
It is a popular concept in the African household that he or she who is served the biggest meat in the pot is often the most respected family member. A particular angst many Africans have regarding business with the U.S. compared to counterparts, such as China is the lack of respect. American firms can often identify business opportunities that best benefit their firm, with little consideration for the external repercussions on the environment or local community.
There is visible change regarding this matter given the Summit announcement of the $5bn partnership between private-equity firm Blackstone and Aliko Dangote, Africa’s richest businessman, for energy infrastructure projects in sub-Saharan Africa. In addition, the Export-Import Bank will commit $563m in financing to support the sale of General Electric locomotives to Transmet, South Africa’s largest integrated freight transport company. Both examples the U.S. are in support of sharing responsibilities with their African counterparts that will help to further deepen their relationship.
There was also a declaration of $1bn financing guarantees available for agricultural exports and the U.S. Department of Transportation announced the Secretary Anthony Foxx will lead a 2015 transportation mission for improved regional connectivity. Further to this, the World Bank announced a $5bn investment in Power Africa and General Electric said it will front $2bn to help boost infrastructure and access to energy. In aggregation, these deals put Africa at a significant advantage going forward, with assurance of adequate provision of sustainable food, transport and power.
Overall, there was an announcement of new deals in clean energy, aviation, banking, and construction worth more than $14bn, in addition to $12bn in new commitments under the President’s Power Africa initiative from private sector partners, the World Bank, and the government of Sweden. In all, these new commitments amount to more than $33bn, supporting economic growth across Africa and tens of thousands of U.S. jobs. Therefore the Summit could appear to be laying the seeds for a fruitful future. A future that will hopefully change stereotypes of the much maligned continent into a region delivering on much potential and promise.
By Lekan Doyin-Salau
Categories: Business & Finance