US President Barack Obama yesterday announced $33 billion in new investment and financing commitments to Africa during a three-day summit with dozens of leaders from the continent.
“That will support development across Africa and jobs in the United States,” Obama said, according to AFP. “The bottom line is that the United States is making a major long-term investment in African progress.”
The $33 billion included $12 billion in new money for the power sector, seen as crucial to building up the African economy, and another $14 billion in investments in other sectors by US companies.
The bulk of the commitments came from private-sector companies, including Coca-Cola and General Electric, underscoring Africa’s growing appeal to businesses.
The continent is home to six of the world’s fastest-growing economies and a rapidly expanding middle class with increased spending power.
The announcement was aimed at convincing some 45 African heads of state and government gathered in Washington that the United States is committed to participating in Africa’s economic emergence, despite having fallen behind competitors in China and Europe.
Obama also called Republican members of Congress not to close down the US Export-Import Bank (Ex-Im Bank), as it remains a vital source of funding America’s export industry, especially for US companies seeking to invest in Africa.
The Ex-Im Bank is at the centre of a political controversy in Washington, with some Republicans seeking to shut the bank and threatening to block its reauthorisation when Congress returns from recess this fall. The GOP lawmakers seeking to shut down the bank argue that its spending is politically motivated and unnecessary.
Yet Obama noted that US trade with the entire African continent was about the same as its trade ties with Brazil and that just about one per cent of US exports go to sub-Saharan Africa.
“We’ve got to do better, much better,” he said during closing remarks at a day-long session that brought together U.S. and African politicians and business leaders.
“I want Africans buying more American products and I want Americans buying more African products.”
The US is hardly alone in seeing economic potential in Africa, with China, Europe and India moving aggressively to tap into Africa’s growing markets. China in particular is hungry for oil, coal and other resources and is eager to develop the roads, bridges and ports needed to pull them out of Africa.
“We also realise we have some catching up to do,” said Michael Bloomberg, the former New York mayor and billionaire businessman who opened the summit yesterday. “We are letting Europe and China go faster than the US.”
Obama has sought to cast the US as a better partner for African nations than China, arguing that his administration has a long-term interest in the continent’s success and is not simply seeking to extract resources for its own purposes.
“The United States is determined to be a partner in Africa’s success,” he said. “We don’t look to Africa simply for its natural resources. We recognise Africa for its greatest resource, which is its people, their talents and their potential.”
The business forum is part of an unprecedented three-day summit underway in Washington, with nearly 50 African heads of state in attendance. Obama hosted the leaders at a White House dinner yesterday night.
About 100 US companies were represented at yesterday’s conference. Vice-President Joe Biden and Secretary of State, John Kerry also addressed the attendees, as did former President Bill Clinton, who declared that the US has “only barely scratched the surface” of Africa’s economic potential.
In conjunction with the meeting, US companies announced $14 billion in investments for Africa. Among them: a $5 billion investment from Coca-Cola to fund manufacturing lines and production equipment; $2 billion investment from GE by 2018; $200 million in investments across Africa by Marriott, and a $66 million commitment by IBM to provide technology services to Ghana’s Fidelity Bank.
The White House also touted another $12 billion in new commitments for Obama’s Power Africa initiative from the private sector, World Bank and the government of Sweden. Obama announced the Power Africa initiative last summer, setting a goal of expanding electricity access to at least 20 million new households and commercial entities.
The president said that with the new financial commitments, he was boosting that goal to 60 million homes and businesses.
Obama also announced $7 billion in new government financing to promote US exports to and investments in Africa. That includes $3 billion in financing from the US Export-Import Bank aimed at supporting American exports to Africa over the next two years.
GE CEO Jeff Immelt, who was among the business leaders participating at the summit, also appealed to Congress to renew the bank’s charter, saying its existence signals to other countries that the US government believes in investing overseas.
“The fact that we have to sit here and argue for it is just wrong,” Immelt said.
Obama also signed an executive order creating an advisory committee which comprised private sector representatives who will advise the White House on ways to boost economic ties with Africa.
The first day of the meeting, which was on Monday, saw US officials chiding their guests over democratic reform and civil rights. But by yesterday, Obama and US titans of commerce and industry were trying to convince their counterparts that America is as determined to take part in Africa’s growth story as China or Europe.
Hundreds of US and African business chiefs joined political leaders in different fora on Monday including the top executives of General Electric, Coca-Cola and Walmart, as well as African billionaires such as Nigerian commodities king, Aliko Dangote, telecoms tycoon Mo Ibrahim, and Ashish Thakkar, the young founder of the tech-focused Mara Group.
But outside of a few top companies, US businesses faced criticism that they are less knowledgeable and more afraid of risks on the continent than their European and Asian rivals.
The US remains the largest source of investment but most of that has been in the oil and gas sector.
Meanwhile, China and Europe have built stronger positions in infrastructure, manufacturing and trade, with China’s trade with Africa more than double that of the US.
American companies “are still thinking about Africa as a decade ago… whereas things have really changed dramatically. Africa now has been growing at about 5.5 per cent on average in the last decade,” said Dangote, Africa’s richest man whose fortune is estimated at more than $20 billion.
“There is a lot of perceived risk. People only talk about risk. But the majority of those who perceive risk don’t know the story. They have not really been there,” he added.
US Commerce Secretary, Penny Pritzker, said Washington would boost efforts to build commercial ties, with more government help on financing and more trade missions going both ways. “The time to do business in Africa is no longer five years away. The time to do business is now,” she added.
Pritzker stressed that building trade and investments with Africa would be good for both sides, helping African countries develop and creating jobs in the United States. “As Africa’s middle class continues to expand, we hope to see our export numbers grow,” she said.
