AFRICA OUTLOOK

By Royce Lowe

Helping Africa

Last December, according to Reuters, the United States pledged to commit $55bn to Africa over the next three years. This money was aimed at “a wide range of sectors to tackle the core challenges of our time” and was being distributed in close partnership with Congress, national security advisor Jake Sullivan said. Much of the funds appeared to come from previously announced programs and budgets. The summit was the first involving leaders from the U.S. and African countries since Obama established the President’s Advisory Council on Doing Business in Africa-or its acronym PAC-DBIA - in 2014.

At that time the White House said that of the $55bn, some $20bn would go to health programs, with $11.5bn allocated to HIV/AIDS, and over $2bn to “address the health, humanitarian and economic impacts of COVID-19.” Some $2bn would go to combating malaria. Between January 2021 and the summit date, the administration invested and planned to provide at least $1.1bn to support African-led efforts in conservation, climate adaptation, and energy transitions. These funds include U.S. International Development

Finance Corporation investments into Malawi’s Golomoti JCM Solar Corporation, and a Climate Action Infrastructure Facility.

At this same summit, President Biden highlighted $15 billion in trade and investment partnerships and deals, the White House said. These include over $1 billion in deals signed by the U.S. Export-Import Bank, including a $500 million memo of understanding with the African Export-Import Bank to support diaspora engagement, a $500 million deal with the Africa Finance Corp, and a $300 million memo of understanding with Africa50 to match U.S. businesses with medium- to largescale infrastructure projects. The deals also include a new “Clean Tech Energy Network” that supports $350 million in deals. One might say, “small potatoes.”

The Brookings Institution had quite a lot to say on the subject just a couple of months ago and came up with some very useful suggestions. When PAC-DBIA was established, it was an important initiative and is still highly relevant. It was, after all, charged with providing recommendations to the President of the United States through the Secretary of Commerce on how to increase the U.S. commercial presence in Africa. Who better to provide advice than some of the leading American companies on the continent? The U.S. companies represented on the PACDBIA understand the challenges and opportunities of doing business in Africa. And a larger U.S. business presence in Africa is a priority for many African governments. Not only do our partners on the continent want closer commercial ties with the U.S., but they appreciate that most American companies create jobs, enhance skills, and comply with global best business practices, including anti-corruption.

We might ask what the PAC-DBIA has accomplished over the course of seven meetings and five reports. When President Obama established the committee in 2014, U.S. direct investment in Africa was at an all-time high of almost $69bn, but seven years later, it dropped to about $45 billion.

Having said this, we can’t forget what Africa has been through over the past decade; ebola, COVID-19, Russia’s invasion, and the effects of climate change. Plus many internal conflicts. Africa has a serious problem with infrastructure; hence development of infrastructure should be a priority for the U.S. government. According to Moody’s Analytics research and as cited by the African Development Bank, Africa has the lowest default rate on infrastructure projects among the world’s regions at 5.5%, compared to 12.9% in Latin America and 8.8% in Asia.

Commercial diplomacy is very important. Meg Whitman, a former business leader and the current U.S. ambassador in Kenya, remarked this past May to a high-level business gathering in Nairobi, “When I was CEO, I’ll be honest, I probably thought of Africa about 1% of the time.” The ambassador’s refreshing candor underscores that most U.S. business leaders do not see Africa as a target market.

In fact, the U.S. has significantly stepped up its support of the private sector in vital ways, including the creation of the DFC and Prosper Africa and, most recently, Vice President Harris’ recent visit, to name a few of the impactful initiatives. However, since Commerce Secretary Penny Pritzker and the DBIA undertook a fact-finding mission to Nigeria and Rwanda in 2016, U.S. commerce secretaries have spent one cumulative day on the continent (Wilbur Ross visited Ghana on July 6, 2018, with the advisory group).

The Brookings Institution recommends that the secretary of commerce lead a PAC-DBIA trade mission to Africa annually. Not only would this signal to U.S. business leaders that Africa is a priority market for the American government, but it would be an opportunity to begin the implementation of the many relevant recommendations made by the PAC-DBIA since its inception. Such commercial diplomacy inevitably will play an important role in fulfilling the private sector commitments, worth $15.7bn, that were made at the

2022 U.S.-Africa Leaders Summit and reversing the decline in U.S. investment in Africa.

At the risk of being tiresome, and we aren’t the only ones mentioning this, it might be noted that over the last three decades, every Chinese foreign minister’s first overseas trip of the year has been to Africa. China-Africa trade is some $200bn per year, and around 10,000 Chinese companies are operating in Africa.

The Outlook: To help Africa, the U.S. needs to take action and fulfill its promises of investment and direct involvement. Otherwise, the U.S. is merely a whisper in the winds of change.

Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook. n