From July 20-22, the Kingdom of Morocco brought together more than 2,500 delegates, businesspeople and investors from the United States and Africa to discuss the future of U.S.-African investments. The US-Africa Business Summit brought together many expert panelists on a range of issues facing African business and development, including food, infrastructure, cybersecurity and risk perception. I had the privilege of attending, and my time of observation led me to conclude that there is a need for the United States to show a new orientation and a new interest in the African continent. Amid a global food crisis and encroaching Chinese influence in Africa, the United States should prioritize increased public and private sector investment to achieve mutually beneficial dividends in trade, diplomacy, and Security.
The “African century” was at the center of the summit’s call. Currently, Africa is home to 1.3 billion people with a combined GDP of $3.3 trillion. Although this figure is certainly low compared to developed countries, Africa is residence to six of the ten fastest developing countries. Additionally, high fertility rates and the recent creation of the African Continental Free Trade Agreement mean that the African market will grow significantly over time. Within decades, Africa could become one of the largest and most dynamic economies in the world. In terms of natural resources, Africa has more than 60% of the world’s arable land and will be increasingly used in the decades to come as the world’s breadbasket. The region is also home to around 30% of the world’s mineral reserves, 12% of the world’s oil and 8% of the world’s natural gas reserves. Additionally, a burgeoning youthful population has increased the continent’s appetite for the digital revolution. However, due to obstacles in infrastructure – both technological and logistical – and a relative lack of local experts, the continent needs financial and technical assistance to achieve its Sustainable Development Goals in many sectors.
American organizations such as Millennium Challenge Corporation (MCC) and Prosper Africa are actively involved in development projects through grants and covenants. However, their funding is limited and as such sees limited impact. Over the past eighteen years, MCC has invested 9 billion dollars in Africa. In such a large continent, this money spreads very little and is usually used for multipliers, such as industrial parks. On the other hand, Chinese investments in Africa outrun in the United States, extending Beijing’s economic and geopolitical influence across the continent. In addition, the fifty-four countries of Africa constitute the largest electoral bloc in the United Nations and have increasingly aligned with China in the decade since the launch of the Belt and Road Initiative (BRI) in 2014.
The United States has not yet realized the stake it has in Africa. There is a strong demand for US dollars and technical expertise. What remains is the American will to provide that. A recurring concern raised at the summit was the perception of high risk by US banks and investors, which translates into weak political will to adequately fund relevant government programs. These perceptions are wrong, and experts and summit officials have done well to clarify why. Default risk in Africa is lower than the global average and many developed markets. Existing institutional investors generally have positive outlooks and returns. American investments in Africa have also borne fruit in trade and job creation in the USA.
China’s growing economic and geopolitical influence in the region risks depriving the United States of the resource, trade and diplomatic potential that Africa could offer in the decades to come. However, continuation of Beijing’s current strong hand is not guaranteed. Although it has been generous in its funding of BRI projects, many of these projects have been riddled with economic viability issues that have been further compounded by COVID-19, such as Kenya’s standard gauge railway, which operated with a huge loss of $200 million over three years and was eventually suspended by both parties. This has caused a slow but steady deterioration in African perceptions of the BRI and creates vulnerabilities that an expansion of US capital can exploit. The most methodical, evidence-based approach of the MCC, which includes the promotion of technical and vocational training as part of its compacts, could be increasingly attractive to African countries over time. Moreover, the United States has a tool that China does not have: the African diaspora. The United States and China have deeply created racial tensions. However, while American race relations are messy, diaspora-owned businesses, academics, and elected officials are particularly helpful in engaging, investing, and promoting American-African trade and relations. The potential of the diaspora was highlighted at the summit, with many first- and second-generation immigrant American businesspeople forging relationships. Emulating Israel’s success, several African countries have actively sought to generate links with the diaspora. For example, Ghana has successfully hosted year of return in 2019.
Despite this, the United States should not focus its African policy on competition with China. Adopting an “us versus them” position similar to that of the previous administration would be counterproductive. Some African countries are keen to take advantage of geopolitical rivalries and others simply have no interest in alienating potential partners. With the advent of the African century, it is essential to engage with Africa on its own terms. Neo-imperial policies will not generate confidence or cause a rift with Beijing, and they may inadvertently push them further East. As China has deep interests in the continent and the yuan will continue to remain an influential force, when it is reasonable to do so, Washington should also explore areas of collaboration with Beijing to achieve sustainable and transparent multilateral development goals in Africa, including on issues such as agriculture and logistics. Technology infrastructure, as evidenced by the Huawei 5G controversy and Chinese hack of the African Union headquarters, should however remain an area of competition.
Much of the summit was ambitious, offering a very optimistic, yet realistic outlook for US-African investments. The Biden administration has taken small but significant steps to improve the United States’ focus on Africa, but more needs to be done. In Morocco, Vice President Kamala Harris announced the African American Leaders Summit, which will take place in Washington in December. Africa’s development faces several obstacles inherited from the post-colonial legacy: brain drain, lack of infrastructure and corruption, which cast a shadow over potential private investment across the continent. This upcoming summit provides an opportunity to advance trade, relationships and investments and to generate concrete plans to overcome these real and perceived obstacles. The Biden administration should use this opportunity to attract interest from the American private sector, build on existing government initiatives, and use the African diaspora to present the United States as a more attractive partner than China and find new bilateral partnership channels.
Mitch Ruhl is a foreign policy and national security scholar based in Washington, DC. He is passionate about 20th and 21st century military history, its relationship to politics and society, and transatlantic relations.
Image: Flickr/US Dept. of State.