Xinhua, Washington :
This week’s US-Africa Leaders Summit wrapped up Wednesday after the announcement of 33 billion U. S. dollars in investment commitments, highlighting Washington’s shift toward a focus on trade with the continent, experts say.
The unprecedented event, which saw dozens of African leaders and U.S.-based CEOs converge on Washington D.C., underscores the White House’s bid to promote trade above a myriad of other U.S. dealings with the continent in a relationship that had long been fixated on security and aid.
Tuesday saw the announcement of billions in investment commitments from U.S. corporate giants including Coca-Cola and General Electric, underscoring the summit’s aim of promoting U.S.- Africa trade opportunities.
Private and public sector investments included a commitment from General Electric to invest 2 billion dollars by 2018; nearly 70 million dollars from computer giant IBM; and 200 million dollars from hotel chain Marriott for a total of 14 billion dollars.
“The summit is about just putting Africa on the map and getting American companies to think about Africa as a market and as part of the global economy,” Caroline Freund, a senior fellow at the Peterson Institute for International Economics, told Xinhua.
Going into the summit, the question on analysts’ minds was whether the summit would be followed by action and continue the White House’s focus on trade with Africa, or whether it would fizzle out.
“More important than a follow-up event is the follow through on the announcements and commitments that were made at the summit, and it seems like the summit’s results exceeded what the administration predicted,” RAND Corporation’s senior international policy analyst Larry Hanauer told Xinhua, emphasizing the importance of maintaining this high level of U.S. commitment to trade with Africa.
Amadou Sy, a senior fellow in the Africa Growth Initiative at the Brookings Institution, echoed those thoughts.
He told Xinhua it is crucial for African governments to continue to provide an environment conducive to investment, such as ensuring predictable policies and regulations.
US goods exports to sub-Saharan Africa were up 250 percent over the previous decade, and goods imports saw a 53 percent rise from the previous decade, according to the U.S. Trade Representative website. And while overall trade numbers are small, the rise has convinced many analysts, including Sy, that trade has the potential to increase further.
But it’s unclear whether President Barack Obama’s administration will continue to prioritize economic ties with Africa or whether its commitment will eventually fizzle out or simply flatline, and it remains unknown whether the summit is a kickoff to an ongoing cycle of events, experts said.
It’s also unclear whether the next administration will continue to give trade with Africa as much priority over other Africa issues as Obama is giving the matter.
Moreover, heightened U.S. government attention is no guarantee of US private sector success in Africa, and critics have said the meetings left too little time for discussions on good governance, without which significant economic improvement is unlikely.
Despite the whirlwind of deals announced at the summit, Obama said current levels of U.S. trade and investment need to increase.
In closing remarks Tuesday, Obama said he would like Africans to “buy more American products” and Americans to buy “more African products.”
“We’ve got a lot of work to do. We have to do better, much better,” he said.
Indeed, the United States has been slow to get on board Africa’ s growth train, with many potential investors-perhaps unfairly – – lumping together politically risky nations with those that boast stability and rapidly growing GDPs and middle classes.
Those sentiments were reflected in Tanzanian President Jakaya Kikwete’s remarks on Tuesday, when he quipped that the recent headline-grabbing outbreak of the deadly Ebola virus is on the other side of Africa, far from his country.
“Of course right now the epidemic is in West Africa. Tanzania is in East Africa,” he said to crowd applause.
Figures underscore many American investors’ apprehension, with the U.S. share of African trade standing at a paltry 4 percent, lagging far behind Europe, BRIC countries and the Middle East, according to a report from global research firm McKinsey released earlier this week.
That may amount to a missed opportunity, as Africa is transforming from an aid destination to an investment opportunity, with the flow of private capital to the continent surpassing remittances and aid from 2003 to 2012, totaling 545 billion U.S. dollars, McKinsey found.
The continent is also home to eight of the world’s top 15 fastest-growing economies between 2000 and last year, with growth topped only by East Asia including China.
Africa’s GDP of 2 trillion dollars tops India’s. And the rate of return on investment in Africa in 2012 was higher than most developing regions except for Asia, with Africa tagged at a 13.0 rate of return; the Middle East at 8.1; Latin America at 6.5; and emerging markets at 11.0. Only Asia, at 13.7, exceeded Africa’s return on investments, the report found.
The continent has benefited from the surge in commodity prices as more people worldwide enter the middle class and have larger incomes to purchase food for their families, but the majority of African growth is being driven by other sectors including wholesale and retail trade, transportation, telecommunications, and manufacturing, McKinsey found.
Governments have moved to end armed conflicts, lower inflation, and reduce government debt and privatize government owned enterprises, with Nigeria privatizing 116 enterprises between 1999 and 2006. McKinsey called those moves important first steps, although the report’s authors opined that more could be done.
Hanauer said U.S. companies that have taken time to understand economic and political opportunities in Africa see that there are opportunities there.
“There are clearly opportunities to do business on the continent,” he said, but added that there are other U.S. companies concerned about risk.
“Certainly there are American companies that don’t understand what it would be like to do business in Africa, that don’t fully understand the distinctions between one African country and another,” he said.
