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US-Africa Summit: Rethink and invest in Africa

, August 7, 2014, 0 Comments

us africa summit & Opporunities-MarketExpres-inTrade and investments were the prevalent topics at the first US-Africa summit. The US want to improve their relations with African nations. But they’re late: other countries have already discovered the budding continent.

The US-Africa summit ends with a large number and a promise. In front of almost 50 African heads of state, US President Barack Obama announced in Washington that the US wanted to invest $33 billion (25 billion euros) in Africa.

“Thirty-three billion dollars on paper is certainly a fairly impressive total,” Richard Downie, Africa expert at the Washington-based think tank Center for Strategic and International Studies (CSIS) told DW. “When you look at the breakdown of the figures, though, it’s not all US money. A fair chunk of it is in fact money that for example the World Bank and other governments have committed to helping Obama’s ‘Power Africa Initiative.'”

The $33 billion also include money that was promised previously and investments by American companies. Only $7 billion are new money from the US treasury.

Myth vs. reality

The Obama administration wants to secure investments and exports to Africa. “These are solid commitments, particularly from the private sector, which has announced a string of new investment deals in Africa,” Downie said. “Companies like Coca Cola and GE for example are announcing new commitments. So this is solid, tangible cash. But it’s still fairly a drop in the ocean.”

A new way of thinking appears to be even more important than these numbers. “A new Africa is emerging,” Obama said and thus coined a slogan many of the heads of state and business people in town for the summit can identify with. After all, they’re all in favor of a stronger involvement of US companies on the African market.

“Investors have this sense that everything bad happens in Africa,” Henry Obi, manager at private equity fund Helios Investment Partners, told DW. “There’s corruption in Africa, there are wars, there are famines. So it’s always surprising when investors take trips to African corporations and realize the potential opportunities across the African landscape. I think the perception is different – there’s myth and there’s reality.”

‘Buzz of excitement’

“The more important outcome yet to be measured is whether [the summit] succeeds in changing perceptions of Africa in the US, moving those perceptions from ones that focus on the downside, the challenges of Africa towards the upside opportunities,” Richard Downie from CSIS said.

“There’s certainly been a buzz of excitement here in Washington this week around the summit,” Downie went on to say. “Having so many heads of state descend upon Washington is an unprecedented event, almost.”

Numerous conversations with senators and representatives, as well as countless events after the official part was over created many opportunities for exchange and optimism.

Late arrival

Seven of the 10 fastest growing national economies are African countries. The sub-Saharan states have an annual growth of 6 percent. US Vice-President Joe Biden nailed it when he said it wasn’t about doing something for Africa, but with Africa.

China, Russia, Brazil and the countries of the European Union, however, are doing good business in Africa already. “We are missing the boat,” former US President Bill Clinton criticized at one of the summit’s high-profile panels. Clinton said that partnering with African business was “a massive opportunity for American business.”

Obama criticized in his speech that US trade with the whole continent of Africa wasn’t larger than the trade with a single country like Brazil. But of course the president himself has only recently discovered the topic of Africa. That’s quite striking for the first US president with African roots, writes the Washington Post.

Business in Africa is going well

With the first ever US-Africa summit, Obama wants to change course now. Even now, many large companies are already successful in monopoly positions, Helios manager Henry Obi said. He believes the reason that this isn’t widely known is that those who do good business in Africa don’t share it with the world. He sees his company as one of the success stories.

“We run the biggest private equity fund in Africa, about $2.7 billion,” Obi said. “And 60 percent of our investors come from the US – corporations, endowments, pension funds, high-net-worth individuals.”

The Americans aren’t the only ones who want to profit from the budding continent. Egypt’s Prime Minister Ibrahim Mahlab marked his country as a partner for US companies seeking to do business in Africa.

“I think Egypt will be the hub,” Mahlab told DW. “Egypt will be the golden gate to penetrate Africa.” He said all factors of success were present in Egypt: “We have a very good relationship with African states, the passion is very high, and our human resources are to be really valuable to any American investors.”

Whether said American investors can be convinced of this remains doubtful, considering the rather bleak economic reality in Egypt. The same goes for Mahlab’s claim that “Egypt is the only stable, peaceful country in the region.”

Human rights were benched

Touchy subjects like the precarious security situation and many African countries’ undemocratic governments remained mostly on the backburner at the summit.

Human rights organization complained that the US organizers of the summit wanted to avoid a direct confrontation between the dictators among the African heads of state and their critics.

Seydou Konate, for example, criticized the regime of Burkina Faso’s president Blaise Compaore – but only in front of the hotel summit participants stayed in, and not in one of the panels.

Konate is 27 years old. That’s the exact same number of years that Compaore has been in office. The regime critic told DW: “What Africans can learn from America is democracy. Democracy is the essence of America. America also needs to tell dictators in Africa to step down, because they’ve been there for too long.”