President Barack Obama announced on Tuesday that the U.S. government, World Bank and businesses will invest a combined $33 billion in Africa’s economy, showcasing America’s economic ties to a continent where trade and investment are increasingly dominated by China and Europe.
Obama said the United States will finance $7 billion in business exports and investments in Africa, while U.S. companies have inked $14 billion in deals with the continent.
And the World Bank, Sweden and private sources have pledged another $12 billion in funding for Obama’s Power Africa energy initiative, bringing the electrification program’s total funding to $26 billion.
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The pledges were the highlight of Obama’s three-day U.S.-Africa Leaders Summit, which brought nearly 50 African heads of state to Washington this week.
In a speech at the summit’s business forum on Tuesday, Obama pointed to a “new Africa that’s emerging,” with an exploding middle class, developing manufacturing and retail sectors, the fastest-growing telecommunications market and the world’s youngest population.
But he said the United States’ trade with the entire continent is equal only to trade with Brazil. The three African countries that trade the most with America are South Africa, Nigeria and Angola, and that’s mostly tied to oil.
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“We’ve got a lot of work to do. We have to do better — much better,” Obama said. “I want Africans buying more American products and I want Americans buying more African products.”
The forum also featured former President Bill Clinton, business executives and African leaders, all of whom pointed to an economic relationship with room to grow.
“We kind of gave Africa to the Europeans first and the Chinese later. Today [it] is wide open for us,” said Jeff Immelt, General Electric’s chief executive officer.
The business forum was aimed at making up ground lost to China, which surged past the United States to become Africa’s top trading partner in 2009 and has since gained more than twice the U.S. share of two-way trade there. European and Chinese officials have held similar summits in recent years, with a particular interest in Africa’s natural resources.
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Obama pitched the United States as a different kind of partner. “We don’t simply want to extract mineral from the ground for our growth. We want to build genuine partnerships to create jobs and opportunity for all our peoples,” he said.
In that vein, the U.S. government is pumping more than $7 billion into efforts to increase exports and investment in Africa, the president said.
That includes $3 billion in Export-Import Bank financing to promote U.S. sales there. The bank will help General Electric sell about $560 million in locomotives to Transnet, South Africa’s largest freight transporter, the White House announced.
In addition, the government’s Millennium Challenge Corp. is devoting $2 billion to new compacts in Africa aimed at spurring private-sector growth and poverty reduction, including almost $500 million over the next five years to help Ghana’s energy sector.
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The Overseas Private Investment Corp. is committing $1 billion to finance and insure business investments in Africa, and the Agriculture Department will guarantee $1 billion in agricultural exports to the continent over the next two years.
The $14 billion in business commitments include deals in sectors such as banking, construction, clean energy and information technology.
Immelt and executives from IBM, Marriott and other leading corporations unveiled the specifics at the daylong event, where U.S. officials touted the business opportunities on a continent that is home to six of the world’s 10 fastest-growing economies.
General Electric announced it will pump $2 billion into Africa by 2018 to develop the facilities and skills training it will need to land more infrastructure and energy contracts there.
IBM, meanwhile, said it has struck a $100 million deal to handle information technology for Fidelity Bank of Ghana.
Obama’s Power Africa initiative, which is aimed at helping 600 million sub-Saharan Africans gain access to electricity, got a boost as well when World Bank President Jim Yong Kim announced $5 billion in financing guarantees for the project. The private equity firm Blackstone Group and business conglomerate Dangote Industries also vowed to invest $5 billion into African energy projects over the next five years.
Obama also announced the U.S. was increasing its annual commitment to $300 million, which, combined with a $1 billion pledge from Sweden, brought the program’s total commitments to about $12 billion.
The forum heard several pitches on trade measures favored by the American business lobby, including extending the charter of the Export-Import Bank, which finances sales in developing markets like sub-Saharan Africa, past September and renewing the Africa Growth and Opportunity Act, which waives import tariffs on products from the continent, before its expiration date at the end of fiscal 2015.
Support for the Export-Import Bank came from former President Bill Clinton, who said he has “heard more ridiculous things about the Ex-Im Bank in the last six months than I have in my adult life” and rebuffed a push by conservatives to abolish it.
“Economics is not theology, and if you’re running a country, you’ve got to try to create an opportunity for all your businesses to be competitive,” Clinton said while moderating a forum panel.
Tuesday’s forum also gave other obscure U.S. agencies like the Overseas Private Investment Corp. a chance to tout their roles financing several new deals.
Still, many of the more than 300 government officials and business executives in attendance acknowledged that the United States needs to catch up, with Clinton noting,“This is probably something we should’ve done a long time ago.”
Rosa Whitaker, a former assistant U.S. trade representative for Africa, called the summit “a defining moment in U.S.-Africa relations.”
“It really provides an opportunity for President Obama to really solidify his legacy on Africa, which he really couldn’t do in his first term,” Whitaker said. “Africa has been in America’s blind spot for too long.”