The US has more to gain than China in Africa
Africa is home to six of the world’s 10 fastest-growing economies and is projected to grow by 5 percent in 2013, more than twice the U.S. rate? Presently, they only get 1 percent of U.S. foreign direct investment and as President Obama commented when he visited Africa earlier this year: the U.S. lacks a strategy to engage the continent economically. What else should the US be doing to address the extremely uneven state of development across the continent? With the worst recession in decades still with us, should they simply export more to Africa? What is clear is that the US could do with more jobs and we know many parts of Africa would benefit from more US trade and more Rule of Law.
In 2009, China overtook the U.S. as Africa’s largest trading partner. Trade between China and Africa totaled $166 billion in 2011, compared with the U.S.’s $95 billion trade with Africa. But unlike China, the USA has an obvious and apparently untapped advantage with such a large African Diaspora in it’s cities. They could easily play a key role in re-rooting the USA in Africa and help by promoting or investing in new businesses there. We only have to look at the growing numbers of doctors resident in the USA but born in African countries to see that advantage and consider the numbers of African-Americans who look to Africa as a place where they are both welcome and able to thrive, too.
Investment opportunities in African countries are underestimated and undervalued. If we closely opportunities are everywhere and even more promising when we properly understand those regional economies for example, if can accurately measure the size of those important regional economies e.g. in the Gulf of Guinea, that would be good. Studies from the IMF show that figures are often grossly under-estimated, since base years exceed the 5 years used in most countries. Ghana for instance was found to have an economy 60% larger than previously thought. Nigeria has an economy currently valued at $300 Billion but it could easily be revalued at $500 Billion.
We all know there are obstacles and opportunities and African nations must get a better handle on terrorism and corruption. It’s stifling competition and collapsing confidence; as we’ve seen recently in Kenya and Nigeria. The US could do more here too but has to tread carefully. African countries might do more in exchange for essential U.S. assistance. They could adopt more policies like the Extractive Industries Transparency Initiative, which requires governments to make regular audited disclosures of their oil, gas and mining revenue? Such disclosures seem to work, making it harder (though not impossible) for corrupt officials to pocket illegal payments.
It is in the U.S.’s interest to increase their trade with Africa and invest in African businesses, perhaps starting with New York the most important regional economy and port in the USA and those African countries closest to it, just across the Atlantic Ocean, not only to boost American exports, but also to promote U.S. values of transparency and to build local African businesses and communities.