The new US-Africa Relations

In the last four years, the perception has been that the United States approach to Africa was at an arm’s length and committed to little engagement with African leaders. The Previous administration launched Prosper Africa and finalized the creation of the Development Finance Corporation (DFC). Both initiatives embody Trump’s view of doing business with individual firms and countries instead of a more multilateral orientation. Another tool at the DFC’s disposal is a higher credit line of $60 billion, which means it can lend more money to viable projects. Currently, the DFC has invested $8 billion for 300 projects across Africa.

President Biden’s remarks at the 2021 African Union Summit highlighted a shared vision for a better future that includes “growing trade and investment that advances the prosperity” of the United States and African nations and emphasized that the U.S. was ready to be a “partner in solidarity, support and mutual respect.”

The Biden- Harris Administration’s vision for how it will invest in economic development, create new markets for U.S. products, and address shared challenges, needs clarity with an action-plan centered on pro-growth trade that will leverage the AfCFTA, investment, and flexible finance to bring about Africa’s self-reliance is an important first step.

Even though there are many bright spots in the African Economy like the emergence of mobile technology and fin-tech as well as an increased number of African returnees starting businesses and bringing innovation and more foreign direct investments, the GDP statistics tell us that poverty still plagues Africa. The lessons of the post-COVID-19 pandemic economies in Africa is that African governments and their partners should not continue to ignore critical, massive investments in the fundamentals which include healthcare, education, infrastructure, energy, and water. These will lead to unemployment reduction and produce inclusive wealth.

Key areas the US Government should look at while engaging African Governments are as follows

Chinese Influence:
Chinese Lending: Since 2016, China has had close ties with Africa granting cheap credits, infrastructure developments and low accreditation procedures to support African Countries but in recent times Chinese lending has dropped significantly. According to data from Boston University’s Global Development Policy Center, lending by the China Development Bank and the China Exim Bank plunged 94% from $75 billion in 2016 to just $4 billion in 2019. This is a dramatic shift given that these two banks alone over the past 20 years have lent nearly as much as the World Bank. This paves the way for the Biden-Haris Administration to work with its partners for an Infrastructure initiative that will connect 80% of the world’s population through physical and digital infrastructure, enhance global exchange, green growth, & strengthen the rules-based system which will also strengthen the AfCFTA.

Covid-19 Diplomacy: Vaccines have had a place in diplomacy since the Cold War era. The country that can manufacture and distribute lifesaving injections to others less fortunate sees a return on its investment in the form of soft power: prestige, goodwill, perhaps a degree of indebtedness, even awe. Today the country moving fastest toward consolidating these gains may be China, under President Xi Jinping, who proclaimed last May that Chinese-made vaccines against COVID-19 would become a “global public good. Vaccine diplomacy is reaping soft-power dividends for the Chinese government and consolidating its relationship with BRI countries

Biden-Harris Climate Change initiative: The Biden-Harris Administration wants to develop a U.S. climate finance plan, as well as a plan for ending international financing of fossil fuel projects with public money. Africa has many of the poorest people in the world. For most African countries, the priority is economic growth — first in agriculture, where much of the population still works, and then in industry and services.

Composting and recycling can only go so far — farmers need synthetic fertilizer to raise yields, and natural gas is the most efficient energy source for fertilizer production. Poor farmers in Africa need much better access to irrigation and efforts to use small-scale solar powered irrigation systems at the farm level have been successful but are nowhere near sufficient to meet the needs of the entire continent. Large scale, energy-intensive water control projects that rely on fossil fuels must be in the mix — just as they are in wealthy countries.

Countries like Ethiopia, which have ambitions to become manufacturing powerhouses, are increasingly looking to China for the construction and operation of large-scale power projects that will provide reliable electricity. Off-grid technologies are useful for extending basic energy services but cannot power the industrial activity needed to create millions of jobs and drive economic diversification. There is no world in which Africa can meet its energy needs with carbon-neutral power plants and off-grid solutions. A blanket ban today on the financing of fossil fuels in the poorest countries will not only obstruct economic growth; it will also do little to fight climate change and makes those countries less resilient to climate change.

US Initiatives: US Programmes or Initiatives such as African Growth and Opportunity Act (AGOA), the President’s Malaria Initiative, the President’s Emergency Plan for AIDS Relief (PEPFAR), Power Africa, Prosper Africa, the Millennium Challenge Corporation (MCC), and the Young African Leaders Initiative (YALI), US – Nigeria Commercial Investment Dialogue among others, have clearly made their mark, and such initiatives provide a roadmap for charting a foreign policy course that aligns with the aspirations and values of African publics, and is, at the same time, consistent with American values. However, clarity is needed on what these initiatives will be in the Biden-Harris Administration, especially how they will consolidate to support the critical needs of African Nations and how the US Business Community can leverage on these initiatives across Africa.

Securitization of US Investments: The American Business Community in Africa have shared their concerns on security of investments. A survey conducted by the American Business Council in Nigeria since 2017, has showed that crime and security is a major issue for the US Private Sector. Working with African leaders and partners (U.K, E.U) to bring about the needed security that will drive investments will be critical.

On the 2nd of June via a webinar, the new US-Africa relations organized by the American Business Council in collaboration with US Chamber of Commerce, Amcham Ghana, AmCham Kenya and Amcham South Africa, US Government representatives indicated that the critical challenge for SME growth in Africa which is funding.

The American Government is very keen to strengthen the Micro, Small and Medium Enterprises (MSMEs) space in Nigeria by encouraging US MSMEs to invest in Nigeria and engaging the African Diaspora in the US who are interested in closer connection in Africa including through increased trade and investment. The engagement also includes the African Growth and Opportunity Act (AGOA), where 39 countries including Nigeria are AGOA beneficiaries.

Akunna Cook, Deputy Assistant Secretary of State, African Affairs revealed that the Biden-Harris administration has plans for Africa which includes increasing two-way trade and investment between the two parties. The US Government plans on working with African Governments as partners in pursuing shared interests such as Global health, Climate change and the creative industry with an eye towards, ensuring that the youth are prepared for the jobs relevant in the future.

The creative industry in Africa represents a growing business market for the likes of Netflix and the entertainment space with an increasing influence on American audiences. AfCFTA has the potential to promote and protect the many rich and vibrant aspects of African cultures through enhanced IP protections and working through the African Union in this area.

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Watch the Webcast