Building Momentum for Greater U.S.-Africa Trade
The world’s fastest-growing region for foreign direct investment. A growing middle class with spending power totaling USD$4 trillion annually. A market of one billion people. An annual GDP growth rate of more than five percent. Some of the world’s highest returns on investment.
Does this sound like an investor’s dream? It is! The African continent is top rated as an attractive investment destination. Unfortunately, many investors in the United States are not paying attention.
Today, U.S. exports flowing into sub-Saharan Africa stand at only about 1.5 percent. Despite Africa’s immense trade and investment potential, U.S. exports to Africa plummeted from USD$38 billion to USD$22 billion between 2014 and 2016.
The decline in U.S.-Africa trade is occurring in the midst of a rapidly changing African landscape. The rising influence of homegrown African businesses in the global economy reflects the changing realities on the ground. African businesses have emerged as the drivers of growth on the continent, creating more than 80 percent of jobs in their countries. A decade ago, U.S. businesses had to conduct deals primarily with African governments. Today they have African counterparts in nearly every sector.
The rising influence of homegrown African businesses in the global economy reflects the changing realities on the ground. African businesses have emerged as the drivers of growth on the continent, creating more than 80 percent of jobs in their countries.
While American investors appear to be turning a blind eye to the continent’s trade and investment opportunities, other nations are eagerly stepping up to the plate. China’s trade with Africa has expanded to USD$200 billion. Other major global players such as the European Union, Turkey, Brazil, and India have entered the market and are signing trade deals in a big way.
African Heads of State are increasingly recognizing the collective bargaining power and economic potential of their vibrant and growing markets. The African Continental Free Trade Area was signed by 44 African countries on March 21, which will bring together 12 billion consumers into a single continental market with a combined gross domestic product (GDP) of USD$2.5 trillion.
The continental trade pact—the largest trade agreement signed since the World Trade Organization—presents a lucrative opportunity for U.S. investors. Increasing trade opportunities and investments between the United States and Africa and strengthening Africa’s private sector builds stronger economies and prosperity on both sides of the Atlantic.
So, where is the United States?
As U.S. investors look for new markets, the African continent offers enormous economic promise, but many still hold negative investor perceptions. Some blame the media for a barrage of news coverage of disaster, disease, and conflict. Others believe that U.S. investors don’t know where to start when considering investing on the continent.
The Initiative for Global Development (IGD) launched the Africa Investment Rising campaign (AIR) to change the narrative on doing business on the continent by showcasing Africa’s tremendous business and economic potential. The AIR campaign is a communications and advocacy effort aimed at encouraging greater trade and investment in Africa through multimedia storytelling, blogs, and strategic traditional and social media outreach. IGD is committed to amplifying the voices within its network of sector-leading business leaders because they have the power to shift mindsets. When equipped with knowledge and connections, U.S. investors can benefit from the enormous opportunities on the continent.
IGD is committed to amplifying the voices within its network of sector-leading business leaders because they have the power to shift mindsets. When equipped with knowledge and connections, U.S. investors can benefit from the enormous opportunities on the continent.
The IGD roadshow tour, Africa Investment Rising: Building Momentum for Investing in Africa’s Economic Prosperity, took place from April 18–May 1, to bring trade and investment opportunities directly to U.S. companies and forge stronger connections between U.S. and African business leaders in key growth sectors.
Launching in Washington, D.C., the roadshow traveled to New York, NY to highlight financing and investment opportunities; Des Moines, IA for agriculture; and Houston, TX for energy and power. The enthusiasm from American business leaders who expressed interest in tapping into Africa’s trade and investment opportunities demonstrates a growing consensus to strengthen the U.S.-Africa economic relationship.
The African Development Bank (AfDB) Group and USAID’s East Africa and Southern Africa Trade and Investment Hubs sponsored the tour. The AfDB’s mission is to spur sustainable economic development and social progress in Africa while the USAID Trade Hubs exist to assist U.S. investors in navigating the African marketplace and to reduce the risk of doing business in Africa.
The roadshow tour will culminate in South Africa, where U.S. and African private sector leaders and investors from all sectors are invited to attend the IGD Frontier 100 Forum on Nov. 5–6 in Johannesburg, with a focus on bolstering U.S. private sector investments for growth, including site visits to bankable projects in South Africa.
The African Development Bank’s Africa Investment Forum (AIF) will follow on Nov. 7–9, and is designed to take strategy to reality. It is a transactional marketplace dedicated to advancing projects to bankable stages, raising capital, and accelerating the financial closure of deals.
African countries are looking for economic partners, not handouts. That culture of dependency, a vestige of colonialism, is now history. In its place, African businesses are breaking the cycle of poverty and moving forward with the people and countries who want to take advantage of the increasingly abundant trade and investment opportunities.