U.S. companies pledge $14 billion in Africa investment
U.S. heralded $14 billion worth of new investments in Africa Tuesday as Washington seeks to demonstrate it is ready to take a strong role in the continent's economic takeoff.
The Obama Administration wants to strengthen American business investment in Africa. Today, U.S. companies pledged some $14 billion in new business investment. That was in addition to commitments from the U.S. government, the World Bank and other private groups.
The major push in this bid? Power (the electric kind). After all, six of the ten fastest growing economies are in Africa. But Ben Leo, a senior fellow with the Center for Global Development, says 600 million people in Africa lack any electricity. That’s a market opportunity, but it’s also a headwind for economic and business growth.
“That’s why every single African leader has affordable electricity at the top of their political and economic agenda,” he says.
That’s also why the private equity firm Blackstone just announced it has teamed up with African billionaire Aliko Dangote to invest $5 billion in energy infrastructure in Sub-Saharan Africa. The Carlyle Group is also getting involved in energy infrastructure.
Aubrey Hruby, a visiting fellow at The Atlantic Council, says other business obstacles remain. Say you want to open a KFC.
“It doesn’t take a genius to know they want to do business in Nigeria or in Lagos,” a huge city will millions of people, she says. The problem is finding good business data.
“The question is on what block? On what corner? And how do you decide that based on traffic patterns, available disposable income, those kind of metrics?” she asks.
Still, Witney Schneidman, senior international advisor for Africa with Covington & Burling LLP, says U.S. businesses have already invested about $31 billion in Africa. Trade goes both ways, he says.
You can walk into a range of clothing stores in the U.S., like “Lands’ End, Old Navy, and you’ll see shirts that say ‘Made in Lesotho.’ You’ll see pants that say ‘Made in Mauritius.’ You’ll see t-shirts that say ‘Made in Kenya,’” he says.
The evidence? Wal-Mart is doing business in Africa. Procter & Gamble is making diapers there. Even China is looking to Africa for cheaper labor.