At least 50 African Heads of State and Government as well as hundreds of American trade and investment corporations will converge in Washington DC for the US-Africa Leaders Summit which kicks off today.
Hosted by President Barack Obama, the Summit, the first of its kind, comes at a time when Africa is trending as the world’s next great economic giant.
With growth expected to average above 5 per cent in 2015, the continent is now home to six of the ten fastest growing economies in the world.
Real income has increased more than 30 per cent over the last 10 years and according to the African Development Bank, the middle class in Africa has tripled over the past three decades to 355 million or more than 34 per cent of the population.
By 2040, Africa will have a larger workforce than China according to projections. With vast natural resources, and a growing pool of skilled human resource, the world’s biggest economies have turned to Africa as a new business partner.
Already, there are periodical forums between Africa and countries like China, Japan and India.
Speaking about the Summit, the CEO of Private Sector Federation, Hannigton Namara, said with many African economies growing rapidly, the world’s biggest economies have all reasons to pick interest in continent.
“Africa remains the only place in the world where someone can be assured of good returns on investment. The American markets are saturated while Africa has a lot of untapped potential…Africa sits on a lot of raw materials that would feed the US companies while in return, African countries would benefit much from America’s finished products,” he said.
In terms of US’ influence in global economics, Namara said the US, as one of the major financiers of multi-nationals like the World Bank Group, has the ability to channel more funds to Africa.
According to the White House, the US-Africa Summit seeks to forge strong business relationships, increase market activity between the US and African countries, debate economic policy challenges and opportunities—and ensure this new chapter unfolds with maximum social and economic benefit for all.
Top US business executives, including heads of Coca-Cola, IBM and General Electric, will take part in key sessions.
With Africa’s untapped oil deposits, the question is whether American businesses would be more interested in other ventures other than oil that has heavily dominated economic relations.
Andrew Mold, a senior official with The UN Economic Commission for Africa told The New Times in an interview yesterday that the US is trying to gain a strong footing in Africa and it has already made some progress through African Growth and Opportunity Act (AGOA) but the benefits of AGOA had been somewhat geographically focused, with oil producers and a few textile producers being the main beneficiaries.
In Washington, African Presidents will analyse if indeed the US would compete with China’s trade approach, and the more aggressive Europe that has for long maintained business relations with Africa.
In his observation, Mold said the US’ likely rival for the African market is China since it is hard to separate politics from economy.
He, however, noted that the return on US FDI in China has been quite low - data from a few years back suggest as low as 2-3 percent return on assets.
“It is in Africa where US operations tend to be very profitable, giving rise to questions about why there is not more US investment,” he said.
AGOA remains the US’ masterpiece in its relations with Africa which is a trade deal between the super power and 39 sub-Saharan countries in supporting African exports.
In Washington, AGOA is expected to dominate discussions and Presidents may express their stand on how best the initiative can be improved.
Prof Charles Ruhara, the Dean of Faculty of Economics at Kigali Independent University (ULK), said Washington should offer an opportunity for Africa to open up and tap more opportunities.
“There is much Africa can benefit from such forums. If you are to measure the GDP of a nation, you need to put into account the level of that country’s openness to the outside word. The Washington Summit offers that opportunity for countries to network with US and grow their GDP levels,” Ruhara said.
He added that the Summit that focuses on trade and investment would as well act as a forum for Africa to look into ways of increasing its net export.
Africa remains a centre for global attention. Recently Japan announced the move to increase its visibility in Africa with increased aid and investment.
Meanwhile, much as the US has been a major donor to different intervention programmes, some African leaders are already calling for change in approach where business should take precedence.
In an Op-Ed co-authored by Presidents Paul Kagame, Yoweri Museveni and Uhuru Kenyatta, the three leaders said: “The US has always been an important partner for our countries, but the path to solving our problems is not through handouts from American taxpayers.”
“Only we, together with our business sector, can do the job. As we do so, we look forward to a deeper and more “normal” relationship with the US, focused on what we can do together rather than on what Americans can do for us.”