Educating America: Economic opportunities abound in Africa


Windhoek – The United States needs “a massive re-education about Africa” and should work towards having a “mature conversation” with the continent’s leaders, without which current efforts to shift the continent away from China, will come unstuck.

As African leaders gathered for the US-Africa Summit in Washington between August 4 and 6, most political and economic analysts concurred that Africa has once again become the “battleground” for global dominance between the US and China. Analysts also say that the US, which has in the past pursued a military agenda on the continent, is playing catch-up to China, which has taken a long-term bet on Africa’s future.

China has cemented its role as Africa’s investment and development partner over the past decade as it rolls out infrastructural projects such as hydroelectric dams, roads and railway lines in almost every country on the continent.

Chinese-funded banks have doled concessionary financing to drive infrastructure projects across the continent, though Chinese investments have often attracted criticism, at home and abroad, on issues of labour and fears that China would become a latter-day coloniser.

Africa’s scepticism on the Chinese dragon is not without reason. The continent still bears deep scars from European colonisation. At the dawn of independence of most African countries, the continent still became a theatre of the Cold War between the Western countries and the then USSR.

As China flaunted its economic muscle, aiding Africa’s infrastructure and investment needs over the past decade, the US sought to counter China’s burgeoning relationship with Africa by pushing a military agenda, under the guise of the US Africa Command (AFRICOM).

AFRICOM has quietly crept into particularly the Horn of Africa, West Africa and some few countries in Central and Southern Africa and played a direct and instrumental role in the toppling of the late Libyan leader Muammar Gaddafi.

But where the US has pushed guns and drones onto the continent, China has become the continent’s first choice trading and investment partner, analysts say.

“China has got a massive headstart. From a diplomatic and economic point of view, China has made all the running over the last few years so there is quite a catch-up for the US,” Daniel Silke, a South African-based analyst was quoted by news agencies saying.

The US needs to re-orient its approach to Africa “as a continent of opportunity”, another analyst said.

Changing its attitudes towards Africa does not necessarily mean the US abandoning emphasis on democracy, stability and governance, Howard French, an associate professor at Columbia University and author argued, on July 31.

“It means recognising that Africa is overdue for a more mature kind of conversation, in which its economic life is not subsumed by other topics.

“That means recognising, belatedly, that robust, inclusive economic growth can probably do more for the continent than any amount of military planning,” French says.

In addition, the US, which has made little impression on the continent, should also “rethink how one talks about the continent”, French says.

“The US corporate world is in need of massive re-education about Africa, and Washington must learn to speak about opportunity there without muddling the message with talk of terrorism and security, which have increasingly dominated US policy towards the region since the end of the Cold War,” French argues.

Africa is China’s Long Term Bet

According to French, China seeks to use raw materials from Africa “as a spring board to help Chinese businesses emerge as global players”.

“Chinese companies have built bulging order books in Africa, cutting their teeth in a part of the world where Western competitors, when present at all, have not brought their A-team.

“The Chinese astutely calculate that the wealth they accumulate in Africa and the lessons they learn will serve them well as they push into bigger, richer and tougher markets.”

Sub-Saharan African economies will grow by 5.4 percent, on average, this year and 5.8 percent in 2015, the International Monetary Fund (IMF) says.

Africa’s largest economy, Nigeria will grow by 7.1 percent per year up to 2030, the fund says. China’s economy will grow by 7.4 percent this year and 7.1 percent in 2015. On the contrary, the US economy will grow by 1.7 percent and 3 percent in 2015.

“Africa has come a very long way from its era of aid-dependence. The rapidly emerging middle class in Africa is driving large scale diversification of Africa’s economies, which offers immense opportunities for companies willing to invest,” Standard Bank Group, the continent’s largest bank says.

“Trade with African economies and investment in Africa offer big rewards but it requires sound local knowledge, strong local partnerships, and a long term view,” the bank’s chief executive, Sim Tshabalala, said.

Trade between Africa and the US rose to around US$110 billion in 2013 from around US$50 billion in the early 2000s. China’s trade with Africa surpassed US$200 billion in 2013 and analysts say the Dragon’s emergence as Africa’s largest trading partner underscores the potential value on the continent.

“While there is still a lot to be done the overall direction that Africa is moving in is overwhelmingly positive. 

US companies can do very well in Africa provided they put in the effort to understand the continent’s markets in detail, rather than looking at the continent as a single, homogenous entity,” Tshabalala advised.

Unlike China, the US completely misread the economic opportunities on the continent. While the continent still looks overwhelmingly poor, it already has a middle-class larger than India’s. The continent’s demographic dividend will place “most of the population in the most productive, youthful and heavily consuming phase of life”.

Young people on the continent resemble less and less the peasant multitudes of the past, and are instead urban and highly globalised.

“For the most part China is placing its chips on this demographic end-run in Africa, seeing past the aging, debt-saturated markets of the West,” French argues.

The mature, rich economies of the West have had little interest in competing with China in low-end manufacturing and cheap consumer goods on the continent.

“There is a worrisome complacency in the US corporate world about the continent, which leaves an open path for China to move up the value chain in African markets,” he added.

August 2014
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