US-Africa summit garners over $17b in investment pledges

WASHINGTON — African leaders on Tuesday called for a deeper economic relationship with the United States, hailing investment pledges totalling more than $17 billion at a Washington summit as a fresh step in the right direction.

US and African companies and the World Bank pledged new investment in construction, energy and information technology projects in Africa at the US-Africa Business Forum, including several joint ventures between US and African partners.

“The United States is determined to be a partner in Africa’s success,” President Barack Obama said in a speech at the forum. “A good partner, an equal partner, and a partner for the long term.”

The US president also urged African officials to create conditions to support foreign investment and growth.

“Capital is one thing, development programmes and projects are one thing, but rule of law, regulatory reforms, good governance, those things matter even more,” he stressed.

African leaders said they were optimistic of becoming full partners in a relationship worth an estimated $85 billion a year in trade flows, as US business leaders eyed opportunities in the region, home to six of the world’s 10 fastest-growing economies — even if they might be late to the party.

“We gave it to the Europeans first and to the Chinese later, but today it’s wide open for us,” said the chief executive of General Electric Co., Jeff Immelt, who on Monday announced $2 billion to boost infrastructure, worker skills and access to energy.

Tanzanian President Jakaya Kikwete said Africa wanted to move away from a relationship of “aid donor and aid recipient” to one of investment and trade.

Kikwete told the forum that with Obama and senior officials encouraging the business community “to take Africa seriously, I think this time we will make it”.

More than 90 US companies participated in the forum, part of a three-day summit which has brought almost 50 African leaders to the US capital, including Chevron Corp., Citigroup Inc., Ford Motor Co., Lockheed Martin Corp., Marriott International Inc. and Morgan Stanley.

Many already have a foothold in the region, which is expected to have a larger workforce than China or India by 2040 and boasts the world’s fastest-growing middle class, supporting demand for consumable goods.

Working as partners 

The Coca-Cola Co. said it would invest $5 billion with African bottling partners in new manufacturing lines and equipment, as well as safe water access programmes, over six years, and the chief executive of IBM, Ginni Rometty, said the IT giant would plow more than $2 billion into the region over seven years.

Still, Aliko Dangote, the president of Nigeria’s Dangote Group, whose operations include cement making, flour milling and sugar refining, said nothing works without adequate power.

Dangote signed an agreement to jointly invest $5 billion in energy projects in sub-Saharan Africa with Blackstone Group  funds, also calling for the US Export-Import Bank to remain open to support African companies buying US goods.

The World Bank, which committed $5 billion to support electricity generation, estimates that one in three Africans, or 600 million people, lack access to electricity despite rapid economic growth expected to top 5 per cent in 2015 and 2016.

Obama took part in a discussion with chief executive officers and government leaders at the event, also attended by US Commerce Secretary Penny Pritzker as well as former president Bill Clinton and former New York mayor Michael Bloomberg.

“These deals and investments demonstrate that the time is ripe to work together as partners, in a spirit of mutual understanding and respect — to raise living standards in all of our nations and to address the challenges that impede our ability to develop closer economic bonds,” Pritzker said.

Pritzker added that Washington would boost efforts to build commercial ties, with more government help on financing and more trade missions going both ways.

“The time to do business in Africa is no longer five years away. The time to do business is now,” she emphasised.

Pritzker stressed that building trade and investments with Africa would be good for both sides, helping African countries develop and creating jobs in the United States.

“As Africa’s middle-class continues to expand, we hope to see our export numbers grow,” she said.

“With a young, dynamic population and a burgeoning private sector, Africa is already a vital market for foreign investors. And that is why we are here today,” US Treasury Secretary Jacob Lew told political and business leaders.

“We want to drive more US investment in Africa, increase trade between Africa and the United States, and spur job creation both here and in Africa,” he said.

African telecoms billionaire Mo Ibrahim encouraged US  businesses to invest in Africa and make money but also said they should “pay their taxes”.

In the evening the African leaders joined Obama and his wife Michelle at a lavish dinner at the White House, where the president referred to his family ties to the continent.

“I stand before you as the president of the United States and a proud American. I also stand before you as the son of a man from Africa,” Obama said to applause. “The blood of Africa runs through our family, and so for us the bonds between our countries, our continents, are deeply personal.”  

But outside of a few top companies, US businesses faced criticism that they are less knowledgeable and more afraid of risks on the continent than their European and Asian rivals.

The United States remains the largest source of investment but most of that has been in the oil and gas sector.

China and Europe have built stronger positions in infrastructure, manufacturing and trade, with China’s trade with Africa more than double that of the United States.

American companies “are still thinking about Africa as a decade ago... whereas things have really changed dramatically. Africa now has been growing at about 5.5 per cent on average in the last decade,” said Dangote, Africa’s richest man whose fortune is estimated at more than $20 billion.

“There is a lot of perceived risk. People only talk about risk. But the majority of those who perceive risk don’t know the story. They have not really been there,” he added.