Two months have passed since the first ever U.S.-African Leaders Summit. It is now time to take stock of what was achieved and what comes next.
One of the most significant achievements of the Summit was the clear emphasis placed on trade and investment as a top priority in the U.S.-Africa relationship. A full-day was devoted to a business forum co-hosted by Commerce Secretary Penny Pritzker and former New York Mayor Michael Bloomberg. The forum, which drew nearly 300 public and private sector leaders focused on deepening the U.S. business community’s engagement in Africa across a range of sectors including consumer goods, finance and capital investment, information and communications technology, infrastructure, and power and energy.
With more than $33 billion dollars in deals, commitments and investments announced during and around the Summit, it is evident that there are significant opportunities for the private sector. Several policy developments from the Summit will be of particular interest to businesses seeking to realize these opportunities and to navigate the challenges of this expanding commerce.
At the Summit, both senior administration officials and members of congress committed to working together to achieve a “seamless renewal” and “long-term” extension of the African Growth and Opportunity Act (AGOA). A cornerstone of the U.S.-Africa commercial relationship, the preferential trade legislation is intended to incentivize African economies to open their markets to American investment. Currently set to expire on September 30, 2015, AGOA is critical to commercial interests on both sides of the continent; it has generated an increase of over 221% in U.S.-Africa trade, approximately 100,000 jobs in the U.S., and over one million direct and indirect jobs in Sub-Saharan Africa. Long-term renewal of AGOA is especially important because the size of investment needed to make a venture viable — particularly in the textile industry — requires a longer period of time to amortize. The sense of urgency conveyed about the need to renew and extend the legislation was welcomed by policymakers and investors alike.
Among the other developments, two are worth noting. The energy sector received considerable attention. The White House announced a new goal of extending reliable sources of power to 60 million households and businesses across the continent through the Power Africa initiative. To date, the private sector has pledged to invest $26 billion in this project. These commitments are supported by the U.S. government, the Millennium Challenge Corporation, the World Bank, and the government of Sweden through advisory services, direct financing, grants, investment guarantees, loans and technical assistance. This doubling of the Initiative’s goals will create more opportunities for investors who are looking to participate in projects in Africa’s energy sector.
Also, USAID and the Gates Foundation are partnering with the Development Credit Authority to issue a non-sovereign backed municipal bond in Dakar, Senegal. This model, if successful, will generate new financing for infrastructure projects and services in Africa’s cities, where much of the continent’s future growth will occur, creating increased access to African markets for investors in the coming years.
In summary, the U.S.-Africa Leaders Summit set forth ambitious, but tangible, goals to accelerate the region’s economic development and to strengthen U.S.-Africa relations. As a result of the Summit, business investment in Africa is likely to increase as companies seek new opportunities.