America’s competition in Africa

By Gregory Simpkins

In December 2022, the Biden Administration convened a summit with African governmental leaders, as well as African and American businesspeople and civil society representatives. It was predicted that this gathering would lead to a deeper relationship between the United States and the nations of Africa.

“In 2023, the United States accelerated high-level exchanges, directing an unprecedented pace of visits to the continent. In the last year, 17 Cabinet and leaders of U.S. Government Departments and Agencies have visited 26 countries in Africa, with visits centered on expanding substantive and meaningful partnerships with African countries, institutions, and peoples across the continent, including a visit to Ghana, Tanzania, and Zambia by Vice President Harris where she announced the mobilization of more than US$8 billion in public and private sector investments in climate and food security, women’s empowerment, and digital inclusion across Africa,” the Department of State fact sheet read.

The statement went on to report that in the past year, the United States had supported and helped close 547 new deals for a total estimated value of US$14.2 billion in new two-way trade and investment between the United States and African countries. This represents an increase of approximately 60 percent in the number and value of closed deals over 2022. The results from these increased investments have tangible impacts on the lives and livelihoods of people in the United States and Africa, with highlights that include:

1. In 2023, the International Development Finance Corporation (DFC) committed over US$2 billion across 46 transactions in Africa. These projects are leading to significant development impacts across the continent, including supporting strategic infrastructure, job creation, small business growth, agricultural productivity, improved health outcomes, and open access to critical minerals
2. In 2023, the U.S. Trade and Development Agency (USTDA) funded fifteen project preparation grants designed to help leverage more than US$3.4 billion in infrastructure finance for projects across the continent.
3. In 2023, the U.S. Department of Commerce, in concert with the launch of its department-wide Africa engagement strategy to leverage the full range of agency capabilities, facilitated nearly US$3.6 billion in U.S. exports to Africa, and committed to fostering long-term commercial partnerships with a focus on priority sectors such as digitization, clean tech, creative industries, climate-smart agriculture, and infrastructure – all of which are driving inclusive growth, supply chain resilience, and quality jobs on both sides of the Atlantic. The U.S. Department of Commerce has also launched new bilateral commercial dialogues with Tanzania and Zambia, renewed several existing engagements with other countries, led several trade missions, and is opening new Foreign Commercial Service offices in Côte d’Ivoire and Zambia.
4. In March, Prosper Africa mobilized US$274 million in long-term financing for West Africa’s rapidly growing housing sector, opening new opportunities for U.S. investment in Africa’s emerging markets and providing an avenue for West Africans to gain greater access to homeownership. This deal represents an innovative approach to mobilize transparent, market-oriented financing at scale and is expected to help about 6,000 households across West Africa gain access to homeownership.
5. In April, the President’s Advisory Council on Doing Business in Africa (PAC-DBIA) adopted 18 new recommendations for the U.S. Government to strengthen U.S.-Africa commercial collaboration in priority sectors.
6. US President Biden announced Millennium Challenge Corporation (MCC) Board selection of four countries as eligible for MCC investment – The Gambia, Togo, Senegal, and Mauritania – which are advancing development of programs to unlock key constraints to economic growth. In September 2023, MCC signed a US$500 million compact program with Mozambique to promote climate and coastal resilience and improve public services and transportation infrastructure. In September 2023, MCC signed a US$60 million threshold program with Kenya to strengthen urban connectivity in Nairobi.

American presidents seldom go to Africa, especially summits such as AGOA Forums. Somehow American government officials do not realize that cabinet officials – even the Vice President – are not at the rank of African presidents no matter how powerful our government is.

U.S. efforts in Africa

As has been the case since the administration of President Bill Clinton, the United States has focused more on trade and economic development in addition to its traditional concentration on humanitarian assistance. The African Growth and Opportunity Act (AGOA), and more recently Prosper Africa, have stimulated efforts to enhance U.S. trade and investment with Africa. However, there are issues that are impediments to the U.S. competition for African alliances.

First, American presidents seldom go to Africa, especially summits such as AGOA Forums. It is certainly great that American cabinet officials and the Vice Presidents go, but leaders of other countries not only travel to Africa but are at the forefront of their Africa summits. Somehow American government officials do not realize that cabinet officials – even the Vice President – are not at the rank of African presidents no matter how powerful our government is.

Biden promised to go to Africa in 2023 but given the turmoil in Ukraine and Israel-Gaza, not to mention spreading attacks on shipping in the Middle East and a perceived Chinese threat to absorb Taiwan, he has a lot of other concerns on which to focus, and 2024 is a major election year that likely won’t facilitate an Africa visit either.

Second, for many reasons, AGOA has not been as successful as it should have been. Too many African and American businesspeople still don’t understand how it works even more than two decades after the law was signed. In the last two years, seven African participants have been suspended from AGOA regardless of the impact on businesses in those countries – a sign that this trade process operates more as a government-to-government operation than the business-to-business one it was intended to be. Such a construct is not helpful to either African or U.S. businesses.

Third, the U.S. dollar’s reign as the world’s prime reserve currency is under serious threat. The use of the dollar in sanctions is leading countries around the world to move away from a currency that can be used against them. While replacing the dollar as the reserve currency may not be as easy as some would hope, the turmoil surrounding the dollar isn’t a good sign for advancement of American interests in Africa. Scarcity of dollars in African countries has been a growing problem in recent years.

Fourth, an American tendency to make decisions that seem contradictory to an overall policy has been confusing. For example, pushing Kenya to install muti-party democracy but not next-door Uganda appeared to be aimed at encouragement of Uganda to support U.S. positions such as peacekeeping in Somalia.

The inconsistent and little-explained U.S. position on the Israel-Gaza conflict apparently is reminding Africans of prior U.S. policy inconsistencies.

Finally, the United States faces significant competition for African markets and allies. Al Jazeera reported on January 9 2022 that Africa has been opening up to numerous foreign suitors:

The face and the fate of African continent in the 21st century is changing fast and its network of foreign relations is becoming more complex as new actors are interacting with African countries

The report further stated:

“Besides the Western powers, nowadays, China, Japan, India and Russia along with Middle Eastern regional powers such as Qatar, the United Arab Emirates (UAE), Saudi Arabia, Iran and Israel are all seeking to create an area of influence over Africa’s sources, markets or strategic locations by offering low-cost loans, financial investments or finished products. Therefore, Africa has become the new star of summits and forums which are usually considered a necessary tool to boost interaction with Africa.”

According to Al Jazeera, Turkey has particularly made a play for favor within Africa.

“Today, Turkey is a more visible actor in Africa and Africa has had a unique position in Turkey’s multi-dimensional and proactive foreign policy in the last 15 years.

Turkey is seeking to increase its influence in the continent more by using every channel of diplomacy, trade, investment, education, health, security and military cooperation along with soft power tools like culture and history” stated the news service.

The African Center for Strategic Studies in its recent report, pointed out that India has a longstanding relationship with the nations of Africa on which to build.

“India’s first prime minister, Jawaharlal Nehru, termed Africa as India’s ‘sister continent,’ in recognition of the long ties of affinity. Since the 1960s, India’s prime ministers have visited Africa 76 times, a level of engagement unmatched by Africa’s other external partners.

Between 2015 and 2022, New Delhi received over 100 African leaders, while each African country received an Indian cabinet minister. Indo-African ties cover culture, education, trade, technical cooperation, energy, agriculture, maritime security, peacekeeping, and professional military education,” the report stated.

It must be recalled that India has sizeable expatriate communities in African countries – especially in eastern and southern Africa – and in cases such as the Madhvani family in Uganda, they are often very economically influential.

The United States is at a handicap in that our country’s direct relationships with African countries is relatively recent. Prior to the independence movements of the late 1950s through early 1980s, most of American contacts with Africa ran through the former European colonial powers. Even trade with Africa, which harkens back two hundred years or so, still went through European interlocutors.

China and Russia gained favor on the continent by supporting independence movements with which the United States was reluctant to become involved. Not only India, but also Lebanon, have influential expatriate communities in East, West and southern Africa, along with the residual European presence on the continent.

Americans, hearing and reading truly little positive about doing business in Africa, are reluctant to take the plunge and invest or do business there. U.S. administrations from Clinton on have made efforts to increase American commercial involvement in Africa, but it is a difficult task with limited expatriate communities in African countries. There are, of course, Americans who have moved to African countries to become citizens, but they usually had no strong government ties before leaving and have not been a focus of U.S. government recruitment or financing efforts since leaving.

Perhaps the Diaspora from America will be seen as a means of enhancing U.S.-Africa trade soon. After all, the Diaspora here in this country is acknowledged as a vanguard for U.S.-Africa trade, even if that phenomenon hasn’t yet been activated to the extent that it should have been.

Gregory Simpkins, a longtime specialist in African policy development, is the Principal of 21st Century Solutions. He consults with organizations on African policy issues generally, especially in relating to the U.S. Government. He further acts as a consultant to the African Merchants Association, where he advises the Association in its efforts to stimulate an increase in trade between several hundred African Diaspora small and medium enterprises and their African partners.