Although the US has made generous trade concessions to African countries, its companies, with the exception of a few, have been slow to take advantage of the opportunities the new Africa offers. Hopefully this is about to change. Sherelle Jacobs examines the implications of a major trade delegation led by the US Secretary of Commerce to Nigeria and Ghana.
The US’s economic relations with Africa came under the spotlight in May when the US Secretary of Commerce, Penny Pritzker, led a delegation of 20 US energy firms to Nigeria and Ghana.
The visit highlighted the Obama Administration’s wish to strengthen US economic relations with Africa, particularly in the energy sector. The overarching objective of the trip was to bolster business relations in the energy sector – amongst those accompanying the Secretary of Commerce on the trip were experts in distribution, generation and transmission of energy.
“President Obama and this Administration see tremendous opportunity in Africa. President Obama has called it ‘the world’s next great economic success story.’ Africa is home to seven of the 10 fastest-growing economies in the world,” said Pritzker in a speech to business leaders at a conference in Lagos during her trip.
“President Obama is committed to deepening the relationship between US and all the nations of Africa, and developing a new level of mutual understanding and respect based on a shared commitment to freedom, democracy, social progress and economic growth,” she added.
In June 2013, the US launched the Power Africa initiative to encourage the flow of further investment into African energy industries. So far the US government has pumped $7bn into Power Africa
The May tour of Nigeria and Ghana is a prelude to President Obama’s Africa Leaders Summit, which is being launched this year. The first ever summit is to take place in Washington, DC in August 2014.
It will go down as the largest such gathering ever organised by a US President and will bring heads of state and CEOs from both Africa and US to talk about how companies from both regions can improve their relationship – in a range of sectors including energy, finance, agriculture, infrastructure and ICT.
“While the US’s ties to the African continent are stronger than ever, this Forum will help spur even more trade and investment between Africa and the US. We are excited about this CEO Forum. But it does not change the fact that there is much work to do,” said Pritzker about the August summit, during her trip to Nigeria.
These developments feed into a broader trend of increasing US interest in Africa – something that is traceable back to the inauguration of Barack Obama as President.
Indeed, in 2012 Obama outlined his vision for a new basis to the US-Africa relations in a document, Strategy Toward Sub-Saharan Africa. The strategy has four main aims: bolstering democratic institutions; promoting peace and security; encouraging opportunity and development; and stimulating economic growth, trade, and investment.
A lot of the US’s economic activities in Africa are focused on energy. In June 2013, the US launched the Power Africa initiative to encourage the flow of further investment into African energy industries. So far the US government has pumped $7bn into Power Africa. Thirty-five partners from the private sector have committed a further $14bn.
“Already, Power Africa has closed on transactions totalling nearly 3,000 megawatts, with an additional 5,000 megawatts in the planning stages,” said Pritzker, adding that Power Africa could provide Nigeria with an additional 2,000 megawatts of energy over the following five years.