A decade ago, American companies were wary to enter African markets, pointing to stagnated or falling growth, insecurity and complex political and commercial environments.
Today, America’s private sector is increasingly aware of Africa’s growth story. Africa is home to six of the world’s10 fastest-growing economies, and that number is expected to rise to seven by the end of 2015. The continent holds vast oil and gas reserves and uncultivated arable land. Its demographics are marked by rapid urbanization, a fast-growing middle class and large youth population. All of these variables create a continent ripe for opportunity.
While many U.S. companies are pioneering in their work in Africa, too many others are not taking advantage of the wealth of opportunities Africa offers. Despite obvious growth, too many within U.S. business and policy circles still perceive Africa to be overrun by problems that make the continent inhospitable to investment. And unlike Europe, Africa is far away, and traveling to the region can still be a challenge. Africa’s power deficit, the lack of intra-African infrastructure, concerns about transparency, and complex regional and individual characteristics have also contributed to America’s failure to capitalize on Africa’s growth.
Next week, African heads of state will meet in Washington at the invitation of President Obama to the U.S.-African Leaders Summit. The landmark event is an opportunity to change the narrative on U.S. engagement with Africa from one of belated hesitancy to proactive partnership and dialogue. In particular, the Summit creates a forum for American business to demonstrate its exceptional capabilities, meet the key African players and get educated on doing business across the continent. In turn, African leaders will have the chance to see the vibrancy of America’s private sector and NGO communities.
American business is uniquely positioned to tap into African markets. Africans — both governments and the private sector alike — value U.S. transparency in conducting business and also appreciate the investments in human capital American companies such as GE, Coca-Cola and IBM are willing and eager to make. Especially as African countries seek to climb up the value chain, the commitment of American business to increase Africans’ capacities will be ever more important.
The technical capabilities of American companies also offer the opportunity for the U.S. private sector to assist in solving some of Africa’s greatest challenges, such as the continent’s power deficit. Sub-Saharan Africa generates roughly the same amount of power as does Spain, and 70 percent of the population is without electricity. This deficit constrains Africa’s growth, limits productivity and raises operating costs as companies are forced to rely on diesel generators.
President Obama’s Power Africa initiative aims to double access to power in sub-Saharan Africa by partnering with the private sector to meet the substantial investment needs that improving energy access will require. This is a lofty goal, and it can only succeed with the full support of the U.S. private sector. American businesses can leverage their technical expertise and financial wherewithal to meet Africa’s unique energy needs. These investments will go a long way towards reducing energy costs across the continent, thereby expanding business opportunities in the region and acting as a force-multiplier for Africa’s growth.
The Summit provides an ideal opportunity to determine additional synergies between American business and Africa’s needs. It will also be a chance for Africa to demonstrate its commitment to creating an open and conducive business environment. Working in partnership with African governments, their citizens and the private sector, American business has the capability of catalyzing Africa’s sustained growth. The upcoming Summit is the next step in strengthening this win-win partnership.
Don Gips is a Senior Counselor at Albright Stonebridge Group, a Senior Advisor to Blackstone’s Private Equity Group, and a Venture Partner at Columbia Capital. From 2009-2013, he served as the U.S. Ambassador to South Africa. Previously, he held positions in the Obama and Clinton administrations. He is Chair of the U.S.-South Africa Business Council.