Africa is ascendant, but when will America recognize it?
Africa’s economic outlook as a whole presents one of the most promising growth stories of anywhere in the world, yet the U.S. remains under-invested in the continent relative to other regions. When you read a headline about Africa in the paper, it’s still more likely to talk about conflict or disease than opportunity.
What many Americans — and American businesses — may not know is that Africa’s economic growth has exceeded the global average by 2 percentage points over the past decade and a half. Yet many economies across the continent remain constrained by poor infrastructure, especially power — with about two-thirds of the Sub-Saharan African population living without electricity.
Closing the energy gap requires massive investment, a figure the International Energy Agency puts at $385 billion, and that creates an opportunity for U.S. companies.
“The growth is real — we’ve seen it, we’re putting our money where our mouth is,” said GE CEO Jeffrey R. Immelt during an Africa Ascending conference on Monday that GE hosted with The Economist. Earlier that day, the company announced a range of additional investments in energy infrastructure, healthcare and skill-building and that adds up to $2 billion through 2018.
“Big challenges remain, but the challenges will be solved through innovation,” said Immelt. “In order to play you have to show up, and I think the next five or 10 years for American business, Africa has to be on the radar.”
The conference and many other events like it being held around Washington, D.C. this week presented a chance to raise awareness about opportunities to invest in Africa, with the leaders of more than 50 African countries gathering for the U.S. Africa Leaders Summit.
“The U.S. is coming into the game in a new way, and we appreciate that,” said Ngozi Okonjo-Iweala, Nigeria’s finance minister.
“It’s about investment,” she said. “We’re not saying that aid is not important — it is. But a different kind of aid, aid that will catalyze even more private sector investment.”
Among the investments GE announced that day were a number of projects in Nigeria, including $350 million in technology and services for Nigeria’s subsea industry and as well as aeroderivative gas turbines to ensure uninterrupted power at the Nigerian National Petroleum Corporation’s state oil refinery.
But Okonjo-Iweala acknowledged that governments also have a role to play in spurring investment, estimating that planned reforms to liberalize Nigeria’s power sector could add 2 percentage points to growth.
John Dramani Mahama, the president of Ghana, said the energy deficit is one of the main constraints to growth in his country and other parts of Africa. “Providing sufficient power at affordable rates as efficiently as possible is going to be driver of growth in Africa.”
GE recently announced plans to invest in Ghana 1000, a project that aims to bring 1,000 MW of power online over the next six years. Mahama expects other U.S. companies to consider similar partnerships, saying he already sees signs of a shift in attitude toward investing in Africa. “We’re seeing a lot more American businessmen coming to look at opportunities.”
Yet despite growing awareness, there is still a lot of work to do in spreading Africa’s growth story. “Americans don’t know the Africa of today,” said World Bank President Jim Yong Kim. “It’s time for the rest of the world to really study and understand what’s happening in Africa, because that’s where I think the biggest opportunities for growth are going to be going forward.”