U.S.-Africa Summit Produces $37 Billion Project Pipeline

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--It was a lot to ask that the U.S.-Africa Leaders Summit in Washington last week would hit the jackpot for the all 50 attending African heads of state, as well as business leaders, President Barack Obama, representatives of major U.S. companies, and bodies such as the World Bank.

An underlying theme conveyed in the president's approach was the need to develop infrastructure projects to enable a secure expansion environment for the trade and industry supply chain. He also stressed that the U.S. was looking to develop and train Africa's population in partnership with African governments and local companies. The development and training aspect was understood as a reference to China's forceful move into Africa with its own labor force to exploit natural resources.

After announcing a $2 billion boost to infrastructure, worker skills and access to energy, Jeffrey Immelt, chief executive officer of General Electric (NYSE:GE) (Fairfield, Connecticut), said, "We gave it [Africa] to the Europeans first and to the Chinese later, but today it's wide open for us."

Aliko Dangote, president of Nigeria's the industrial conglomerate, Dangote Group, and the continent's richest man, has signed an agreement to invest $5 billion, jointly with the Blackstone Group (NYSE:BX) (New York), on energy projects. He said nothing works without adequate power.

Obama mentioned a figure of $33 billion in investments destined for Africa, and with further funding of projects by companies and financial groups, this amount could be expanded to $37 billion.

Already committed is the $12 billion for the Power Africa initiative, which will boost generation capacity and access to power for the continent's population.

There is also about $7 billion in loans to be offered to support U.S. exports to Africa. The finalization of many of these loans depends on whether Congress will vote for the continuation of the program, which is supported by the president but strongly opposed by many Republicans.

Trade and investment will be served by a framework deal between the U.S. and the Economic Community of West Africa (ECOWAS) to promote business. There is also a U.S. government private-sector council to promote trade and investment. The continuation of the African Growth and Opportunity Act (AGOA), which is due for renewal in 2015, was strongly supported by African countries. Trade under AGOA is dominated by oil-producing countries, who exported $22 billion, out of a total of $27 billion, to the U.S. in 2013.

Mutual security concerns in Africa will be supported by $110 million annually during a four-to-five-year period to assist countries on the continent in setting up rapid-response forces that will support UN and African Union peacekeeping missions. Also, Washington has pledged to deliver $70 million in equipment to African peacekeepers. Also, $65 million is slated to strengthen security institutions in six countries against threats from extremist terror groups, such a Boko Haram, al-Shehab and al-Qaeda in Islamic Maghreb (North Africa).

There was a feeling of ambivalence among some delegations and observers at the summit, but the mix of U.S government and corporate pledges, plus the motivation to get into the African market, bodes well.

For related information see June 5, article - U.S. Goes 'Beyond the Grid' to Provide 20 Million African Connections and May 16, 2014, article--Power Development Initiative Rolls Out in Africa.

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