Aug. 6 (Bloomberg) -- President Barack Obama said Africa represents a great opportunity for American companies to expand their investments, as the U.S. competes with China to tap some of the world’s fastest growing economies.
“Africa’s rise means opportunity for all of us,” Obama told heads of state gathered for a morning session today at the State Department in the final day of U.S.-Africa Leaders Summit.
He promised them “a partnership of equals that focuses on African capacity to solve problems, and on Africa’s capacity to grow.”
The president is seeking to shift the U.S. focus in Africa toward fostering investment and trade, instead of the traditional emphasis on providing aid. The new approach is being taken as China has surpassed the U.S. as Africa’s biggest trading partner with a relationship that exceeded $200 billion last year, more than double that of the U.S.
At yesterday’s U.S.-Africa Business Forum in Washington, the U.S. president drew an indirect contrast yesterday to China’s approach, saying that the U.S. wants to work with African nations to promote their expansion. “We don’t simply want to extract minerals from the ground for our growth.”
That prompted a response today from the Chinese government.
“China’s African policy has always featured sincerity, friendship, equal treatment, mutual benefit and common development,” Foreign Ministry spokeswoman Hua Chunying said, according to a report by the official Xinhua News Agency.
“This is the fundamental reason why China-Africa cooperation is welcomed by African countries and people.” China, the spokeswoman said, hopes the U.S. “can play a greater role” than it does now in supporting African development.
China’s state-owned enterprises have rolled out projects in every country on the continent, including hydroelectric dams, highways and rail lines linked to the extraction of natural resources.
The U.S. is seeking to expand its commercial footprint in Africa. At yesterday’s forum, which included more than 90 U.S. companies, Obama highlighted $33 billion in commitments to Africa: $14 billion in investments by companies including General Electric Co. and Coca-Cola Co., $7 billion in financing to promote U.S. exports and $12 billion for an initiative to double availability of electricity in sub-Saharan Africa.
Obama said he wanted to focus leaders’ attention today on factors that encourage investment and economic stability: governance and rule of law, expanding trade and steps to deepen security cooperation
To draw more U.S. investment, the administration is pressing African leaders at the summit to protect human rights, especially for women, curb corruption and foster more transparent financial systems. It has been a recurring theme from the president and top administration officials over the three days of the summit.
“Capital is one thing,” Obama said yesterday. “Rule of law, regulatory reform, good governance? Those things matter even more” because investors want to be able to do business without “paying a bribe or hiring somebody’s cousin.”
Africa’s biggest need, he said, is “laws and regulations and structure that empower the individual” and don’t simply preserve “power for those at the very top.”
Obama will return to that message during the final session of the summit today titled “Governing for the Next Generation.” The White House, in a statement, said that discussion at the State Department will include emphasizing that accountable and transparent government promotes development.
The president also is taking part in a closed session on security and stability. The U.S. wants to help build the capacity of African nations to deal with peacekeeping and counterterrorism so that they can “move away from the need for costly outside intervention,” the White House said.
In the final day of U.S.-Africa Leaders Summit, Obama said a “new Africa is emerging” with a growing middle class and record levels of investment. Growth in the African economy is projected to exceed 5 percent this year.
The president noted the absence of the leaders of Liberia and Sierra Leone because of the Ebola outbreak in their countries. The U.S. is ready to “do whatever we can to help” fight the disease, he said.
The administration’s strategy leans heavily on U.S. companies investing in Africa, which Obama said would increase employment in the U.S. as well.
GE yesterday announced plans to invest $2 billion in the region by 2018 and double its workforce on the continent. Ford Motor Co. is looking to expand its manufacturing in Africa.
Energy shortages remain an obstacle. About 70 percent of the population lacks electricity, according to the International Energy Agency.
The Obama administration has proposed a Power Africa program, which still requires action by Congress, a five-year $7 billion plan to double access to power in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.
In addition, private equity firm Blackstone Group LP is in a $5 billion partnership with Aliko Dangote, president of Dangote Group and Africa’s richest man, for power projects in sub-Saharan Africa.
Room to Grow
“The total need for power in Africa is $300 billion,” Steve Schwarzman, Blackstone’s chief executive officer, said in an interview with Bloomberg Television. “So the power initiatives of the current administration, our own joint venture with Dangote, is really just scratching the surface of what the full needs are.”
Separately, Carlyle Group LP is investing an unspecified amount with Dangote in Nigerian oil and gas ventures and other sub-Saharan projects.
In addition to the private investments, the U.S. plans to add 10 trade missions in African countries and expand its presence in other parts of the continent, Commerce Secretary Penny Pritzker said.
The International Monetary Fund said July 24 it estimates sub-Saharan Africa’s growth at 5.4 percent this year and 5.8 percent in 2015, compared with 1.7 percent and 3 percent in the U.S. for the same two years. The region still represents a small portion of U.S. trade, accounting for 1.5 percent of all exports and 1.7 percent of imports.
Obama and first lady Michelle Obama played host to the African leaders in town for the summit at a White House dinner last night. Singer and songwriter Lionel Richie performed for the guests.
Obama, 53, said the White House has never hosted so many presidents and prime ministers at one time, and he told them the bond between the U.S. and African nations was, for him, “deeply personal.”
He recounted his family’s trips to Africa and bringing his daughters to his father’s hometown in Kenya.
“I stand before you as the President of the United States and a proud America. I also stand before you as the son of a man from Africa,” he said to applause from the audience.
In addition to Obama’s discussions with African leaders today, former President George W. Bush, known for his campaign to fight HIV/AIDS in Africa, addressed a session on health policy. Bush forecast the “the beginning of the end of AIDS,” highlighting the need to increase public health efforts to fight breast and cervical cancers in Africa.
“This fatal link between HIV and cervical cancer can be broken and it is our job to break it,” Bush said in a speech today at the Kennedy Center in Washington.
To contact the editors responsible for this story: Steven Komarow at email@example.com Joe Sobczyk