By John J. Sullivan
The US administration launched its Africa Strategy in December of last year. The strategy calls for expanding commercial ties between the United States and Africa; advancing peace and security; supporting stability, good government, and self-reliance across the entire continent.
Our strategy recognizes that high-quality foreign direct investment is essential for Africa’s development.
It underscores our longstanding commitment to Africa and to supporting our African partners as the continent transitions from foreign assistance to sustainable financial independence.
And it recognizes that satisfying the first objective of the strategy, expanding two-way trade and investment, is the surest way to satisfy the objectives that follow: advancing peace and security, promoting stability, good governance, and self-reliance.
In that spirit, the United States has made expanded economic engagement our number-one priority in Africa. Closer ties between the United States and African private sectors will expand markets for goods and services and contribute to greater American and African prosperity.
That would be good news for the United States and for a continent whose population, we’re told, will double by 2050.
And our efforts to ramp up trade and investment could not have come at a better time as the African Continental Free Trade Area enters into force.
We strongly support this agreement’s objectives of lowering trade barriers, attracting investment, and diversifying trade.
With the strong backing of this administration, our Congress passed legislation called the BUILD Act last year.
The BUILD Act retools and expands the U.S. Government’s approach to development finance, and it more than doubles the U.S. Government’s resources for underwriting outbound private investment from approximately 30 billion to 60 billion.
This new, modernized development finance agency offers opportunities for more U.S. direct investment in Africa, as well as equity investments in African companies. The DFC will also provide technical assistance and conduct feasibility studies for potential projects.
The DFC will support bankable projects that adhere to high standards and are led by the private sector.
The DFC, the new arm of U.S. development finance, will serve as a bridge between investment opportunities overseas and the U.S. private sector, whose economic might can and will help power developing economies around the world, particularly in Africa.
We believe that the DFC embodies the future of development finance, and we hope to use these resources to unlock billions in private capital from the United States.
Prosper Africa Initiative
In addition, this past June, our administration also announced the Prosper Africa Initiative. At its core, Prosper Africa has three main objectives. First, it aims to establish a one-stop shop where U.S. and African businesses can access the full range of U.S. Government services.
Second, it strives to help facilitate more business deals between U.S. and African counterparts. And third, it focuses on promoting better business climates and financial markets on the continent to attract more investment.
At the same time, we have established embassy deal teams to deliver trade and investment opportunities for American and African businesses in a more structured fashion. Already our deal teams have ramped up our engagements, resulting in successful bids by U.S. firms that will create employment and increase production in the United States and in Africa.
For example, Nevada-based Africa Growth Corporation has built close to 160 homes since 2017 and plans to build 300 more in the next two years in the Namibian residential construction market, and they can pave the way for other U.S. companies to help address critical housing shortages and the need for more affordable housing solutions.
We also hope that, in time, fair and reciprocal free trade agreements with the United States will serve as a conduit for the investment many African countries desire. Our free trade agreements provide the legal certainty necessary for private sector investments.
some of our flagship American companies, global iconic names – Citibank, Bechtel, GE, Google, and ExxonMobil. These companies show how Americans are not only bringing significant capital, innovation, and proven solutions to new and emerging markets, but they adhere to the highest standards of transparency, quality, and social responsibility on the continent. They also make it a priority to hire, train, and advance Africans into positions of responsibility.
We all know that some other countries investing in Africa have not followed this model of engagement. Instead, they leverage asymmetric and unfair business deals to infringe on national sovereignty, and often trap countries in spiraling debt. Their bottom line is weaker as a result, more dependent, and not a self-reliant economy that results.
Unlike some state-directed models of development, the U.S. development finance approach focuses on incorporating the strongest U.S. business practices.
By mobilizing our private sector capital to build projects that are financially sustainable, we can avoid the debt traps that have often left countries worse off, and do more to improve underlying business climates and initiate virtuous cycles that generate more trade, investment, and growth.
Our promise to Africa
Our promise to you[ Africa] is this: U.S. economic engagement in Africa will continue to be predicated on respect for our partners’ sovereignty; ensuring that local workers benefit from our cooperation; upholding environmental standards; combating corruption; and producing outcomes that are built to last. We’re not only investing in Africa; we’re investing in Africans, providing opportunities that strengthen the workforce and lead to economic self-sufficiency.
Editor’s note: Slightly edited remarks by Deputy Secretary John J. Sullivan at Roundtable Discussion on Enhancing Trade and Investment in Africa. The discussion took place at Palace Hotel, New York, NY on September 25, 2019