President Barack Obama plans to announce today $14 billion in commitments from U.S. companies for investments in Africa, a centerpiece of his goal of strengthening commercial ties to the continent.
More than a dozen companies, including General Electric Co. (GE:US) and International Business Machines Corp. (IBM:US), are making the pledge, which Obama is scheduled to outline during a U.S.–Africa Business Forum in Washington that is part of a three-day summit involving 40 African heads of state, according to an administration official.
The White House said in a statement that the money will go into areas including construction, energy, finance and technology. They “will deepen U.S. economic engagement in Africa, fueling growth that will support broader African prosperity and emerging markets for U.S. businesses,” the administration said.
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The White House declined to give specifics of the projects involved. Part of it is the $2 billion that GE Chief Executive Officer Jeffrey Immelt said yesterday that his company plans to invest in Africa by 2018, according to the official, who asked for anonymity because the wider commitment hasn’t been announced.
The summit is part of Obama’s effort to shift the U.S. approach to Africa from providing aid to fostering investment and trade. After five years of a foreign policy focused on expanding ties to Asia, the crises in North Africa and the Middle East, winding down wars in Iraq and Afghanistan and, more recently, confronting a more assertive Russia, Obama is turning to building a legacy in Africa.
“These agreements represent conclusive evidence that America is open for more business with Africa as the continent’s economic ascent is just beginning,” Commerce Secretary Penny Pritzker said in a statement.
Today’s daylong U.S.-Africa Business Forum, hosted by Bloomberg Philanthropies and the U.S. Commerce Department, will give business and national leaders an opportunity to discuss investment and the continent’s economy. Bloomberg Philanthropies is led by Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.
More than 90 U.S. companies are participating in the forum, where Obama will deliver remarks and take part in a discussion with business executives and government leaders, according to the White House.
The Africa spending planned by GE will go to develop facilities, improve supply chains and train workers, according to a statement from the Fairfield, Connecticut-based company. GE’s Africa business includes supplying locomotives for Nigeria and aircraft engines for Kenya Airways Ltd. The local payroll will swell to 4,000 people during the next few years compared with about 2,000 now, according to Jay Ireland, GE’s Africa CEO.
Africa is home to six of the 10 fastest-growing economies and Obama is seeking to make inroads for the U.S. and challenge China as the continent’s top investor and trading partner. China’s trade with Africa surpassed $200 billion last year, more than double that of the U.S.
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“One of our main economic rivals, China, has been doing this for years now,” Bloomberg said on MSNBC’s “Morning Joe” program today. “You cannot, if you’re a good business person, avoid markets that have a chance of becoming dominant, and the African market with 600 million people certainly has that potential.”
The Obama administration is meeting with heads of state throughout the summit “to figure out where the opportunities are. They want us present,” Pritzker said on the same program.
Obama earlier unveiled initiatives to double access to power in six African countries and expand trade, food security and health initiatives. His inaugural Mandela Washington Fellowship for Young African Leaders began last month.
The Power Africa initiative, which still requires action by Congress, envisioned a five-year $7 billion plan to double access to power in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania -- singled out for good governance practices.
Part of the U.S. approach involves helping African nations become more attractive to investment by nudging governments there to expand human rights -- in particular those of women -- and stamp out corruption.
“No democracy can survive without the active, intense participation of its people,” Vice President Joe Biden said in remarks yesterday to the summit’s civil society forum.
Biden said governments in Africa must “draw on the talents of all of your people, including women and girls” because marginalizing them is “a waste.” Corruption, he said, stifles economic growth and prevents democracy from taking root. “It’s a cancer in Africa as well as around the world.”
The centerpiece of the U.S. commercial relationship with the continent has been the Africa Growth and Opportunity Act, which was signed into law in 2000 and is up for renewal next year.
It gives duty-free entry to the U.S. for certain products from sub-Saharan nations that practice good governance. Thirty-nine of the region’s 49 countries qualify for benefits under the law, according to the office of the U.S. Trade Representative.
Imports covered under the law amounted to $26.8 billion last year, quadruple the amount in 2001.
U.S. Trade Representative Michael Froman said last week the Obama administration wants to revise the pact and emphasize production in Africa, giving an opening to U.S. companies.
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