US, World Bank and businesses pledge billions for Africa

President Obama announced that the U.S. government, World Bank and businesses will invest a combined $33 billion in Africa’s economy, showcasing America’s economic ties to a continent where trade and investment are increasingly dominated by China and Europe.

Obama said the United States will finance $7 billion in business exports and investments in Africa, while U.S. companies have inked $14 billion in deals with the continent.

And the World Bank, Sweden and private sources have pledged another $12 billion in funding for Obama’s Power Africa energy initiative, bringing the electrification program’s total funding to $26 billion.

U.S. food aid policy has shifted under the Obama administration. Rather than relying primarily on federal funds to support small farmers overseas, the administration has enlisted African companies and major multinationals to help address some of the development challenges Africans still face.

US-Africa Leaders Summit seeks to boost African trade

Typically, people only look at Africa through the lenses of either humanitarian, health or security issues, says Amadou Sy, a senior fellow in the Africa Growth Initiative at the D.C.-based Brookings Institution.

That needs to change, says Sy, and a good start is the historic three-day U.S Africa Leaders Summit, which kicked off Monday and is gathering over 50 of Africa’s heads of state in D.C.

So-called hotspots of the continent often distract from how much has changed in Africa over the past couple decades, the economic gains it has made and why it’s important the U.S. fosters its continued growth, Sy says. “The bottom line is it makes sense,” Sy said. “After all, why did the U.S. support Europe after World War 2 and have the Marshall Plan? It was in its benefit to have a vibrant, economically strong Europe for trade. The same thing with Africa.”

The U.S. does not want to miss out on Africa’s growth potential. “You want to be part of that in terms of commerce, in terms of trade, in terms of investment,” Sy said. “And for strategic reasons also. Nobody wants to see a region of the world that is unstable.”

Africa still continues to struggle, and has some significant obstacles to overcome. More than 400 million people in Africa live in extreme poverty, one in three is malnourished, over 500 million suffer from water-borne diseases and 24 million are afflicted with HIV, according to George Ingram, a senior fellow in the Global Economy and Development program at the Council on Foreign Relations.

Yet Ingram also notes that’s only part of the picture, writing in a recent blog. “It would be easy to focus on these statistics and see Africa as hopeless, as has been all too common. But a more holistic picture reveals trends that are cause for considerable optimism.”

From 2000 to 2010, six of the world’s 10 fastest-growing economies were in Africa, and Africa was the fastest-growing continent at 5.6 per cent in 2013, Ingram wrote.

Over the last 10 years, there have been fewer coups, more democratization, rapid urbanization, and some success stories, Sy said.

For example, almost everybody in Africa has a mobile phone, including those living in rural areas, Sy said. And a number of the biggest companies are already in Africa, including Microsoft, Wal-Mart and Google, which translates its pages into local languages.

China investment is well entrenched in the continent and has become the largest bilateral trade partner with Africa, surpassing the U.S in 2009.

[CBC]