As President Obama prepares for his weeklong visit to Africa at the end of June, his first since a one-day stopover in Ghana in July 2009 en route home from Russia and Italy, administration officials are ramping up efforts to sell more U.S. goods and services to the continent.
Some officials and private sector supporters of closer U.S.-Africa business ties say the makeup of the delegation that will accompany President Obama will indicate the level of seriousness about deepening the country’s commercial engagement with the continent.
The Export-Import Bank of the United States, the country’s official export credit agency, is in the vanguard of the effort to accelerate U.S. exports to Africa.
“To frame the opportunity in terms that would resonate strongly with the [U.S.] private sector, we took a look at six countries – Nigeria, Kenya., Ghana, Mozambique. South Africa and Tanzania – and there’s about $600 billion in infrastructure expenditure that will take place over the next five years,” Wanda Felton, vice chair and first vice president of Ex-Im Bank and convener of the bank’s Sub-Saharan Africa Advisory Committee, said at the bank’s 2013 Annual Conference in April.
“Think about what that might mean to American companies in market-share terms. If we had a goal of capturing 20 percent of that market over the next five years, that’s $120 billion of infrastructure spending that American companies could reasonable expect to get,” Felton said
The bank finances seven to eight percent of every U.S. export into sub-Saharan Africa, three times the intensity for the rest of the world, according to its chairman, Fred P. Hochberg. It is placing emphasis on two “strategic” markets, South Africa and Nigeria, which together account for 61 percent of sub-Saharan Africa’s gross domestic product; and on five other “key” markets: Angola, Ghana, Kenya, Mozambique and Tanzania.
Combined, these seven markets represent 77 percent of sub-Saharan Africa’s GDP and 75 percent of U.S. exports to the region. South Africa and Nigeria alone account for 53 percent of U.S. exports to sub-Saharan Africa.
President Obama will visit two of the seven countries – South Africa and Tanzania – as well as Senegal, from June 26 to July 3. He will meet with leaders from government, business and civil society, including youth, to discuss strategic partnerships on bilateral and global issues.
Some fear it may be too late for American exporters because manufacturers elsewhere offer better prices for products of similar quality. China, India, Dubai and Turkey, for example, are popular shopping destinations for African business owners.
Moreover, skeptics say, getting more U.S. companies to show more interest in Africa is a daunting task given the media’s persistently negative coverage of the continent.
“Sub-Saharan Africa could become a manufacturing base for the world in the next ten to twenty years. Our challenge is, there is not enough interest on the part of U.S. companies,” Hochberg conceded last September at a public meeting of Ex-Im Bank’s Sub-Saharan Africa Advisory Committee.
How the Ex-Im positions itself to make sure U.S. exporters get in the game is more than a key part of the bank’s agenda, says Rick Angiuoni, Ex-Im’s director for Africa Global Business Development, says. “It is a critical focus of the administration as well. From the president’s PPD (presidential policy directive) to the strong list of interagency initiatives, there is no question about the administration’s commitment to focus on Africa,” he says.
“In fiscal year 2013, we have supported a number of large transactions, more than in past years, including lift-boats to Nigeria for the oil and gas sector, a hospital project in Ghana, fire trucks for Lagos State in Nigeria, aircraft for Comair in South Africa. In addition, we expect strong growth in healthcare, aircraft, oil and gas, and mining in sub-Saharan Africa,” he notes.
But at the Nigeria Development and Finance Forum 2013, held in Washington, D.C., from June 4 to June 5, Nigerian business owners and government officials alike acknowledged the quality and brand power of U.S. goods, but argued that U.S. businesses in general are not serious about doing business in Africa, notwithstanding notable success stories.
They cited several reasons for this, including a negative perception of the continent; failure to carry out appropriate due diligence on potential partners; inability or unwillingness to remain in the African market for the long haul; lack of understanding of the local culture; impatience with local infrastructural weaknesses; and an overall lack of knowledge about business opportunities on the continent.
One real estate developer affirmed that he had no plans to buy U.S. housing inputs such as floor tiles, toilets and air conditioners, although he initially bought those items in the United States.
“I first went to [a major U.S. outlet] and they gave me their best price for American Standard toilets. I started buying from them, but then I found out that American Standard was made in China. So I went to China to the factory where they were made and got them for (about $25 less per unit),” he recounted.
More importantly, he said, he invested $5 million in the factory and now the factory is producing the identical items under his brand name for export to Africa. He plans to move the factory to Nigeria.
“Money s not a problem in Africa. Africans can buy whatever they want. But business is business. We go where we get the best deal, just like Americans do,” he said.
Ex-Im officials counter that U.S. interest in Africa is growing.
“At the bank, we find that U.S. exporters are increasingly interested in sub-Saharan Africa,’ Angiuoni says. “Generating that interest by U.S. business in exporting to this region is one of the many keys to doing more in Africa. That critical focus on the part of Ex-Im and the administration is only picking up steam.”
