A number of South African and international commentators have wondered whether there was any real substance to the US-Africa Summit in the first week of the month, or whether all the pomp and ceremony concealed nothing more than hot air.

Others were perhaps worried that the summit was a “neo-colonial” attempt by the US to lure Africa into exploitative contracts – a thought that may contain the unexpressed assumption that Africa’s business and political leaders are incompetent.

Standard Bank was fortunate enough to be able to send a delegation to the summit and its associated business forum, and we can confirm that there was indeed a great deal of hot air in Washington DC during the US-Africa Summit. But that was only because Washington in August is a very humid place.

In the efficiently air-conditioned conference halls and meeting rooms of the US-Africa Summit, we felt only the refreshing wind of economic change coming from Africa, the coolly rational response of the US government and American corporations, and the briskly effective way in which we Africans advanced our own interests.

As President Barack Obama said at the summit’s business forum: “We all know what makes Africa such an extraordinary opportunity.”

Certainly, most Africans – and many of our international trading and investment partners – know that the Africa of 2014 is a very different place from the colonial and post-colonial “lost continent” of the previous century.

Several major African countries have settled into a pattern of rapid growth. Economies including Ethiopia, Kenya, Mozambique, Nigeria and Zambia are likely to double in size over the next decade. Africa is expected to attract about $200 billion (R2.1 trillion) in foreign investment this year.

China-Africa trade has multiplied by 20 times since 2000, and China is now Africa’s leading trade partner, importing about $113bn worth of African products and selling us $85bn of Chinese goods and services in return.

These are not abstract numbers. They measure trends that are fundamentally changing how Africans live. For instance, the number of cellphone users in Africa has multiplied 33 times since 2000 and, within the next five years, it is likely that almost every adult in Africa will have a cellphone.

There are now probably about 8 million middle-class households in Africa north of South Africa – 4 million in Nigeria alone. They will be joined by another 14 million households by 2030. Anyone who has recently visited Lagos or Nairobi – or downtown Johannesburg for that matter – can feel the energy and see the growth all around them.

The US government and US companies are frankly worried that they’ve been losing out on this opportunity. The business sessions of the summit were all about fixing that. This was a truly remarkable gathering of business and government leaders.

The US administration attended in astounding force: their delegation included the president, the vice-president, five cabinet secretaries, the White House chief of staff, the US trade representative and the heads of all the US agencies responsible for trade and international development.

African political leaders present included the chairperson of the AU, 50 African heads of state (including President Jacob Zuma) and the president of the African Development Bank.

The list of major American companies that attended was almost equally remarkable and they were often represented by their chief executives. African business was similarly represented by senior executives of almost every major African company, including African Rainbow Minerals, Econet, Heirs Holdings, Mara Group, Massmart and Sasol.

None of us were there for show.

The agenda was highly concrete and led to equally concrete outcomes. The first session focused on finding specific partnership opportunities for US and African companies. The second session looked in detail at how to attract more US investment into African capital markets. The third session was an in-depth discussion of how to do the same for Africa’s energy, transport and information technology infrastructure. The fourth discussion brought together the African heads of state to reinforce the point that the continent is very much open for business.

A theme that ran through the business forum was that a better business climate and more investment can – and must – create a better life for ordinary Africans. More output needs to mean less poverty, more jobs and less inequality. In fact, Africa’s record on inclusive growth has been fairly good: since 2000, gross domestic product has expanded by about 5 percent a year and the continent’s human development index has risen by 7 percentage points. Good – but we can do better.

US commitments

Obama wrapped up the business forum not with vague statements but with five concrete commitments. First is to work to persuade Congress to renew and expand the Africa Growth and Opportunity Act (Agoa), which creates open access to US markets for many African exporters. The second is to expand financial and technical support to US companies wanting to invest in Africa. The third is to triple the size of the Power Africa public-private partnership to $26bn with the goal of bringing clean and safe electricity to 60 million African homes and businesses. Fourth is to expand the Trade Africa initiative, which is focused on promoting trade within the East African Community (EAC) and between the EAC and the US. Fifth is to provide training and support for young African entrepreneurs.

The summit and its business forum created many opportunities for African and US companies and government agencies to connect with each other and to start or continue very real business negotiations. For example, the government of Ghana and the Millennium Challenge Corporation signed a $500 million compact that will dramatically improve Ghana’s power supply.

The world’s largest asset manager, BlackRock, signed a deal with Nigeria’s Dangote Group to raise $5bn, also for investments in the power sector.

To use Standard Bank as an example, we were able to have useful conversations with governments from across the continent and the wider world. We spoke with multinational and US development agencies and with major companies including IBM, MasterCard, Symbion Power and General Electric (GE).

In fact, one of our sessions with GE illustrated just how real the conversations got. The Standard Bank team was approached by a very senior US official to discuss the furthest thing from hot air imaginable. We spoke about the technical details of the financing structure of a new power station in west Africa that is being built as partnership between a US and a west African company, with funding from the US Overseas Private Investment Corporation and a group of private sector financiers under the auspices of the Power Africa initiative. This isn’t a cosy deal between elites.

Focussing on Nigeria, we can say that it is already growing fast and the rich can afford generators. More reliable grid power in Nigeria will mean more inclusion and more sustainability. Less carbon will be generated; small and medium enterprises will be more competitive when they no longer have to include the price of diesel in everything they produce; and children will study more safely and effectively when their homes have reliable electricity instead of trying to learn under the flickering and dangerous light of kerosene lamps.

South Africa did particularly well during the summit. The US-South Africa business forum at the US Chamber of Commerce was a major highlight – an illustration of just how impressive South Africans can be when we speak with one voice in the national and continental interest. One could feel the positive mood created by Zuma’s affirmation that US business was very important to South Africa, and his call for the extension of Agoa for 15 more years, including South Africa, had an equally palpable impact.

In fact, as Zuma himself put it on his return home: “There’s a good relationship already between Africa and the US but this summit has reshaped it and has taken it to another level.”

That’s exactly right. But, of course, it will take continued effort from both Africans and Americans to keep the relationship at this new higher level. Both sides will have to keep working hard to identify opportunities for mutually beneficial trade and investment. For our part, Africa will need to continue to strengthen our capacity to compete in global markets; to welcome investment while also regulating our economies fairly and efficiently; to strengthen our governance and our institutions so that growth is sustainable and its benefits are equitably distributed; and – crucially – to exercise the necessary firmness and skill to find good bargains for ourselves in our negotiations with the US and all our other trade and business partners.

We can and will do all these things, as it is very much in self-interest to do so. That is the final – and most compelling – reason why the summit really wasn’t a matter of hot air. We have moved from a time in which the US was largely a donor and Africa was mostly an aid recipient.

The US and Africa now increasingly encounter each other as equal commercial partners. That’s a much better place to be.

Sim Tshabalala is the joint chief executive at Standard Bank Group.

By Sim Tshabalala
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