Why 200 American investors have joined Obama in Kenya(Read article summary)
Sub-Saharan Africa, the second-fastest growing region in the world, is a golden opportunity for investors, say experts.
President Barack Obama called Africa a continent "on the move" Saturday, as he opened a US-sponsored business summit in Kenya. Tagging along are some 200 American investors.
The presence of American investors in Nairobi sends a strong signal that investment on the continent is shifting, from the billions of aid-focused dollars from the US government to private sector involvement in one of the fastest growing regions in the world.
One program that has struggled with private sector inclusion is President Obama's Power Africa Program, which set out to double access to electricity in sub-Saharan Africa over the next five years. With a price tag of $7 billion, the initiative has yet to provide any electricity two years in, the New York Times reports. The International Energy Agency currently estimates electricity reaches only about 32 percent of sub-Saharan Africa, a challenge the US has picked up alongside the region's leadership, but which dogs lawmakers and energy investors who cannot seem to broker progress.
Power Africa officials in Washington told the Times that Power Africa was intended to provide incentives to help foster private investment, rather than to function simply as an aid program.
The shift from aid to capital investment was repeatedly emphasized by the president and Kenyan officials. Kenyan President Uhuru Kenyatta, who co-hosted the business summit with Obama, said he hoped Obama's visit would help change the narrative about Kenya and Africa. The two leaders sat down for a formal meeting at Kenya's State House after the summit, where again Obama called for a shift in US-Africa relations, one that emphasizes opportunity, rather than charity.
The presence of so many private investors at Saturday’s summit may be one of the first signals that such a plan is finally starting to take shape.
Sub-Saharan Africa is second only to South Asia as the fastest growing region in the world, says the World Bank, and its statistics tell a story that is complicated, but full of potential.
The continent is home to a third of the planet’s mineral reserves, a tenth of the oil, and two-thirds of the diamonds. Highly dependent on the price of natural resources and export crops, the economy ebbs and flows with growth in those industries, according to The Economist. An emerging emphasis on manufacturing is slowly freeing Africa’s economy from the fluctuating prices of its natural reserves.
The International Monetary Fund reports that by 2035, the number of Africans joining the working age population (ages 15–64) will exceed that from the rest of the world combined, a trend with significant ramifications for the global economy.
The World Bank consistently projects around 5 percent annual growth for the continent, despite noting that half of school-aged children are not in school in sub-Saharan Africa, which signifies a vast resource of untapped potential.
Perhaps the biggest struggle in the region is the need to integrate burgeoning manufacturing, agriculture, tourism, and transport markets with the rest of the world. To leverage this potential, the IMF emphasizes the need to "fill the infrastructure gap, lower tariff and nontariff barriers, and improve the business climate and access to credit."
Democracy is a leading driver of growth, according to the United Nations, which credits democratic leadership with more responsive government in sub-Saharan Africa.
Connectivity is also transforming the continent, reports the UN. Between 2000 and 2012, African mobile phone subscribers increased by about 2500 percent.
Together, this adds up to a region, as Obama put it, "on the move." The 200 American investors accompanying Obama on Saturday sends a strong signal that the flow of US support may soon look a little different.
"What happens in Africa is going to affect the world," Obama said.
Material from the Associated Press was used in this report.