Why Africa ‘Is The Next China’ & Why U.S. Businesses Should Not Overlook This
Earlier today, Sen. Chris Coons, a U.S. Democrat Senator, from Delaware, who is also the Chair for the Senate Foreign Relations Subcommittee on African Affairs wrote a very insightful article about Africa on CNN.
“Twenty years ago, every American company was deciding whether to take the risk of investing in and engaging in the newly opening markets of Asia, and China ended up being the dominant opportunity of the region.
Today, no competitive company is without some role in China. Africa will emerge as the next great growth market and opportunity of the 21st century, and China will not miss “the next China,” writes Sen. Coons.
The U.S. President Barack Obama will be holding a three days meeting this week, with over 40 African heads of states in Washington, dubbed the U.S. – Africa Leaders Summit.
Sen. Coons’ article could not have come at a better time. In his article, the Senator outlined how America is losing great opportunities in Africa by always concentrating most of its efforts on crisis mitigation.
It is no secret that China is the biggest competitor the U.S. faces when it comes to doing business on the global scene. Looking at trade with Africa, China has already surpassed the United States by far. As of today, China has already held five summits with heads of states from Africa since 2000. The United States is holding its first summit with African leaders this week.
It dawned on the Chinese much earlier that six out the world’s ten fastest-growing economies in the world over the last decade, is in sub-Saharan Africa. Over that period, China’s exports to Africa have surpassed that of the United States by a ratio of 3 to 1, making China, Africa’s biggest trade partner.
Ironically, U.S.’s foreign direct investment in Africa still outpaces China’s. But when it comes to trade and exports sales to the African market, China is far ahead of the U.S. This is probably because, when the Chinese want something from the African governments – be it a mining right or port exclusivity – it simply presents “gifts” with no-strings-attached or make investments in infrastructure constructions.
On the other hand, the U.S. gives Africa values-driven policy and investments in its people, especially in the public health sector. Chinese are known for buying their friendship with the African governments through low-interest financing of construction projects. If America is to compete in the global market against China, it needs a new approach with the African governments and businesses. America must ensure their engagement with Africa is more meaningful and mutually beneficial, so says Sen. Coons.
On Tuesday, the U.S. – Africa Leaders Summit will bring America’s top CEOs on same the table with African heads of states and business leaders. Sen. Coons describes this event, as a matchmaking event with a mission of increasing the United States’ exports to Africa; targeting Africa’s rapidly growing middle-class consumer base.
Most American trade partners overlook Africa’s growth and its potential as a trade partner. All thanks to the bad news being reported on mainstream media on only a handful of African countries plagued with bad governance, corruption and civil unrest. While the good news about other dozens of African countries slides under the radar or receives little limelight.
American companies are looking for new markets for their products while American workers are looking for jobs to create those products. While African leaders are looking for international trade partners to sell products in their local markets, invest in their country’s growth and partner up with their local businesses. This present the perfect opportunity for a win-win relationship for America and Africa in terms of trade and investment.
Sen. Coons also points out the underutilized competitive trade advantage in Africa the U.S. has over its global competitors like China, Russia and India. The United States has tens of thousands of African Diaspora drawn to America for higher education and assimilated into the American culture, entrepreneurship, technology, and innovation. This is a great advantage that America still enjoys, and makes it command a great deal of attention from African leaders and consumers.
America can and should exercise this unique competitive trade advantage; through its African Diaspora, it can build bridges to the emerging economies and democracies in Africa. The thousands of African doctors, businessmen and engineers educated in American, can help the United States connect with Africa in ways China, Russia and India can only dream of.
For more details about Sen. Chris Coons’ article on CNN, follow this link.