- The United States’ role in Africa’s economic transformation has become more pronounced, fostering trade, investment, and development.
- The United States has actively pursued investment and trade opportunities in Africa, recognizing the potential for mutually beneficial economic partnerships.
- The US fosters trade, investment, technology, education, health, energy transition, and climate solutions.
In recent years, Africa has emerged as a promising destination for global investment, with its vast natural resources, expanding consumer markets, and growing middle class. As the continent’s economies continue to strengthen and diversify, global players increasingly recognise the potential for mutually beneficial partnerships. The United States has significantly contributed to Africa’s economic transformation among these partners.
Moreover, the United States’ role in Africa’s economic transformation has become more pronounced, fostering trade, investment, and development. However, the shifting global economic axis has seen Africa go East, searching for financial solutions and partnerships. The US has not given up yet. It continues seeking to continue its role in fostering Africa’s economic transformation by focusing on key growth areas.
Investment and trade
The United States has actively pursued investment and trade opportunities in Africa, recognizing the potential for mutually beneficial economic partnerships. The African Growth and Opportunity Act (AGOA), founded in 2000, has proven crucial in promoting trade between the US and African nations. AGOA offers eligible African countries duty-free access to the US market, promoting export-driven economic development and diversification. AGOA continues supporting African exports, including agricultural products, textiles, and manufactured goods, contributing to job creation and poverty reduction.
Furthermore, the United States has increased its investment in Africa, targeting infrastructure, energy, telecommunications, and finance sectors. Private companies and government initiatives, including the US International Development Finance Corporation (DFC), have provided critical technical expertise funding to support Africa’s development projects.
DFC invests across technology, energy, critical infrastructure, and healthcare sectors. DFC also offers financial support for women entrepreneurs and small businesses to create jobs in emerging markets. These investments have facilitated the expansion of vital infrastructure networks. These include roads, ports, and power generation facilities, enhancing connectivity and enabling Africa’s economic transformation.
In the second quarter of 2022, DFC’s Board of Directors approved several key transactions using equity investments and debt financing to support the US national security and foreign policy priorities. The DFC also approved 22 other projects at the Corporation level. The projects focused on development priorities. The priorities include climate change, food security, gender equity, and increasing access to financing needs in Africa and other emerging economies. The DFC projects approved in the second quarter of 2022 totalled more than $1.4 billion.
Technology and Innovation to Boost Africa’s Economic Transformation
The United States’ technological prowess has significantly influenced Africa’s economic transformation. American tech giants, including Google, Microsoft, and IBM, have invested heavily in Africa’s digital economy, fostering innovation, entrepreneurship, and digital inclusion. The US technology giants continue collaborating with African governments and start-ups, supporting initiatives that yield digital solutions to address local challenges.
For instance, the US Government’s Prosper Africa initiative officially launched its Africa Tech for Trade Alliance on April 12 at the 2023 Africa Fintech Summit in Washington, DC. The tech alliance of major US and African companies will fast-track digital trade and e-commerce in Africa while addressing logistical, regulatory, and legal bottlenecks across the continent.
The Prosper Africa Tech for Trade Alliance was first publicised at President Biden’s US-Africa Leaders’ Summit in December 2022 as part of a $15.7 billion package in new and expanded trade and investment commitments made in the Summit’s Business Forum Deal Room. The Alliance will also advance the White House’s new signature Digital Transformation with Africa (DTA) initiative, strengthening digital access, literacy, and enabling environments across the continent.
By leveraging leading US and African companies’ technology expertise, services, and assets, the Alliance will grow Africa’s trade and e-commerce flows in goods and services; foster African economies and firms’ trade and productivity; support the African workforce’s technological capacity; and encourage a better policy-enabling atmosphere for investment and trade in Africa.
Education and Capacity Building
Economists have proven that increasing years of education and building skills positively affects Africa’s economic transformation when controlling for other factors. Providing high-quality education today will help build the skills for the world’s future workforce, increase incomes, grow economies, and expand African markets and trading partners.
Given the importance of educating Africa’s children and youth, the US continues to provide funding and support to increase access to quality education. The United States has invested significantly in education and capacity-building programs across Africa, recognizing the importance of human capital development for sustainable economic growth. Through scholarships, exchange programs, and partnerships between educational institutions, the United States has provided African students and professionals with opportunities to acquire knowledge and skills in various fields.
The US Government Strategy on International and Basic Education, established in 2019, creates a welcome shift in focusing on partnerships and local ownership. This is a critical part of the strategy that should be continued and strengthened.
For instance, USAID funding has traditionally gone mainly to US-based organizations with deep technical expertise, excellent administrative capabilities, and sophisticated know-how for navigating USG procurement processes. These US organizations often sub-grant to local non-profits, universities, or networks once a grant comes through to help implement a specific set of activities.
Recently however, especially with the guidance of the Government Strategy on International and Basic Education, USAID is awarding more grants directly to local organizations, beginning to involve African organizations in discussions about the design of programs, and—in a handful of cases—the usual relationship between US and local organizations has been flipped.
Health Assistance for Africa’s economic transformation
Health is wealth, and the recent Covid-19 pandemic challenges have proven that health remains one of Africa’s most significant pillars of economic transformation. The United States remains an essential contributor to health and development assistance in Africa, playing a crucial role in combating infectious diseases, improving healthcare systems, and promoting overall development. In 2023, the United States remains committed to addressing pressing health challenges and supporting Africa’s healthcare infrastructure.
The United States Government continues partnering with governments and institutions, including the African Union (AU) and Africa Centres for Disease Control and Prevention (Africa CDC), to advance shared public health goals. The US has remained committed to strengthening health systems and institutions; advancing global health security; combatting HIV/AIDS, malaria, and tuberculosis; promoting sexual and reproductive health and rights, and maternal, neonatal, and child health; closing gaps in nutrition and non-communicable diseases; and accelerating efforts to achieve universal health coverage and the 2030 Agenda for Sustainable Development.
Since the beginning of the Biden-Harris Administration, the US has committed nearly $20 billion to health programs in Africa. US investments and partnerships on health in Africa have saved millions of lives. It has strengthened health systems and prepared Africa and the world for current and future health security threats. Thanks to the sustained partnership and investment, maternal and child mortality and malaria mortality across the continent have declined dramatically.
Energy transition financing and combating climate change
Since US President Joe Biden took office in 2021, his administration has made support for climate action overseas a central component of its foreign policy agenda. The primary focus is on helping accelerate the global energy transition.
In high-income regions where people generally take energy for granted, carbon emissions are high, and renewable energy markets are thriving. In these regions, the energy transition is primarily about rapid decarbonization and replacing fossil fuels with clean technologies.
With very few carbon emissions, Africa faces a very different energy landscape. However, the continent has vast energy deficits that endanger lives and hinder economic transformation. Moreover, African economies have trouble accessing new energy infrastructure financing. As a result, the outlook and objectives for their energy transitions inevitably differ.
Current African countries’ specific visions for what their energy transitions should entail and how they should be implemented differ significantly. Given this complexity—and the degree to which energy intersects with broader policy issues—it is unsurprising that US efforts now seek to align African objectives. The specifics remain important; beyond driving policy discussions on climate and energy, they also shape other dialogues; influence the scale, scope, and destination of available public and private finance; and help create the conditions for diplomatic cooperation.
For instance, the US Strategy Toward Sub-Saharan Africa commits to helping African countries pursue their energy access goals. This aligns with the continent’s prioritization of the access issue. For the last decade, the United States has supported expanding access to clean energy. This support remains a significant component of its African foreign policy and development assistance portfolio.
Supporting clean energy
Moreover, the Biden administration has continued long-standing efforts to support clean energy in Africa, including by emphasizing the issue in its US Strategy Toward Sub-Saharan Africa and through assistance from agencies including the US Agency for International Development (USAID), the US Trade and Development Agency (USTDA), the State Department, and others.
The US government has also enhanced specific agencies’ mandates in this space. Consequently, the US has joined significant international efforts to support long-term decarbonization in particular countries, including several in Africa. These efforts align with African goals to pair decarbonization with economic development. Moreover, they aim to support development pathways that achieve climate targets and broader economic and social objectives.
The United States plays a significant role in Africa’s economic transformation. The US fosters trade, investment, technology, education, health, energy transition, and climate solutions. The US has contributed to Africa’s transformation and emergence as a global economic player. It has done this through trade agreements, investment partnerships, technological collaborations, capacity-building programs, and development assistance.
Continuous engagement and commitment of the United States remain essential for Africa’s sustainable development, poverty reduction, and inclusive growth. African countries and the United States continue to strengthen their partnerships. Consequently, the potential for mutually beneficial outcomes and shared prosperity becomes even more promising.