The United States is pivoting towards the emerging market economies of Sub-Saharan Africa. As part of this push, President Obama was in Ethiopia to address the African Union.
Africa’s potential continues to grow due to increased global economic uncertainty. In Europe we’re still in the middle of the Greek crisis. Similarly, Asia’s economic outlook looks uncertain as China’s stock market struggles.
Africa is now an especially attractive proposition for trade. Despite a weakening commodities market, African economies have significantly diversified and are now offering enhanced prospect for growth going forward.
The U.S. however, is somewhat late to the party. It is now desperately trying to catch up on the growing level of opportunity offered on the continent. Something which has already been well capitalised upon by China and Europe.
In the face of this, the President’s speech took place at the AU Conference Centre in Addis Ababa. The building is a gift from China. Financed by Yuan rather than Dollar, it is a stark reminder of Chinese economic muscle in the region.
Apart from a few omissions, there was a near full turnout of delegates for the address. Taking to the stage, Obama outlined a renewed focus on intra-Africa trade,
‘You don’t have to just look overseas for growth, you can look internally… we’re expanding our efforts across the continent, because it shouldn’t be harder for African countries to trade with each other than it is for you to trade with Europe and America.’
Continuing on, he also promised to expand U.S. economic commitments to the continent,
‘We’ve launched major initiatives … investments that will help fuel Africa’s rise for decades to come.’
Although never mentioned explicitly, the spectre of China was present throughout. China overtook the U.S. in 2009 as Africa’s largest trade partner. Chinese investment heralded unprecedented growth. Their methods though have been questioned, something Obama was quick to bring to the fore,
‘The United States isn’t the only country that sees your growth as an opportunity … but economic relationships can’t simply be about building countries’ infrastructure with foreign labor or extracting Africa’s natural resources.’
Obama’s speech was well received but, whether he can wrestle back U.S. economic hegemonic power over the continent remains to be seen. China still possesses vast foreign currency reserves, so expect it use these to further entrench their position.
What can we take away from this? Well the message for internationally trading businesses and investors is clear. Africa is not going away and its importance is wide and far reaching.
As the U.S. and China ramp up investment, the African marketplace will continue to expand. Can you afford to ignore it?