US President Barack Obama said the fast growing economies of Africa represent one of the greatest opportunities for the US to extend its commercial reach and doing so requires a concerted effort by business and government.

The president highlighted $33 billion (R356 billion) in commitments to Africa: $14 billion in investments by companies including General Electric and Coca Cola, $7 billion in financing to promote US exports and $12 billion for an initiative to double availability of electricity in sub-Saharan Africa.

“Even as Africa continues to face enormous challenges,” he said at the US-Africa Business Forum in Washington today, “we cannot lose sight of the new Africa that is emerging.”

The president is seeking to shift the US focus in Africa toward fostering investment and trade, instead of the traditional emphasis on providing aid.

Today’s forum, which includes more than 90 US companies, is part of a three-day summit attended by more than 40 African leaders.

The administration’s aim is forging more robust trade and commercial ties in Africa to tap some of the world’s fastest growing economies.

China has overtaken the US, the world’s largest economy, as Africa’s biggest trading partner with a relationship that exceeded $200 billion last year.

That’s more than double US trade with Africa.

 

China’s Moves

China’s state-owned enterprises have rolled out projects in every country on the continent, including hydroelectric dams, highways and rail lines linked to the extraction of natural resources.

“The United States is determined to be a partner in Africa’s success,” Obama said.

“We don’t simply want to extract minerals from the ground for our growth” he said, drawing an indirect contrast to China’s approach.

The administration’s strategy leans heavily on US companies investing in Africa, which Obama said would increase employment in the US as well.

GE yesterday announced plans to invest $2 billion in the region by 2018 and double its workforce on the continent.

Ford Motor is looking to expand its manufacturing in Africa.

“Everything is pointing toward a surge in the African economy,” Jim Benintende, Ford’s head of operations in the Middle East and Africa, said in an interview yesterday.

Fast Growth

The World Bank projects a 5.2 percent growth rate for sub- Saharan Africa this year, driven by rising investment in natural resources and infrastructure, and strong household spending.

Energy shortages are a major obstacle to more robust growth.

About 70 percent of the population lacks electricity, according to the International Energy Agency.

The Obama administration has proposed a Power Africa program, which still requires action by Congress, a five-year $7 billion plan to double access to power in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.

In addition, private equity firm Blackstone Group LP is in a $5 billion partnership with Aliko Dangote, president of Dangote Group and Africa’s richest man, for power projects in sub-Saharan Africa.

“The total need for power in Africa is $300 billion,” Steve Schwarzman, Blackstone’s chief executive officer, said in an interview with Bloomberg Television.

“So the power initiatives of the current administration, our own joint venture with Dangote, is really just scratching the surface of what the full needs are.”

Separately, Carlyle Group is investing an unspecified amount with Dangote in Nigerian oil and gas ventures and other sub-Saharan projects.

Trade Missions

In addition to the private investments, the US plans to add 10 trade missions in African countries and expand its presence in other parts of the continent, Commerce Secretary Penny Pritzker said.

Sub-Saharan Africa still represents a small portion of US trade, accounting for 1.5 percent of all exports and 1.7 percent of imports.

“We have to do better, much better,” Obama said.

“I want Africans buying more American products. I want Americans buying more African products.”

To draw more US investment, the administration is pressing African leaders at the summit to protect human rights, especially for women, curb corruption and foster more transparent financial systems.

Good Governance

“Capital is one thing,” Obama said.

“Rule of law, regulatory reform, good governance? Those things matter even more” because investors want to be able to do business without “paying a bribe or hiring somebody’s cousin.”

Africa’s biggest need, he said, is “laws and regulations and structure that empower the individual” and don’t simply preserve “power for those at the very top.”

Obama’s message was reinforced by other speakers during the day-long session.

“To expand growth and attract greater investment, Africa will need to develop more open, secure and competitive capital markets that can provide access to financing for governments, businesses and families,” Treasury Secretary Jacob J. Lew said at the forum earlier today.

Former US President Bill Clinton said during a panel discussion at the business forum that Africa offers a massive opportunity to American companies that have been slow to invest there.

‘Missing the Boat’

“It strikes me that we’ve only barely scratched the surface of what we could and should be doing there, and that we’re missing the boat,” Clinton said.

The US-Africa Business Forum is hosted by Bloomberg Philanthropies and the US Commerce Department.

Bloomberg Philanthropies is led by Michael Bloomberg, the founder and majority owner of Bloomberg, the parent of Bloomberg News.

Tomorrow, Obama hosts the African leaders at the State Department for daylong discussions on topics including sustainable development, regional peace and stability, and improving governance.

Former President George W. Bush, known for his campaign to fight HIV/AIDS in Africa, will speak to a session on health policy.

The summit will conclude at the end of the day and Obama plans a news conference.