Africa's growth triggers new US-led initiative: Prosper Africa
Prosper Africa, a US Government initiative, was rolled out at the US-Africa Business Summit held in June in the Mozambican capital, Maputo. This new initiative aims to double US-Africa trade and investment through the articulation of a new whole-of-government approach by the US to make it easier for African and US businesses alike to access, through a one-stop shop, the full range of the US government support services.
With the existing African Growth and Opportunity Act (AGOA) due to expire in 2025, the new initiative will allow the US government and businesses to craft longer term strategies that will invigorate US-Africa trade and investment. In particular, Prosper Africa is a response of the US Government to a growing call from its entrepreneurs and investors to make it easier for them to do business with Africa.
Africa's sturdy growth opens alleys for enhanced US-Africa trade and investment
Such an initiative could not make more sense. Due to sustained growth, Africa is poised to play a pivotal role in the global economy. At present, the continent is home to six of the ten fastest growing economies in the world and has over one billion resident consumers. By 2025, it is estimated that two thirds of some 300 million African households will have discretionary income. Meanwhile, producers in Africa see in the US a consumer market of more than 300 million people with a combined purchasing power of $13 trillion.
These figures underscore the benefit Prosper Africa has in store for both parties.
Recognising the need to provide financing support to open up the pipeline of opportunities in Africa, Prosper Africa also aims to foster fair and accessible business eco-systems and robust financial sectors. Efforts to support the development and deepening of financial sectors in Africa will be key to increasing trade and investment flows. In this connection, Mr Worku Gachou, Managing Director for Africa at OPIC, announced at the summit the future increase of their lending cap to $60 billion, also stressing the need for blended finance solutions to mobilise private capital flows.
US remains most committed investor into Africa
Defying a global downward trend, foreign direct investment (FDI) flows to Africa rose by 11% to $46 billion in 2018, fuelled by a demand for commodities as well as non-resource seeking investments. Flows to Sub-Saharan Africa increased slightly faster, by 13% to reach $32 billion. Prospects for 2019 are good, with additional FDI flows forecasted in response to higher prices for minerals and the African Continental Free Trade Area gathering momentum. In this context, traditional investor nations to Africa will be vying to keep their lead.
Prosper Africa is poised to see the US strengthen its position as one of the biggest investors in Africa. Though by FDI stock the US may seem to have lost ground in recent years compared to countries like France and the Netherlands, it remains by number of FDI projects – 130 in 2017 – the most committed investor on the continent.
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