Obama in Africa: An opportunity overlooked too long

by Developed Africa 26. June 2013 09:00

Obama's upcoming trip to Senegal, Tanzaia and South Africa has garnered a fair amount of criticim in the USA due to its projected costs of $60 to $100 million. But this high cost has masked the massive potential both in terms of international relations and, more importantly, in the vast potential commercial returns of the continent. Obama has received a fair amount of criticism for lack of engagement with Africa in the last 5 years - as highlighted by the video above - which has allowed China to make huge political and commercial gains in their absence.

Harvard Business Review published an article on the trip highlighting these benefits:

Africa ranks second—behind emerging Asia—as the fastest growing region of the world. The IMF forecasts thatSub-Saharan Africa will grow at a rate of 5.4% this year, about 50% faster than Latin America, and infinitely more than Europe, which is currently expected to grow not at all or even contract. Also, Africa's growth is not from a small base. Africa today is a $2 trillion economy, roughly the same as Brazil or India (where few would say a presidential visit is wasted)"

An article on Bloomberg Businessweek  further stressed the potential for growth in economic cooperation with fast growing African states:

U.S. foreign direct investment to the whole region in 2011 amounted to just $3.1 billion, less than 10 percent of total FDI to Africa that year. The latest U.S. Trade Representative statistics suggest the stock of U.S. FDI in Tanzania was a pathetic $21 million. U.S. trade with the region as a whole was worth $94 billion—compared with $127 billion in China-Africa trade. America’s comparatively low economic engagement means the U.S. is missing out on trade and investment opportunities in a small but dynamic part of the global economy."

Clearly there is pressure from inside the USA and from African states for new ventures that Obama has so far largely ignored - he has previously made just one 24 hour visit to Ghana in 2009. This trip was low on any real substance and saw his administration lose favour for refusing to engage properly. This trip is Obama's chance to remedy that.

For more on potential trade opportunities between the USA and Africa take a look at this brief by the Center for Global Development.

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Categories: Foreign Direct Investment