U.S.-Africa Summit: Partnership Opportunities

Photo: UNMIL, Christopher Herwig

The U.S.-Africa Leaders Summit, to be held Aug. 4-6 in Washington, D.C., will provide a unique opportunity to reset the relationship between two partners facing significant geopolitical challenges in the coming decades. As U.S. President Barack Obama prepares to host up to 50 African heads of state and governments in what the White House calls the "largest event any U.S. president has held with African heads of state and government," a lot will be at stake beyond the stated Summit themes of investing in Africa's future, peace/regional stability and governing for the next generation.

U.S. perspective

The Obama administration's 2012 Africa Strategy clearly seeks a relationship with Africa focused on mutually beneficial partnerships rather than foreign aid. Under this paradigm, the United States and Africa would become increasingly interdependent on trade and investment issues, emerge as strong democratic and governance reform partners, transform into resilient allies in the fight against terrorism, and strengthen global collaborative frameworks.

In addition, the United States looks to Africa's political and economic elite to create an environment that enables young men and women to become future leaders. According to the Africa Development Bank and the United Nations, Africa's youth bulge is so significant that individuals under 35 years of age constitute more than 65 percent of the population in many countries. The Mo Ibrahim foundation estimates that by 2050 more than 50 percent of all Africans will be 24 or younger. By 2100, half of all the youth in the world will be living in Africa. Today, youth unemployment rates over 50 percent are common across the continent. U.S. policymakers evidently believe the roadmap to a viable Africa requires long-term, stable investment in young men and women. The Obama administration's Young African Leaders Initiative (YALI) is a major push in this regard.

Industrialized nations, including the United States, will continue to deal in the foreseeable future with domestic priorities such as high unemployment, decaying urban infrastructure and a restive middle class looking for opportunities to shake up political systems. The 2014 Secretary General Report of the Organization for Economic Cooperation and Development (OECD), the club of richest industrialized nations, paints a picture of continued anemic, uneven and fragile economic recovery in the West.

In one of the most important and largely unanticipated scenarios in U.S.-African relations, the long-term dependence of U.S. policymakers on oil imports from Africa to assure adequate domestic supply may be coming to an end due to increasingly successful domestic exploration of existing oil wells and new shale formations. The U.S. Energy Information Administration (EIA) reports that domestic crude oil production increased four-fold between 2008 and 2012. The EIA conservatively estimates the net share of imported crude oil will likely decline from 41 percent in 2012 to 25 percent in 2016. In another sign of the time, The Wall Street Journal reports that the biggest privately owned oil companies in the world—Exxon, Shell and Chevron—now focus more of their exploration and production investments in OECD countries: 66 percent in 2013 compared to 49 percent in 2003. Furthermore, prices of oil produced in the United States may soon become competitive in global markets, with ominous implications for African and other developing nations heavily dependent on oil exports to the West.

Africa's perspective

From Africa's perspective, despite serious security concerns, the continent appears to be on a trajectory towards long-term economic prosperity, according to recent reports from multilateral institutions, think tanks, foundations and investment banks. The Mo Ibrahim Foundation reports that Africa accounts for 60 percent of the remaining cultivable land in the world and more than 50 percent of global deposits of platinum, diamonds, cobalt and tantalum. Between 2010 and 2017, Africa will likely record a 70 percent increase in the exploration of 15 important minerals. Africa also holds vast potential for tourism and renewable energy resources.

According to both the World Bank and the Africa Development Bank, six of the 10 fastest-growing economies in the last decade are African countries. In a growing show of confidence by private equity and other investors, foreign direct investments in Africa now roughly equal development assistance at about $50 billion a year. The McKinsey Global Institute and Goldman Sachs independently indicate that within the next two decades, Africa's rapidly growing middle class, with exponentially increased purchasing power, will likely make the continent a global destination of prosperity.

African leaders will be attending the Summit acutely aware that United States is not the only economic or even political alternative. The rapid economic rise of China, Brazil, India, Gulf States, Turkey, Singapore and Malaysia over the last two decades provides increasingly promising opportunities for economic and trade investments. The OECD indicates that China is now the major provider of aid, trade and investment to the least-developed countries, with nearly 45 percent of assistance going to Africa. These alternative trade and investment opportunities often come without political strings attached on issues such as human rights and governance reforms associated with U.S. partnerships.

Additionally, an ongoing effort to jumpstart the political and economic influence of the global South appears to be gaining momentum. Recently, Brazil, Russia, India, China and South Africa (the BRICS countries) announced plans to establish a fully capitalized $50 billion development financing facility, to provide competitive alternatives on infrastructure and sustainable development projects currently financed by existing multilateral institutions. Additionally, the BRICS will establish a $100 billion contingency reserve fund to assist poor countries experiencing financial difficulties. In the United Nations, World Bank and International Monetary Fund, Global South countries are now working more closely on political and governance reform agendas.

The role of the African diaspora is increasingly important to African policymakers. In 2012, official remittances to Africa stood at $60.2 billion, surpassing development assistance and foreign direct investment. African Americans and African immigrants remain influential in the design and implementation of U.S. policy towards Africa. Africans leaders recognize that Africans in the diaspora can become important investment and technical allies in coordinated development efforts in the continent.

Making progress at the U.S.-Africa Leaders Summit

U.S.-Africa relations will not be dramatically changed by a single gathering. The Summit will focus attention on issues important to both sides, allowing political leaders to engage in constructive dialogue on the way forward. Delegates will have opportunities for high-level technical discussions and networking. The Summit will also highlight the rising profile of Africa on the global stage.

Some decisions are likely from the Summit. The Summit will reaffirm the strong ties between the United States and Africa while making progress on issues of of investment, governance and a few dedicated projects. Projects important to Africa include the Obama administration's Power Africa initiative, which seeks to extend electricity to 20 million new households, and the Africa Growth and Opportunity Act, which aims to enhance access to African goods and services in the United States. Africa's support for YALI, easing restrictions on private-sector investments and tighter coordination of security partnerships will likely be key priorities for the U.S team.

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