The investment potential of Africa

US is waking up to the potential of Africa, after years of leaving it to the Europeans and Chinese.

1. This week, America has finally woken up to the true potential of trade with Africa, the continent with some of the world’s
fastest-growing economies andan abundance of human and natural resources.
2.
The gains from trade with Africa long ago brought China and Europe — and, to be fair, some of the smartest American
companies — to this vast continent with investment and infrastructure, but the US has been behind both of those two
major competitors in recent years.
3. China is now Africa’s biggest business partner, with roughly $200bn (£120bn) in trade in 2013 — more than double the trade
that Africa did with United States, which is also behind Europe. More than one million Chinese migrants have moved to Africa
to helpthe cause.
4. What started as insatiable demand from China for Africa’s commodities — which involved the Chinese moving in to build
the massive infrastructure and transport links required to get the resources out ofAfrica — has developed into a much
broader tradingrelationship in all sorts of goods and services.
5. Now, America wants to catch up. After all, Africa hasthe world’s fastest-growing middle class, and they will soon want the
consumer goods and services thatAmerican companies can provide.
About 50 African leaders attended the US-Africa Business Forum in Washington this past week, and more than 90 US
companies including General Electric, Coca-Cola, Morgan Stanley, Citigroup, Ford, Chevron, Marriott International and
Lockheed Martinwere present to talk about their investments.
6. The result was $33bn of economic commitments over the next few years and promises of a much closer trading relationship
between America andAfrica.
7. Among many deals done, Coca-Cola said it would invest $5bn in African manufacturing and water programmes, and
the private equity groupBlackstone signed an agreement with Nigerian conglomerate Dangote Group to jointly invest
$5bn in energy projects in sub-Saharan Africa. Muhtar Kent, chief executive of Coca-Cola, said: "As an organisation that
has been part of the economicand social fabric of Africa since 1928, we and our local bottling partners have seen,
first-hand, the great promise and potential of this dynamic, growing and vibrant continent."
8. Coca-Cola also signed a letter of intent to launch "Source Africa" — an initiative to secure local ingredients.
9. Mr Kent added: "In Africa, we believe we can do more to source agricultural ingredients locally, with significant supply
potential that’s under-developed and under-utilised.
10. "Tapping this potential could accelerate the growth of our business and Africa’s emerging economies, making our supply
chains more cost-effective and enabling sub-Saharan Africa to supply more ingredients to growing markets in Africa and
beyond."
11. These are big commitments by big players who understand the promise of Africa. However, a big theme at the summit
was the challenge posed by the large parts of Africa that still have inadequate power supplies. About one third of Africans,
roughly 600 million people, still do not have access to electricity.
12. Investors in Africa need to concentrate on developing the potential of its human resources as much as extracting its
natural resources and making big bucks. The reward for Africa needs to be more than the billions of dollars paid by
international companies for access to resources that may or may not trickle down to the people who actually do the work.
13. The opportunity is huge for all involved — but the African people have to win. Adapted from The Independent, Mark
McSherry, 08.08.14