Tuesday, August 12, 2014


If it is possible at all you, have to feel sorry for the US.

Assuming altruism, a real desire to help Africa, as well as make some money in the process and put the brakes on China’s determined inroads into the region, corporate America and US officialdom were presented with quite a dilemma last week.

Imagine the scene Barack Obama stands before 40 African leaders at the US-Africa Leaders’ Summit, wondering how to make an impact on them with his words, trying to work out who among them is the first among equals and who it would be important to get onside so all the others fall in step.

A useful analogy would be the relative from the village, slumped in your sofa, “Get me job. Anything,” he pleads.

It would help if he had an education. Even better if he had some working experience. But it would be immensely useful, even valuable if he showed a willingness to make it easy for you to help him. Or at least in very concrete terms, show how it would be in your interest to help him.

On paper the relationship between the US and Africa should be decidedly lopsided.

The US annual economic output stands at about $11 trillion (that is twelve zeros) while Africa is just above a trillion. The US consumes more than 20 million barrels of oil daily compared to Africa’s figure of under 5 million barrels. The US defence budget is larger than the next 11 countries defence budgets combined. Africa as a whole is not even in the top ten defence spenders in the world.

"By whatever measure you look at it the US is in a whole different league, not unlike them playing in the English Premier League while Africa is in the fifth division, where to dream of playing with the big boys would invite uncharitable questions about your mental health...

That being as it is the US, more specifically its business community, have not had as pervasive a presence on the continent as they are capable of.

The US had a good thing going since the end of the cold war in a unipolar world, where Africa’s importance as a frontline against communism has faded.

The emergence of China has changed all that.

The US strategists projecting into the future see a real challenge to their economic dominance and once again Africa is where the battles will be decided. Some observers put 2027 as the year that the Chinese economy will overtake the US while others say it will be much sooner.

The US has come late to the party. Between 1998 and 2006 exports to China jumped 20 fold while exports to the US during the same period have grown four fold.

Hence the need for last week’s US-Africa Leaders Summit.

"Looked at another way Africa is once again the flavour of the month, courted by Asia, Europe and the US. The question then becomes how do we leverage our new advantage for the benefit of the continent?...

Trade not aid is becoming a well-worn cliché, but is still a relevant catch phrase. The limitations of the African Growth Opportunities Act (AGOA), mostly that we are severely lacking in capacity to service the US market, is a useful learning point.

Africa needs to resolve itself around two things. One, do we need the US and secondly, if we do, what do we need them for and how can we extract maximum benefit from the relationship.

That no one wants to be on the US bad side is a moot point. The sheer size of its output makes it the lodestone of the global economy. The ability if it’s military to project Washington’s will anywhere on the planet provides the big stick to ensure they have their way.

So then the second question is the more pressing one.

The American market is highly competitive to the point of saturation that their companies need to break out into the world in order to continue thriving.

It was reported recently that Warren Buffett, arguably the world’s best investor, is seating on a cash pile of $50b. The amount, which is more than half the total economy of the East African Community, has accumulated for lack of big enough deals to do.

It is with this kind of mindset that you see why the US insists on seeing Africa as one big country. Corporate America will only arise from its indifference to the continent when we present it with big enough opportunity. Even Nigeria and South Africa as standalone economies will not trigger a mad rush for Africa.

"Like our needy cousin from the village we need to help America to help us. We need to accelerate the establishment of our regional blocks. Railway, road and telecommunications networks fanning into the hinterland, thousand-plus megawatt dams or gigantic ports servicing whole regions rather than individual countries  are the kind of things that will not only present tantalising attractions, but when done will unlock the vast potential of the continent, which we hear of only in consultants’ presentations...

US cash will always come to Africa but for it to be the kind we want and in sufficient volumes, the one that triggers enduring and sustainable benefits, we need help ourselves fast by taking a hammer to our artificial boundaries.

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