US-Africa Summit: Biden touts $15bn in new deals

By Julian Pecquet, Romain Gras
Posted on Thursday, 15 December 2022 09:24, updated on Sunday, 18 December 2022 22:56

U.S. President Biden addresses 2022 U.S.-Africa Leaders Summit in Washington
U.S. President Joe Biden delivers keynote remarks at a U.S.-Africa Business forum at the 2022 U.S.-Africa Leaders Summit in Washington, U.S., December 14, 2022. REUTERS/Kevin Lamarque

On Wednesday, 14 December, the US hosted its much-anticipated US-Africa Business Forum, complete with a ”deal room” where more than $15bn worth of new trade and investment partnerships were announced throughout the day. We detail the deals.

It was undoubtedly the main attraction of President Joe Biden’s US-Africa Leaders Summit.

Biden capped the event with several announcements, including significant new government loans and grants for African projects and enhanced cooperation with the fledgling African Continental Free Trade Area (AfCFTA).

The president is also expected to announce a multi-country visit to Africa next year, US news site Axios reported this week. It would be Biden’s first trip to the continent, except for a brief stop in Egypt for COP27.

“This forum is about building connections. It’s about closing deals and above all, it’s about the future, our shared future,” Biden said hours before hosting visiting leaders at the White House for a state dinner.

Despite the successes, the deals announced so far fall far short of the $33bn announced at President Obama’s first US-Africa Leaders Summit and Business Forum in 2014.

Meanwhile African countries used the ministerial meeting of the African Growth and Opportunity Act (AGOA), America’s signature economic policy toward Africa, to push for greater private investment. US foreign direct investment flow to the continent has lagged behind China’s since 2013, according to Statista, falling to just half – $2.1 bn vs. $4.2bn – of Chinese FDI flow in 2020. Total US FDI in Africa was $44.8bn in 2021, down from a peak of $69bn in 2014.

“We are focusing more on the extension and the broadening of the scope (of AGOA),” Lucia Iipumbu, Namibia’s minister of industrialisation and trade, told The Africa Report upon exiting the ministerial meeting on 13 December.

“[…] as it is now, it focuses on the specific agenda of trade. We want to look at the expansion of the scope into investment, into industrialisation. That is the agenda that we are pushing as an African continent.”

Deals abound

Wednesday’s event was only the third such forum ever and the first since the Barack Obama administration invited African officials and business leaders in New York in 2016.

It was co-hosted by the US Chamber of Commerce and the Corporate Council on Africa (CCA) in partnership with the US government’s Prosper Africa initiative. The forum aimed to showcase America’s re-engagement with the continent after four years of perceived neglect under President Donald Trump. This week, the CCA announced that it will hold its next annual US-Africa Business Summit in June in Botswana.

New deals announced at the forum include:

  • $1bn investment into the continent by Visa over the next five years to expand mobile payment services;
  • $80m from General Electric and Standard Bank to improve healthcare services through access to cutting-edge equipment;
  • and $858m worth of new contracts from Cisco Systems and Cybastion, a cybersecurity company owned by Cameroonian immigrant Thierry Wandji Ketchiozo, to beef up cybersecurity protection in Côte d’Ivoire, Burkina Faso, Congo Brazzaville, Benin, Cameroon and Niger.

Biden also announced new government initiatives including a $500m Millenium Challenge Corporation (MCC) regional grant to transportation networks in Niger and Benin; $370m in new investments by the US International Development Finance Corporation (DFC), including $100m for reliable clean energy; and a $350m Digital Transformation with Africa initiative to facilitate some $500b in financing to expand digital access and literacy across the continent.

“Africa’s economic transition depends on good government, healthy populations, and reliable and affordable energy,” Biden said. “These things business seeks out when they’re looking to invest. They attract new opportunities, and they launch new partnerships.”

Trade partnership

To facilitate trade cooperation, the administration is signing an MOU with the AfCFTA to “unlock new opportunities for trade and investment between our countries and bring Africa and the United States even closer than ever”, Biden said.

The AfCFTA, he said, is “one of the largest free trade areas in the world”, with a population of 1.3 billion people and a $3.4trn market.

If you have those big players having those MOUs, it is important for the US not to be left out

“With the new MOU, we’re doing things correctly: enshrining protections for workers both across Africa and in the United States; looking out for small- and medium-sized entrepreneurs and enterprises to make sure they have a fair shot to compete; lifting up opportunity for women-owned businesses, diaspora-owned businesses, and businesses owned by members of historically underserved communities; and supporting and investing in the continent’s vibrant and growing urban economies,” the president said. “Together, we want to build a future of opportunity where no one is left behind.”

In a statement alluding to the upcoming MOU with the office of US Trade Representative Katherine Tai earlier this month, Wamkele Mene, the trade area’s secretary general, thanked the US for its commitment.

“We will sign an MOU in on the margins of this summit and that MOU is a legal document, but we started working together before the signature of the MOU. […] I truly appreciate the commitment that [Tai] has to work and partner with us,” Mene said at a 2 December virtual discussion with Tai at the Atlantic Council in Washington.

The move follows the AfCFTA’s signing of MOUs with several other countries, including China and the UK. This has sparked calls from the private sector for the US to make sure it also has some buy-in into how the trade area comes together to create a conducive environment for American businesses.

“If you have those big players having those MOUs, it is important for the US not to be left out,”  Guevara Yao, the executive director of the US Chamber’s US-Africa Business Center, told The Africa Report on a recent call previewing the forum.

“When you look at the bulk of the companies, the ecosystem of the private sector in the world, you know that the US is playing a prominent role and it’s important not to be left out. […] I think being able to support the AfCFTA team, making sure they are able to achieve their objective using best practices, is really what we are looking at.”

Money talks

On the African side, getting Congress to renew AGOA past its 2025 expiration date while transforming it into an investment vehicle are key priorities.

Senegalese Commerce Minister Abdou Karim Fofana said the two-decade-old program deserves praise for boosting African exports to the US, creating thousands of jobs across the continent.

“But there is a but,” he said. A significant portion “of those exports are compromised of petroleum products, and not enough manufacturing products. For Africa yes, more trade with the US is always good quantitatively, but qualitatively, if we want to get more value added in Africa, we need American investment”.

Today, he says, “Africa is pleading for AGOA not be just a commercial exchange mechanism, that it be turned into a mechanism for both trade facilitation and foreign direct investment”.

Tai was receptive, he said, with the Africans suggesting the creation of more working groups to implement the experiences, obstacles and successes of the various countries.

The US trade representative acknowledged the need for changes as well, pointing to the fact that only a portion of eligible countries take full advantage of the program. Currently, 36 countries are eligible for the program based on their respect for market-based economy principles, rule of law and other criteria.

Africa is pleading for AGOA not be just a commercial exchange mechanism, that it be turned into a mechanism for both trade facilitation and foreign direct investment

“We need to conduct an honest assessment of the state of play, to repurpose our trade tools and to align them with our new realities and needs,” Tai said in opening remarks at the ministerial.

She said she was “interested in discussing today ways in which we can improve AGOA – including how we can increase the utilization rates, particularly among smaller and less-developed countries, as well as ensure that the program’s benefits fully reach all segments of society”.

Green energy

Among the business developments at the summit was the signing of an MOU between the US, the Democratic Republic of Congo and Zambia to support the development of an electric vehicle (EV) value chain in south-central Africa.

The two countries announced plans back in April to develop an electric vehicle battery plant at the border for the domestic market and international export.

The mineral-rich belt that straddles the two countries produces more than 70% of global cobalt.

The US government expressed its support for the project during side meetings at the UN General Assembly in September. Amid growing concerns of Chinese control over the strategic minerals critical to the green energy revolution, the project is seen as a promising blueprint for diversification efforts.

“This memorandum of understanding that we’re about to sign signals the support by the U.S. Government for what is a very important project between these two countries,” Secretary of State Antony Blinken said at a 13 December signing ceremony alongside Presidents Felix Tshisekedi of the DRC and Hakainde Hichilema of Zambia.

“Different government agencies, USAID [the US Agency for International Development], Commerce, the Trade and Development Agency, are exploring technical assistance for the EV supply chain,” Blinken said. “Our EXIM Bank, the Development Finance Corporation, will be exploring financing and support mechanisms for investment in African electric vehicle value chains.”

Zambian Foreign Minister Stanley Kakubo called the MOU “truly a reflection of the deep friendship between our governments”.

“We want to get the transactions done and the setting up of the plants quickly,” he said, “and the value chains must be clear for our mutual benefit.”

His DRC counterpart, Christophe Lutundula, said Kinshasa aims to be involved “in all initiatives in the region that involve the United States so that we can contribute with our natural resources and strategic minerals to the collective management of the world’s fate and future in this day and age with climate change, where we need to have a lot of imagination and creativity to help us manage the energy transition together”.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options