According to the IMF’s 2019 World Economic Outlook report, six of the world’s fastest-growing economies are in Africa.
Over the next three decades, Africa’s population is expected to double to 2.4 billion. By 2050, about one in four people in the world will be African and the continent’s economy could be worth $29 trillion, more than four times its current GDP (in PPP terms).
Africa’s large market and economic potential underlie the growing efforts by China, India, Europe, North America and the Middle East to deepen trade, investment and economic ties with the continent.
Currently, China – the world’s second-largest economy – leads the pack in terms of trade and investment, and does a lot of business with Africa.
Chinese entrepreneurs now throng the streets of most African cities and own shops and factories on the continent, just as a growing number of African importers scour major markets in China and make deals with manufacturers and wholesalers.
But where is the USA, the world’s largest economy, in all this?
Despite having the largest population of Africans in the diaspora, and strong historical, language and political ties to the continent, how come America’s trade and investment activities in Africa do not run as deep as China’s?
In 2018 alone, the US spent over $2.6 trillion on imports from 200 countries. Of this, only 1.4% ($24.9 billion) came from African countries. In contrast, Africa’s exports to China stood at roughly $100 billion. And while US exports to Africa were just about $14 billion, China sold up to $105 billion in goods and services to Africa.
The facts and figures are clear: the USA and Africa are missing out on significant trade and investment opportunities with each other.
To understand why this gap exists and how to address it, this article features an exclusive interview with Titus Olowokere, the organizer of the maiden edition of the US-Africa Trade & Investment Global Summit (USATIGS) taking place this September in Atlanta, Georgia.
In this interview, he explores some of the big reasons why the US and Africa aren’t doing as much business as they should and how entrepreneurs and investors on both sides can change the game and reap big benefits.
In your opinion, what are the most interesting business opportunities that can come from stronger trade and investment ties between Africa and the USA?
Let me first say that there are big opportunities for business and investment in Africa in every sector. But if I were to pick the top four, I would say agriculture, entertainment, tourism, and information technology.
Of course, two of the more prominent resources Africa has are manpower and arable land, so you will understand why I mentioned agriculture first.
Africa’s dense youth-centric population also means that there is an abundance of performance and consumptive entertainment talent.
As for tourism, the landscape is a joy to behold. In fact, I dare say that the potentials in these areas have barely been tapped, let alone fully explored.
Also, the common denominator to real economic growth across all sectors is solid ICT infrastructure, including business and consumer applications.
The continent is on the verge of explosive economic development. Since the USA has reached several milestones in these areas, we do not need to re-invent the wheel.
The United States needs Africa as a strategic trade partner, hence stronger ties between the two continents would be of significant mutual benefit.
Despite these opportunities, why are African entrepreneurs and businesses not benefiting as they should?
You know in business we say ‘it takes money to make money.’
For example, in the agricultural sphere, farming in Africa is still mostly at the subsistence level. An entire community could be farming less acreage than one smallholder in the United States for instance, and they will produce less yield per acre because they do not have the technology in form of fortified or modified seeds and other inputs, mechanization, and access to extension services as their counterparts.
There is also the issue of the sometimes-hostile business environment in some countries. Where government policy is counter-investment, this can be problematic.
Investors want their investments protected. So, if there is uncertainty in the political climate as is sometimes the case in some countries, this would negatively affect economic growth.
Also, African entrepreneurs find it challenging to tell their stories. Project feasibility studies and proposals cost money to develop and are usually unaffordable. And in some cases, the entrepreneur is quite ignorant of the opportunities that exist.
Another area of serious concern is access to information, networking, and leverage. It is said in common parlance that “information is power”. You cannot take advantage of opportunities if you don’t even know they exist.
This is one reason we encourage African entrepreneurs to make the most of international conferences, learn new strategic business information, and connect with those who can help grow their business enterprises, even beyond their imagination.
The US is a huge potential market for unique and value-added African products, but why does it seem unreachable for many African entrepreneurs and businesses?
The USA market is like a labyrinth, an obdurate maze, for many African entrepreneurs. The policies and procedures that must be resolved by businesses are simply overwhelming and many often give up at some point of the journey.
There are logistical and regulatory issues. Sometimes it is a little difficult to tell which should be placed on the higher rung of the deterrent spectrum.
Trade between Africa and the States is not like one African community trading with their neighbors. Yes, I do know it is hard enough to trade within Africa, but this does not mean trading with North America is easy either.
Also, there are so many regulatory hurdles, standardization, documentation, sanitary and phytosanitary measures and agreements, as well as other very strict compliance requirements in the mix.
There is also the politics of business: trade relations and treaties. These are potential roadblocks that need to be effectively navigated. A platform such as the U.S.-Africa Trade & Investment Global Summit (USATIGS) creates opportunities to identify and resolve these challenges.
Overall, there is a paucity of knowledge of the market and how it works. There is minimal government and diaspora support, labor and exchange rate factors, and often a lack of capital and political will to access the market like their counterparts.
Africa is a promising emerging market. How can we get more US entrepreneurs and companies to enter the African market, and what are the biggest challenges they face?
Communication and information; that’s where all business begins. We need to talk.
In the most basic sense, business happens when I know you have something to offer that I need. Or you know something I want, and you have the potential of fulfilling it and so you come to me.
Africa and the USA need to communicate more in targeted strategic forums. There should be more convocations dedicated to these conversations. International players need to be put on the same table and be given an opportunity to engage. There is no other way.
We need to create market places where these exchanges will take place. And that is what USATIGS is all about.
Speaking of challenges, one of the biggest barriers to communication is language. In this instance, we are speaking mainly in terms of business language. Africa and the US need to reach a language compromise.
Let me give an example. Say an American filmmaker wants to make a movie set in Africa and he decides to go to Kenya for instance. His first challenge would be learning how things are done in this part of the world.
He cannot import his business language and tactics wholesale; that cannot work. He needs to have his expectations align with local realities.
First, he would realize he does not have the same kind of structure he is used to having in his country, so he must adapt to the local setting. That is a major challenge.
The same barriers would potentially exist, and even more so, should an American choose to invest in any other sector.
The US entrepreneur must also have a more open mind and be keen to educate himself on the African culture.
Africa, like other investment destinations, has its challenges, uncertainties, and risks. However, with necessary due diligence, analysis, and a well-developed strategic approach, the upside is worth the time, effort and money invested.
At trade enabling platforms, such as USATIGS, participants are encouraged to build relationships, explore attractive incentives to US entrepreneurs and companies, and reconnoiter with business network infrastructure, the security, legal and financial opportunities.
In your opinion, does Africa have any unique or special advantages to play in the US market that other regions of the world don’t have?
Yes, we do.
You will recall that in the year 2000, the African Growth and Opportunity Act (AGOA), a trade preference program, was enacted as the center of U.S.-African engagement on trade and investment.
AGOA provides trade preferences for African exporters – duty-free and mostly quota-free access to the US market – to approximately 6,500 tariff lines.
This includes ‘AGOA products’ as well as those textile and clothing tariff lines that qualify for duty-free access under AGOA’s wearing apparel provisions.
This strategic placement makes Africa unique.
So, the US sees the potentials of Africa and the majority of the 28 million small- and medium-sized enterprises (SMEs) in the United States need to tap into these potentials even more.
AGOA, while a great opportunity, is not well understood or appreciated by African entrepreneurs. There is much potential to be gained by both parties for a better understanding of the AGOA pact.
Presently, U.S. exports to sub-Saharan Africa stands at over $14 billion mostly between the US, South Africa, and Nigeria. What about the rest if Africa? There are definite opportunities for expansion.
What exactly is the US-Africa Trade Summit, and why should entrepreneurs and businesses be interested in it?
As I mentioned earlier, the U.S.-Africa Trade & Investment Global Summit, alias USATIGS 2019, is a trade Summit and multi-sector expo that provides African businesses a strong platform and excellent opportunity to exhibit and promote their products and services in the United States.
This is the third in the series of trade summits, scaling out from the erstwhile successful U.S.-Nigeria Agribusiness investment Summit (USNAGRIS).
The goal of the summit is to harness and showcase feasible and attractive investment opportunities across the huge U.S.-African Trade axis.
The Summit will provide a powerful stage to engage and showcase appropriate technologies, inventions and enormous trade potentials in Africa covering several sectors, including agribusiness, water and irrigation, aviation, energy, entertainment and tourism, infrastructure and real estate, maritime and shipping, healthcare, hospitality, ICT, waste management and environmental remediation and transportation as well as mining and solid minerals.
Many senior government officials, thought leaders, captains of industry and subject matter experts will be attending this year’s summit.
So, why should entrepreneurs and business be interested in it? The answer can be summarized in two phrases; ‘access to the US market’ and ‘business networking.’
We know Africa has an enormous investment potential and we know that US investors are looking for promising opportunities to invest their money. We know that both parties and their economies will benefit immensely from this partnership, and the objective of the summit is to make this important handshake happen.
So, from the 26-28 September 2019, we will be hosting the US Africa Trade and Investment Global Summit with the theme “Expanding the frontiers of U.S – Africa Trade and Investment”.
Participants at this year’s summit will have unparalleled access to network with business professionals in the trade and investment space, and gain high-level access to representatives of African governments.
Entrepreneurs and businesses will have the opportunity to expose their products and services, amplify their brand, take part in dynamic sessions on business in Africa, and have information to access loans, equity investors and technical partners for their respective businesses.
So far, what are the most notable achievements of the summit, and what are the biggest issues it faces?
This is the first edition of the pan-African-American Trade and Investment Summit. The first two editions were in the U.S.-Nigeria trade corridor.
The success of the first two editions led to the scaling up of the summit to a continental level.
The information on funding opportunities in prior editions has helped many participants to navigate the maze and apply for Farmers-to-Farmers funding opportunities with USAID.
Many African entrepreneurs have also been able to make market connections with uptakers and buyers of their agro-commodities in the USA and have improved on their packaging methods to meet US compliance and market needs.
Where and when is the 2019 summit holding, and how can anyone register to attend?
As I mentioned earlier, the summit will hold between September 26-29 in Atlanta, Georgia, and we have the beautiful and prestigious Kennesaw State University (KSU) Center as the Conference location.
Registration is now open and interested individuals and organizations can register for either the regular or all-access ticket at this link: Register for the 2019 US-Africa Trade & Investment Global Summit