A common theme expressed by many Africans who look around and see evidence everywhere of Chinese, Indian and European investment is "Where are the Americans?"
We would answer that the Americans are coming and once they overcome their misperceptions and realize the tremendous opportunities in Africa, they will come in even greater numbers.
U.S. trade to and from Africa has tripled over the past decade with the U.S. exporting $22.6 billion in goods and services to the region last year. The International Monetary Fund has estimated that economic growth rate in sub-Saharan Africa was 6.1 percent last year.
And in the five countries of the East African Community (Uganda, Burundi, Kenya, Rwanda and Tanzania), total trade (exports plus imports) grew by nearly 80 percent between 2012 and 2014: from about $1.54 billion to $2.75 billion. U.S. exports to East African Community countries more than doubled in that period while U.S. imports from the community grew by about 30 percent.
The potential is so much greater. One misperception by some American firms is that you will lose your money if you invest in Africa. That notion is simply outdated. Investments in Africa have the highest rate of return. Another is that the markets are too small. But Uganda, as a member of the East African Community, is part of a market with 150 million people. And the African continent will soon become a free trade area with a population of 1 billion people, hardly a small market.
The East African Community countries recently signed a deal with the U.S. in which we committed to reducing trade barriers and to cooperate with the U.S. on customs issues, easing red tape and streamlining trade standards. The U.S. will help with training on food safety, and animal and plant health standards.
U.S. Trade Representative Michael Froman said the agreement was "an important steppingstone for deepening what has already proven itself to be a promising and impactful partnership," according to the Wall Street Journal. The trade initiative, he added, would be expanded to include other African countries.
The Obama administration has reached out to Africa through the Power Africa and Trade Africa initiatives to encourage trade and investment.
As U.S. ambassador to Uganda, Scott DeLisi has said: "As we look to the future, it is clear that Africa is more important than ever to the prosperity of the international community and to the United States. Africa's economies are among the fastest growing in the world. Uganda, which has such tremendous potential, is of particular interest, with fertile soils, abundant water, a strategic location in the heart of East Africa, a university recognized across the continent for its excellence, and, most importantly, hardworking people with an entrepreneurial spirit."
Already a number of Minnesota-connected companies including Cargill, Medtronic, 3M, Land O'Lakes, General Mills, Cummins and the integrated design firm DLR Group, which is working on projects at Kenyatta University in Kenya, are active in East Africa Community countries. Agriculture, infrastructure development, oil and gas, mining, technology and tourism are but a few of the growth areas in East Africa.
In addition to investment by companies from Minnesota and across the U.S., nongovernmental organizations can play an important role in development. That includes groups like St. Paul-based Books for Africa, which over the past 26 years has shipped more than 5 million books to the East Africa Community countries. In addition, BFA and Thomson Reuters, through the Jack Mason Law & Democracy Initiative, have sent law libraries to law schools across the continent, including four of the five East Africa Community countries.
Those books help educate students, who in turn become part of an educated workforce and a growing middle class. Education also contributes to the building of democracy and the rule of law, which supports economic development.
Africa, despite conflicts in some areas, is moving toward democratization and peace. We know that investment in our countries and our continent requires stability and peace and a sense of predictability. In the East Africa Community and in Uganda, we are working hard to provide those conditions. So come visit what we love to call Uganda, "The Pearl of Africa."
Africa Forum: Business and Political Trends in Africa will be held at 2:30 p.m. Thursday at the Humphrey School of Public Affairs at the University of Minnesota. Register online at https://www.regonline.com/africaforum5-2015 or call Paul Hansen, Minnesota Trade Office: 651-259-7486.