“In addition to hosting six of the 10 fastest growing economies in the world, a recent McKinsey study documented that Africa offers the highest rate of return on foreign investment of any developing region, and has for some time,” Carson said in testimony before the Senate Foreign Relations subcommittee on Africa June 28.
He said consumer spending also continues to rise, and 43 percent of Africans currently have discretionary income, or could be considered middle-class consumers.
“Over the past decade, Africa’s growth was widespread across sectors including wholesale and retail trade, transportation, telecommunications and including manufacturing,” Carson said. “Foreign direct investment, or FDI, in Africa has also seen tremendous growth.” FDI projects in Africa have more than doubled from 339 in 2003 to 857 in 2011, according to Carson, with inter-African investment growing sharply from 27 projects in 2003 to 145 in 2011.
Combined with natural resource exports that have continued to generate significant revenues, Carson said, this steady growth has helped Africa to weather the global economic crisis more successfully than any other region in the world.
“In short, Africa is a trade and investment destination that cannot be ignored,” the assistant secretary said. “This is a continent on the move, and there are enormous opportunities for U.S. companies to enter the market, make money and create jobs” for both Americans and Africans.
“Greater U.S.-Africa trade is in the interests of both America and Africa, and we are determined to work to strengthen it,” Carson said.
Earl Gast, the U.S. Agency for International Development (USAID) assistant administrator for Africa, said in testimony following Carson that foreign direct investment is approaching $80 billion a year and trade figures have tripled during the past decade.
“This fortune is not the result of good luck,” he said. “It’s the result of years of hard work and better management, governance, capital inflows and business climate.”
To translate this growth into transformational development in poverty reduction, Gast said, President Obama’s recently unveiled strategy for engaging with Africa promotes opportunity and development while spurring economic growth, trade and investment.
The cornerstone of U.S. engagement with Africa will continue to be the African Growth and Opportunity Act (AGOA), he said.
“Since 2001, exports under AGOA have increased more than 500 percent, and the African Coalition on Trade estimates that as many as 1.3 million jobs have been created indirectly by AGOA, supporting upwards of 10 million persons throughout the continent,” Gast said. He added that many of these jobs are held by women, “a vital building block for development given that African women are more likely to invest job-related income into food security, health and education of their families.”
Assistant U.S. Trade Representative for Africa Florizelle Liser said Obama’s new strategy intends to “encourage economic growth, enhance trade and investment, support more jobs in the United States and help realize the full potential of the U.S.-sub-Saharan African economic partnership.”
The strategy was unveiled at the start of the June 14–15 AGOA Forum in Washington.
The 2012 forum brought together more than 600 participants, including top U.S. and African government officials, private-sector leaders and civil society representatives. It was preceded by a two-day civil society program June 12–13 in Washington and complemented by the African Women’s Entrepreneurship Program. The Corporate Council on Africa hosted its infrastructure conference June 18–20 in Washington, and the U.S.-Africa Business Conference was held in Cincinnati June 21–22.
AGOA, signed into law by then-President Bill Clinton in 2000, was designed to promote U.S. trade and investment ties with sub-Saharan Africa. It provides trade preferences to the 40 participating African countries through the removal of nearly all tariffs on their exports. It has broken down many trade and customs barriers in an effort to stimulate economic growth, encourage economic integration and help bring sub-Saharan Africa into the global economy.
Carson, Gast and Liser each emphasized the importance of the pivotal economic development program, and said Obama’s new Africa strategy keeps AGOA at the heart of U.S. engagement with Africa.