During President Obama’s stop in Tanzania during a three-nation tour of Africa, he championed a new model for Africa. Instead of solely foreign aid, the president is making a marked shift towards stronger business ties between the U.S. and Africa amidst China’s aggressive investment in the continent. "We are looking at a new model that's based not just on aid and assistance but on trade and partnership," President Obama said during his visit to Tanzania.The “Trade Africa” initiative aims to increase Africa exports to the U.S. by forty percent. The initiative will initially focus on five east African countries, Burundi, Kenya, Rwanda, Tanzania and Uganda.
In the past decade, several African countries have experienced significant growth as emerging democracies and educated youth strive to reshape the images of their countries from destitute conflict zones to cosmopolitan cities with a growing middle class. Many of the world’s fastest growing economies are in Africa, with East Africa expected to experience significant growth in the next decade. According to a McKinsey study, telecommunications, banking, and retailing are flourishing. Construction and private-investment inflows are also surging. Gross domestic product (GDP) for the region quadrupled in 10 years, to more than $80 billion, the White House said in a fact sheet.
There has been speculation that this trip and new trade initiative is a move by the U.S. to combat China’s growing presence in Africa. China has built roads, airports and other infrastructure on the continent. President Obama has continuously denied that the U.S. is feeling threatened by China’s growing presence on the continent. However, it remains true that China has surpassed America as Africa’s largest trading partner. Countries like India, Turkey and Brazil also are increasing their presence on the continent. Without a doubt, Trade Africa will allow the U.S. to regain a foothold in the continent and promote business interests while supporting increased trade and investment between the U.S. and Eastern African countries.
Still, barriers to equitable growth in Africa remain as the continent faces the question of how to turn economic investments into investments in its people that will reduce poverty and corruption. The average American is still 40 times richer than the average African, according to the African Growth Lab. The percentage of Africans living on less than $1.25/day remains high at 48.5%. Africa also faces the challenge of how to create jobs for the over 60% of its population that are under the age of 35 years.
During his trip, President Obama has gone through great lengths to acknowledge both the opportunities and challenges Africa is facing as its economies continue to grow. No doubt, the continent is at a turning point as not only the U.S., but the world, recognizes its growing economic potential. Initiatives like Trade Africa can open American markets to African businessmen and vice versa, and provide opportunities for African countries to trade with each other. The president seems to be seeking a true partnership as he vows to “help Africa to build Africa for Africans.”
France François is the founder of the award-winning Black in Cairo blog. Follow her on Twitter at @FranceF3