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U.S.-Africa business vision clouds up

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U.S.-Africa business vision clouds up

U.S.-Africa business vision clouds up
An African Union soldier peers through a comrade’s sniper scope on a hill overlooking Barawe, Somalia, a stronghold of the al-Shabaab Islamist militant group, on Sunday. Photo credit: AU-UN IST | European Pressphoto Agency

Conflicts, famine and Ebola blunt bid for greater commercial ties; playing catch-up with China

American and African leaders in August celebrated a new story for Africa, one centered on an era of expanding commerce and a shift away from a relationship built around conflict, terrorism and pestilence. But months after a summit in Washington, those remain the ties that bind. Business, as usual, not so much.

“The expectations coming out of the [U.S.-Africa Leaders’ Summit] might have been unrealistic,” said John Campbell, a senior fellow for Africa Policy Studies at the Council on Foreign Relations in New York. “To develop fruitful economic ties will take a long time.”

The succession of crises is bound to make that transition a bumpy one.

In South Sudan, American and African diplomats are trying through peace talks to bind together a rupturing nation. Three years after independence – and $2.2 billion in total U.S. aid later – warring leaders are fighting over sputtering oil fields. The conflict has killed more than 10,000 people and raised the prospect of famine.

The highest-profile American presence these days is over African skies. In September, U.S. drones and manned aircraft launched Hellfire missiles that killed Somali militant commanders, including al-Shabaab’s leader. In Nigeria, surveillance flights are still searching for more than 200 schoolgirls nearly six months after militant group Boko Haram abducted them from a boarding school; although police on Sept. 25 said one captive was released, there are no signs of the others.

Meanwhile, Ebola has exploded – snarling air traffic, deterring investors and drawing American troops to West Africa. Before the U.S. military and more international assistance arrived, the Centers for Disease Control and Prevention warned that the number of cases in Liberia and Sierra Leone could soar to 1.4 million by mid-January. The hemorrhagic fever has killed more than 3,300 people, and the risks Ebola poses to the U.S. were underscored after a Liberian man emerged in Dallas with the virus.

This isn’t the picture U.S. and African leaders hoped to portray during their summit. It points to a historic challenge of how to alter perceptions of a continent that, from the outside, appears to be in constant turmoil.

In early August, President Barack Obama urged American business leaders attending the summit not “to lose sight of the new Africa that’s emerging.” He announced $21 billion in investment and trade deals to expand America’s commercial footprint. He set aside an additional $12 billion for Power Africa, a program to increase electricity for a continent where 600 million people live without it.

U.S. officials envisioned American companies moving into the slipstream of these commitments, positioning themselves to scoop up deals in power and technology. On a continent where the average age is just 19, there is now a new middle class of consumers – one that is fostering entrepreneurship and democratically elected leaders. This is the flip side to an Africa of brutal insurgencies and aging dictators.

“The story of Africa…is increasingly one of economic dynamism,” said J. Peter Pham, Washington-based director of the Africa Center at the Atlantic Council, a think tank. “What the summit tried to do and, at least for a moment, succeeded in doing, was to shift the narrative to this perspective.”

The failure to capitalize on the continent’s change means ceding more of a billion-person market to China, Africa’s largest trade partner. China’s state-run companies long ago raced into the continent to cut resource and infrastructure deals. Today, it is Chinese private companies courting African consumers with televisions, cars and smartphones. China’s trade in 2013 with the continent grew to $210 billion while U.S. trade with Africa fell for a second straight year, to $85 billion.

“Quite visibly, the U.S. is trying to play catch-up,” said Michael Power, a Cape Town-based strategist for Investec Asset Management. “China Inc., in all its guises, remains very enthusiastic about Africa’s prospects; by contrast, U.S. Inc. is very much more hesitant.”

The Ebola epidemic has reinforced perceptions of Africa as a risky frontier market. Airlines have canceled flights to Ebola-affected countries and even some of the unaffected ones, such as Kenya.

Kenya has suffered a series of shooting rampages on its coast. Those attacks, ascribed to both militants and government opponents, have prompted travel warnings from the U.S. and the U.K. and left tourist hotels empty.

Faith in a South African government racked by graft allegations is slipping, as the continent’s most-advanced economy fell three spots on the most recent Corruption Perceptions Index compiled annually by the Berlin-based Transparency International, to a ranking of 72 out of 175 countries, barely ahead of Greece and China.

These problems obscure opportunities, but also reflect a continent that hasn’t always been a welcome home for American investment, said Ed Royce, chairman of the House Committee on Foreign Affairs and a longtime proponent of increased U.S.-Africa trade.

“Capital is a coward,” he said. “Foreign investors will be timid without rule of law and strong governance.”

For some African policy makers, American security concerns are what will continue to shape engagement with the continent – even as business becomes a growing part of the relationship. That is especially true in a place like Nigeria, home to a huge frontier market as well as an insurgency that has carved a swath of control out of the country’s northeast.

“America sees an existential threat in the fight against global terrorism. It’s that mind-set that prioritizes those things,” said Kingsley Moghalu, author of “Emerging Africa” and deputy governor of Nigeria’s central bank. “It doesn’t mean that things aren’t happening on the ground.”

Patrick McGroarty contributed to this article.

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