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Africa is Not a New Wild West for U.S. Business

A critique of the Exercise of Power, by Robert Gates. Part 2



· Africa

In his new book, Exercise of Power, former U.S. Secretary Robert Gates argues that the private sector - including business community, universities, and foundations and charitable and religious organizations - is probably the most significant and distinctive non-military asset for enhancing the U.S. image. Indeed, the government needs to partner with the private sector if America is to compete effectively with China’s Belt and Road initiative, because U.S. foreign assistance is a drop in the bucket compared to it.

But this does not mean that sub-Saharan Africa is a new Wild West where anything goes in the name of profit. U.S. foreign policy in Africa can best further and more effectively protect American interests by supporting contextually meaningful and impactful private sector investments that deliver appropriate, indigenously relevant, sustainable business solutions, based on trust, mutual respect and reciprocity, not might, size and financial clout.

U.S. Africa strategy needs balance

Despite the impressive work done by the Congress on behalf of particular industries, the sum total of their targeted support has not translated into policy that is good for a majority of U.S. or African businesses. Exclusive focus on big business and the measurement of small business success by how quickly it scales to bigger have blinded American policy makers to the clear competitive advantages that micro and small businesses (in the African context) have: flexibility, agility and vigor.

The U.S. Africa Strategy should promote a more balanced understanding of the opportunities Africa provides not only for big/multinational companies, but also for small businesses. Big business has a critical role to play through big investments in infrastructure and mining. But Africa is a continent of young entrepreneurs driven by a lean approach to innovation and creation.

While big U.S. business continues basing strategic decision making on traditional “rational” attractiveness, micro and small companies can provide a different model, one that generates the economic energy and synergy required for productive investments, through a collaborative approach rather than existing incentivized patronage. They are also the ones best capacitated to identify new market gateways and capture differential value domains.

Both the U.S. government and the private sector need to start thinking beyond the infrastructure box 

and start betting long on Africa. Business and investment in Africa need to go address unmet needs, develop solutions that build resilience, nurture local talent and skills, and nurse entrepreneurship and business cooperation.

What success in sub-Saharan Africa looks like

Including the private sector as an instrument of American power requires an equilibrium between the public and the private. Each sector has its strengths and weaknesses. Private sector investments should be made where the evidence shows they can do the most good for Africa, and the government should invest through foreign aid where the private sector cannot do the most good.

A successful equilibrium requires a paradigm shift in Prosper Africa, a U.S. government initiative to unlock opportunities to do business in Africa by increasing two-way trade and investment between the U.S. and Africa in benefit of companies, investors, and workers both in Africa and the U.S. Thinking must be expanded about how Africa’s assets and competitive advantages can be used more productively and in different ways, and the zero-sum view of competition against China must be replaces with demand-driven investment with the goal of promoting and facilitating an endogenous growth model.

Success in American investment in Africa will be achieved through diversification, investing where there is market demand and encouraging greater intra-African trade. This means, as Kingsley Chiedu Moghalu argues in his book Emerging Africa (2014), that the government-business partnerships for American investment in Africa should focus on how to help African nations make the best use of their organic strengths and internal dynamics to ensure market serve societal priorities, not the reverse (Moghalu).

The aim of including business as a non-military tool in America's policy in Africa should be to promote U.S. investment in sectors that can promote, encourage, facilitate, and enhance productivity and economic performance, instead of over-focusing on great power competition for economic influence on the continent.

Astrid Ruiz Thierry, Principal, Upboost LLC

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