Looking for Growth in the African Continent
As China becomes Africa’s largest trade partner, other countries are quickly vying to increase commercial ties with the continent. Africa, boasting a market of 1.2 billion people, has seen tremendous growth in the past decade in terms of its economy. Indeed, leaders from around the world have been making unprecedented visits to the continent highlighting Africa’s economic appeal to the the global community. According to the United Nations, from 2018 to 2035, all of the world’s top ten fastest growing cities will be African. Indeed, the World Bank contends that growth will be massive, claiming that African cities will face incredibly high population densities. Additionally, the past decade has seen incredible growth in Africa’s technology sector, which has been used to solve the continent’s myriad of challenges.
With incredible mineral wealth, a large and diverse market, and increasing economic partnership within the continent, Africa is a stand out in its opportunities. Yet as countries such as Turkey, Germany, Russia, Brazil and countries in the Middle East rush to finance projects across the region, the growing rivalry between China and the United States stand out.
It is no secret that the United States fears China’s ambitious financing in the region. Indeed, the United States has claimed that China was ensnaring other nations in crippling debt in order to gain political leverage. Further, critics to Chinese financing argue that the terms of the financing are unclear to the general public and therefore believe that the projects are unsustainable and fueling local corruption. However, amidst these claims, China has stalled to fund the third stage of a Kenyan railway — emphasizing Xi’s claim that China will only focus its financing on necessary projects with commercial viability.
However, the United States is not convinced. In an incredible show of bipartisan support, the United States Senate passed the Build Act, in a 93-6 vote, in order to compete with Chinese financing in the region. Packaged as a way to increase engagement of the private sector in Africa, counter Chinese economic influence, as well as a solid investment of taxpayers’ money, President Trump is widely expected to sign the bill. The Build Act, if signed into law, will create a 60 billion USD agency to counter-invest in countries that have been offered financing from China. This U.S. message is especially clear when placed in the context of a bill being passed right after the China-Africa summit, in which Chairman Xi pledged 60 billion USD to projects in Africa.
Regardless of the political implications and specific tenets of the Build Act, what underlies its passage is the United States’ commitment to investment in the African continent. Whether these deals are financed via state-owned enterprises, multilateral banks, or the private sector, the capital is being raised, the projects are being undertaken, and the effort to alleviate poverty is prevalent. Competition to finance has allowed for the development of necessary projects throughout the region and has granted the ability for African leaders to carefully finance state projects with foreign investment on their own terms.