Why African business leaders are calling for more US infrastructure investment

Construction workers in Nigeria. African business leaders have called for more U.S. private sector infrastructure investments on the continent. Photo by: Arne Hoel / World Bank / CC BY-NC-ND

African business leaders have called anew for more U.S. private sector investment on the continent - especially in infrastructure, an area that has lately been dominated by China. There appears to be a real yearning - and real opportunity - for U.S. leadership. But will President Barack Obama heed the call?

Devex President Raj Kumar and Africare President Darius Mans laid out the stakes this week in two op-eds published by Devex. Both suggested Obama visit Africa early in the year together with a group of business leaders (Mans) and on the heels of a State of the Union address that could be used to outline the continent’s potential (Kumar).

On Jan. 8, corporate leaders attending the Pan-African Business Forum in Accra, Ghana, made a similar call. Meeting participants praised the Millennium Challenge Corp.’s infrastructure investments in particular, calling on the U.S. government to expand the agency’s role. But the implications seemed clear: There’s a lot of work to be done, and China can’t do it alone.

MCC’s mission, of course, is different to that of the U.S. Agency for International Development, for instance. The former tends to fund one-off projects - the construction of roads, upgrading of ports and the like - that are choosen by partner countries, while the latter is more engaged in the complicated work of changing health systems, improving governance and making communities more resilient to disaster.

“When given the opportunity to choose investments under MCC’s country ownership model, partner countries have consistently prioritized investments in key infrastructure such as roads, water and sanitation, energy, ports, health clinics, and schools as well as other sectors, such as agriculture and rural development,” an MCC spokesperson told Devex this week. “These infrastructure investments create a better environment for businesses, including U.S. investors, since poor infrastructure is often cited as a roadblock to operating in developing countries.”

To date, approximately 60 percent of MCC’s assistance has been used for infrastructure projects. And the government corporation is eager to find new ways to integrate the private sector into its compact program development and implementation, according to the spokesperson.

Both MCC and USAID have started to push innovative financing through public-private partnerships and co-financing arrangements, for instance.

Obama, of course, laid out a new vision for U.S. engagement in Africa last year in his presidential policy directive on sub-Saharan Africa. To boost economic growth, trade and investment - one of the directive’s four goals - the United States wants to focus on energy in particular.

“We are working a great deal on trying to promote that, particularly an enabling environment for private sector investment and trade,” Mike Curtis, a senior program analyst who is in charge of USAID’s economic growth projects, told Devex earlier this week. “In order to get private sector investment, we are trying to work on good governance. Our effort is going to be around improving regulatory regimes and getting the investment climate right to attract private investment. We recognize that in order to get this economic growth, you’ve got to have access to clean reliable and sustainable power.”

USAID wants to do more to create transformational change, he said, although how exactly is “still in a very conceptual” stage. What is clear, though, is that these efforts will be both bilateral (to expand tech capacity and encourage U.S. companies to invest, for instance) and regional (to support power pools, for instance).

“To create transformational change, you can’t rely on China or the international finance institutions or development banks to do it alone,” Curtis added.

African business leaders are hoping that these actors - as well as other emerging donors, companies and investors - will work hand in hand to make that vision of transformational change a reality.

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About the author

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    Rolf Rosenkranz

    Rolf Rosenkranz oversees a talented team of in-house journalists, correspondents and guest contributors located around the globe. Since joining Devex in early 2008, Rolf has been instrumental in growing its fledgling news operation into the leading online source for global development news and analysis. Previously, Rolf was managing editor at Inside Health Policy, a subscription-based news service in Washington. He has reported from Africa for the Johannesburg-based Star and its publisher, Independent News & Media, as well as the Westdeutsche Allgemeine Zeitung, a German daily.