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The US Should Continue Investment in Africa

By Ali Rachidi, Staff Writer '20

· Ali Rachidi

Of the United States’ fifteen largest trading partners today, eleven are former recipients of American Aid. Uncle Sam shaped Asia and Europe by rebuilding economies and democracies, achieving impressive results. This speaks highly of the American engagement with the world. Yet, it is not at all clear whether a more insular America will do the same for Africa this century. The U.S clearly has the potential and incentives to do so. It is more trusted than China, whose approaches are sometimes paralleled with colonial exploitation. The US' ability to expand technology through ideas and innovation could tremendously help the last emerging market of the world, which will be populated by twice as many people with 70% of them under 30 by 2050. To elaborate on the degree of involvement and success of the U.S in Africa, I will investigate on the most important project the U.S has lead in Africa in the past decade, Power Africa.


In 2013, standing in front of U.S. Agency for International Development (USAID) experts, Barack Obama proudly announced a $7 billion partnership to double access to electricity in sub-Saharan Africa. Power Africa was hailed as the game-changing step to better the mismanaged energy system that has been limiting the potential of economic growth for decades.

Indeed, 600 million power-starved people in the region’s 49 countries utilize less grid-connected electricity than South Korea. Five years after the promises made by Mr Obama, the assessment of the project reveals ambivalent results, with a number of shortcomings as well as encouraging results.

According to the 2017 Power Africa Annual report, around 7,600 out of the 30,000 MegaWatts expected by 2030 have been financially closed but only a few projects have started generating electricity. There are two main reasons why this progress is painfully slow, but still constitutes a good advance so far.

Countries in Africa continue to debate on the prioritization of their vast fossil fuels reserves, and whether or not they should exploit those vast resources instead of developing economies based renewable energy, which is becoming more compelling with improved technologies and reduced costs (i.e, 3 and 4 US cents per kilowatt). Energy shortages are very frequent in the region and countries are desperate to find power sources, regardless of whether or not it provokes climate concerns within the western community, which shouldn’t even hold such a hypocritical attitude. However, solar power projects can be accomplished in 2 years compared to a longer timeframe for other large fossil fuels, with those very large projects often being delayed and expensive. The era of renewables has arrived, and everyone should work towards a transition plan to these soon to be cheaper and less dangerous schemes.

In parallel, the managers of Power Africa also experience difficulties at a bureaucratic level. The weak regulatory, policy, and legal environments constitute barriers to the entrepreneurial investment Obama wanted to bring about. Certain companies expressed their concerns about the complications and incompetences associated with the proper conduct of power projects, from approval and launch to maintenance and finalization. It had taken 16 months to get Ghana’s parliament to approve an agreement for an emergency power scheme. “I don’t know how long it would take if it wasn’t an emergency,” said John Rice, GE’s vice chairman. In addition, pervasive corruption remains an extensive issue across the continent. Mainstream was once asked to pay for a political leader’s new Humvee when it was seeking approval to use land for a new wind farm. Mainstream refused the request. The USAID is attacking those issues by encouraging an improvement of energy regulatory policies and governance.

The nature of the project, which many other well-intentioned initiatives rely on, adds pressure to its completion and the resolution of some intractable issues Africa has to deal with. Yet, if there is one lesson the energy project has taught us, it’s that the best prices and fastest completion times aren’t always the best value. Eddie O’Connor, co-founder of Mainstream Renewable Energy, a company based in Africa since 2009, is one of those entrepreneurs who expects “things to take longer in Africa”. Poor quality projects are not dependable and will require expensive maintenance.

​The consensus among energy businesses is still that the US program has already achieved substantial change by increasing the number of American companies invested in the continent. The strong support and desire of the Obama administration to invest in Africa symbolizes a huge vote of confidence. This also underlines the importance of the work achieved by legal and political actors in Washington. Interestingly, support for investment in Africa has brought together different factions which have traditionally had difficulties cooperating. Conservative members of Congress associated with Christian groups active on the continent have allied with Democrats interested in development and pro-business moderates from both parties. 

 

Nevertheless, President Trump's attitude and approach could subvert the efforts of his two predecessors, as military engagement is ramping up but all other efforts are slowly withdrawing from the region. The country’s only hope remains in Congress, and it shouldn’t take Trump referring to Haiti and African nations as ‘shithole’ countries for the average American to become aware of the importance of maintaining relations with the region.

Image from Obama White House Archives

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