To the surprise of everyone from Bill Gates to the United Nations Economic Commission for Africa, African markets have managed the COVID crisis well. They have had the fewest cases per capita, and the IMF predicts 20 of Africa's 55 will return to growth rates over 4 percent in 2021. African markets, with their young, connected, and digitally savvy populations, increasingly prove an attractive and resilient investment destination. With COVID-19 diminishing the notion of the U.S. and Europe as “safe markets” and reducing the risk calculus associated with investing in Africa, the Biden administration should seize this current momentum to deepen U.S. commercial ties with African markets.
As the youngest continent, with a median age of only 18, and the highest urbanization rate in the world, Africa’s 1.2 billion-person market, home to six of the ten fastest growing economies, will increasingly command more attention. Starting with President Clinton, every U.S. president has started a flagship Africa program looking to either increase trade, improve health, or expand infrastructure on the continent. Building on the work of the last two decades, President Biden has the chance to strengthen relationships with African nations at this pivotal moment in their growth by both integrating Africa into broader U.S. foreign policy goals and championing three new transformative ideas on the level of Power Africa.
Leveraging the competitive advantages of American business and government agencies, the Biden administration should look to expand existing efforts, introducing new programs and initiatives particularly suited to the trends and needs of African markets today. This includes launching a “Commercial Corps” as a corollary to the Peace Corps, a creative industry partnership initiative and doubling down on the digital infrastructure investment push led by the Development Finance Corporation (DFC) to reduce the cost of data in African markets.
Under the Trump administration, USAfrica policy increasingly acknowledged Africa’s commercial potential. OPIC was transformed into a new and more powerful DFC, the Export-Import Bank was reactivated, and Prosper Africa was launched to better coordinate government commercial support mechanisms. The potential of these policies and initiatives have not fully been realized, leaving the Biden administration a unique opportunity to creatively build on top of a promising foundation.
To advance U.S. competitiveness and commercial interests, the Biden administration should create a Commercial Corps to send young Americans and retired volunteers to work in emerging markets. Modeled similarly to the Peace Corps, which is often described as “the best face of America,” the Commercial Corps could recruit and deploy those with some professional experience or masters graduates to support embassy deal teams and DFC investment advisors with deal origination, initial due diligence, and post-deal monitoring. This program would deliver several immediate benefits — the Commercial Corps would deepen people-to-people diplomacy, support the U.S. government personnel presence on the ground with business acumen, and create a cadre of business professionals with working experience in emerging markets to enhance long-term American competitiveness.
In addition to the Commercial Corps, the Biden administration should prioritize U.S.-African partnerships in the creative sectors by establishing an advisory council modeled off of the Presidential Advisory Council on Doing Business in Africa. Company executives from the music, film, fashion and finance industry would be on the council and work with Prosper Africa and the DFC to increase foreign direct investment as well as private equity and venture capital investments. A focus on the creative sector makes particular sense given the U.S. competitive advantage in the sector and its importance to African markets where it increasingly employs a growing number and contributes substantially to GDPs; for example Nigeria’s film industry “Nollywood” employs about 300,000 people and contributes 2 percent to GDP.
The last few years have seen explosive growth in Africa’s creative industries, with more U.S. players than ever tapping the continent for new opportunities. Nigeria’s biggest music stars are increasingly collaborating with U.S. artists, including Drake and Beyonce, and the presence of the world’s dominant record labels — Universal Music Group, Sony Music, and Warner Music Group — and music streaming giants, like Apple, are steadily increasing on the continent. The same trend is happening in film, with Disney and Netflix acquiring and/or producing original African content for both local and global audiences. A creative sectors council would provide a mechanism to connect U.S. leaders in the creatives to government leaders and initiatives that traditionally do not see much overlap to accelerate growth.
The digital infrastructure that undergirds growth in the creative industries also is critical for e-commerce, telehealth, online education, and more. While 50 percent of Africa’s 477 million mobile phone subscribers are using smartphones, the vast majority are 3G or below connections. The cost of data is steadily decreasing, but not at the rates seen in other markets such as India, and broadband prices often remain too high or too slow. With an estimated $100 billion of investments needed to reach universal broadband connectivity by 2030, the Biden administration should prioritize and expand the DFC’s digital infrastructure initiative to complement Obama’s energy-focused Power Africa to dramatically decrease data costs and increase access. This could include supporting the expansion of U.S. satellite solutions such as SpaceX starlink, the Google and Facebook-backed undersea cables, the Alphabet innovations in terrestrial coverage and data centers which help offset the historic Chinese dominance of 2G/3G telecom infrastructure in African countries.
Already the global leader in fintech adoption, consumer appetite is strong in African markets for further adoption of streaming, edtech, healthtech, and the like. A flagship effort to expand needed digital infrastructure will contribute to Africa’s economic development and position American companies for future growth on the continent.
Through these new programs and initiatives, the Biden administration has an opportunity to define the next era of U.S.-Africa relations, meeting both the current needs of African markets and politically integrating Africa into major U.S. foreign policy goals. Africa will play a growing, unavoidable role in global affairs in the century ahead. It would serve the Biden administration well to embrace this shift, benefiting both American and African markets.