The Prosper Africa initiative is the Trump administration’s plan to move from an aid-focused to business-heavy strategy in Africa. In the words of USAID Administrator Mark Green, Prosper Africa targets Africans’ “innate desire to want to lead themselves” and construct “their own bright future.” The continent’s rapid growth provides ample opportunities for investment in African business and increased African employment. Exactly how the U.S. will take advantage of these opportunities is described by these five facts about Prosper Africa.
The Next Big Market
Africa is quickly urbanizing and consuming new products. The Brookings Institution found that urbanization accounted for 80 percent of African growth. African consumers and businesses spent $4 trillion in 2015 amid this explosion, a number expected to rise to $6.66 trillion by 2030.
Local businesses have become very profitable. There are 400 African firms that make at least $1 billion yearly. Successful companies secure themselves from the continent’s instability using a variety of methods. Dangote Industries, for example, forms relationships with host governments and creates its own electricity to run its facilities.
Supporting African Business
Despite these victories, Africa’s business environment still suffers from shortcomings in infrastructure and employment. Firms are difficult to run when 600 million people throughout the continent lack electricity. Youth unemployment compounds this issue. Ngozi Okonjo-Iweala, Nigeria’s Finance Minister, worries that African youth will turn to violent extremism if economic opportunities do not appear.
Prosper Africa will not only seek to remedy the abovementioned ailments but also compete with China’s trade dominance in the region. According to Business Insider, China’s Belt and Road initiative is already in full force. This initiative seeks to strengthen ties with Africa through trade and business development. President Xi Jinping announced in 2018 that $60 billion would go toward Africa’s development. Among the new projects funded by China are a $31.6 million East African trade headquarters and a $500 million cement factory in Zambia.
5 Facts About Prosper Africa
- The goal: Prosper Africa will herald more private investment in the continent and enhance bilateral trade relationships with the United States. The International Trade Administration says that it will increase innovation, transparency and start-up firms by reducing risk and providing access to American trade support services. Besides aiding African businesses, Prosper Africa hopes to expand the number of U.S. firms active on the continent. Africa contains over 1 billion consumers, and the U.S. has a purchasing power of $13 trillion to make the most of an improved relationship.
- How it works: Prosper Africa launches a whole-of-government effort that uses existing agencies to remove investment barriers. The Department of Commerce and USAID will work together to focus on the three problem areas including knowledge, expertise and regulations. Administrator Green stated that “Deal Facilitation Teams” at U.S. embassies will support interested African entrepreneurs in moving past gaps in business knowledge or expertise. Prosper Africa will also provide loans to new firms, so banks will allow credit access.
- USAID’s critical role: USAID will provide crucial support for the initiative. Their previous experience within many African nations makes them aware of measures needed to overcome poverty. In 2016, USAID helped Kenya eliminate a 30 percent government shareholding requirement in foreign firms. The U.S. Global Leadership Coalition reports that this created a more attractive market and raised American exports there by $60 million. Efosa Ojomo, co-author of “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” says a transition to more permanent forms of aid like this will ensure lasting success.
- Increasing stability: Prosper Africa will increase stability on the continent, resulting in less need for American troops. In remarks before the Heritage Foundation, National Security Advisor John Bolton stated that Africans would take security into their own hands once economically empowered. The U.S. hopes more prosperous regional alliances, like the G5 Sahel Joint Force, will reduce violence and fight crime. There are currently 6,000 American troops in Africa on 100 missions. A Center for Strategic and International Studies report projected that U.S. military presence will drop by 10 percent in the next decade as a result of Prosper Africa.
- Increasing employment: According to the World Economic Forum, 15 to 20 million new workers will appear yearly by 2030. Africa only maximizes 55 percent of its human capital, however. Prosper Africa’s new business deals will work to solve this problem. The Trump administration announced a $20 billion investment by Texas natural gas company Anadarko in Mozambique on June 19, 2019. Anadarko has already trained 500 people in the country and currently has 1,000 Mozambicans in its classes. Its success resonates with African businesses, and 900 have already registered as suppliers for Anadarko.
These five facts about Prosper Africa show that the U.S. is taking a new approach to fighting poverty in Africa. Direct foreign investment will pave the way for prosperity going forward, and aid will have a training focus. Prosper Africa has potential not only to compete with China’s investments but also to generate healthier environments across the continent.
– Sean Galli