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Foreign Investment Through the Prosper Africa Campaign

Foreign Investment Through the Prosper Africa CampaignForeign assistance helps people living in poverty while also benefiting the donor nations. Foreign aid helps domestic business interests because investment abroad in emerging markets opens the doors for more consumers. Furthermore, it stimulates demand for those domestic goods and services.

A new U.S. government initiative, called the Prosper Africa Build Together Campaign, is aiming to do just that by encouraging investment in Africa. The campaign promises development for recipients and new opportunities in key emerging markets for donors.

Africa’s Emerging Markets

Across the continent, income levels are rising. Some predict that by 2030 global household consumption will reach well over $2 trillion. Opportunities abound with urbanization in countries such as Nigeria, which holds seven cities with populations of more than a million people. By 2030, a fifth of the world’s consumers will live in Africa — with an increasing number of people breaking into the middle class. As GDP per capita continues to rise, so will the buying power for consumers across the continent. Additionally, Africa’s citizens will look to purchase more goods, including luxury goods. Already, Africa is the fastest-growing market for telecommunications and the second biggest market for mobile phones.

Prosper Africa Build Together Campaign

The Biden Administration promises to “elevate and energize” trade and investment across Africa. The Prosper Africa Build Together Campaign is the vehicle to accomplish that task. The goal is to get U.S. government agencies, African governments and the private sector to coordinate together in order to invest in development projects.

USAID states priorities for projects include “clean energy and climate smart solutions, health, and digital technology.” The private sector is key in this campaign as U.S. relationships with African countries start to shift while these nations continue to develop. More and more, relationships will evolve from being focused on aid to relationships focused on trade and investment.

The Prosper Africa Build Together Campaign is one mechanism of the Build Back Better World Initiative. The campaign encourages private sector investment which can help “on a scale that could never be matched on foreign aid alone.”

Prosper Africa Early Results

So far, the two-pronged approach of facilitating transactions and shaping future opportunities seems to be working. Prosper Africa fostered 800 deals, spurring more than $50 billion in exports and investments in over 40 countries across Africa.

For example, one success story comes from Ghana. An investment saved Global Mamas, a small firm that sells unique handcrafted products. Because of the economic hardship associated with COVID-19, Global Mamas saw its domestic revenue decline by 90% and lost almost 50% of its global revenue. USAID’s West Africa Trade and Investment Hub helped to secure $2 million of private funding to save the company. Furthermore, it set Global Mamas up for a sustainable future post-pandemic with projections of over $1 million in exports. The investment will save more than 250 jobs and establish 85 new jobs within one year. Additionally, the jobs go primarily to women who will be the primary earners of their household.

Looking Forward

Fighting global poverty is not only the right thing to do, it has benefits for domestic interests. Investing in key emerging markets helps to grow new consumer bases and in the end, everyone can prosper together. The Prosper Africa Build Together Campaign imagines such a world where we can fight global poverty by encouraging sustainable growth. But, it also supports the investor’s economy at home and improves the domestic industry.

– Alex Muckenfuss
Photo: Flickr

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The Build Back Better World Initiative

Build Back Better World Initiative
Congress has been negotiating the size and scope of a domestic infrastructure bill for most of Joe Biden’s presidency. Still, action is necessary to further infrastructure abroad. The U.S. and its allies in the G7 recognize this need and have launched the Build Back Better World Initiative (B3W) to address global infrastructure challenges. A closer look at the initiative provides insight into the state of infrastructure in low and middle-income countries around the world.

The Infrastructure Gap

Infrastructure connects people and goods, which allows economies to scale and grow. Forming highways, ports, bridges, railways, pipelines, sewage systems and more, infrastructure projects are vital for transport, communication, energy and health. Infrastructure projects are the foundation of economic development and are vital to the Sustainable Development Goals (SDGs), including universal access to water and electricity. 

Infrastructure projects are also important for developing nations because the projects can be a major source of employment, spurring economic growth and allowing workers to gain new skills. The White House currently estimates that the infrastructure needed in low and middle-income countries globally totals more than $40 trillion.

Infrastructure gaps are significant because the gaps hinder economic growth. According to World Bank research, “Every 10% increase in infrastructure provision increases [economic] output by approximately 1% in the long term.” In other words, spending on infrastructure grows an economy. Further, as environmental challenges continue to threaten nations around the world, the World Bank says that even small investments in climate-resilient infrastructure can save trillions of dollars in recovery efforts.

The Build Back Better World Initiative

Partnering with G7 nations, the U.S. launched the B3W to alleviate some of the problems associated with infrastructure gaps. The White House will look toward not only its allies but the private sector for hundreds of billions of dollars in funding for infrastructure investment. The administration says that it will leverage partnerships with the private sector because “status quo funding and financing approaches are inadequate” to meet the size of these challenges. 

The focus for projects is four distinct areas, including climate, health, digital technology and gender equity. The aim is to reach all around the world with different partners, but, USAID and other U.S. development groups will take leading roles. However, there is still an understanding that local needs will be a priority, as “infrastructure that is developed in partnership with those whom it benefits will last longer and generate more development impact.” 

The Biden administration has stressed the importance of good governance in foreign assistance and has already noted the importance of using B3W as a way to encourage full transparency with monitoring tools, common contracts and metrics for evaluation.

The Build Back Better World Initiative and US Interest

Foreign assistance supports U.S. strategic interests, which is why Deputy National Security Advisor for International Economics Daleep Singh has indicated support for the initiative. In recent years, especially when the U.S. has taken a step back from foreign affairs, China has accelerated spending on global infrastructure with the Belt and Road Initiative. 

However, Singh indicates that the point of the initiative is not to inflame hostilities or work as an anti-China group but rather to provide an alternative to Belt and Road financing. The goal is to “rally countries around a positive agenda that projects our shared values.” B3W supports U.S. interests by providing an alternative and showing that the U.S. is once again ready and willing to be a good partner for the world.

With Congress working on a domestic infrastructure package, it is important to not lose sight of the critical need for sustained and significant investment in infrastructure around the world. Infrastructure projects connect the world, making it safer and healthier. Funding infrastructure around the world as part of the Build Back Better World Initiative aligns with U.S. strategic interests. Hopefully, this initiative will encourage bridging gaps and becoming a more connected world.

– Alex Muckenfuss
Photo: Flickr