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Blog Category: Doing Business in Africa

5 Takeaways about Doing Business in Africa

In case you missed it during the U.S.-Africa Business Forum last week, the International Trade Administration (ITA) published a report that shows that the U.S. trade relationship with Africa is growing at an increasing rate.

ITA’s Report on U.S.-Africa Trade and Investment examines the economic statistics related to U.S. commercial involvement in sub-Saharan Africa (SSA) – one of the world’s fastest-growing economic regions. The report is part of the Doing Business in Africa (DBIA) campaign, through which federal trade agencies are joining forces with U.S. businesses to take advantage of the growing export and investment opportunities available in the region.

Here are the five key takeaways of the report:

1. Sub-Saharan Africa is one of the fastest growing regions in the world. Average GDP growth has surpassed 5.2 percent three straight years. The International Monetary Fund estimates that this will increase in both 2014 and 2015.

2. U.S. exports to SSA are at record levels. Merchandise exports reached $24 billion in 2013, an increase of $8.8 billion from 2009. The past decade saw the largest increase in value of U.S. exports to sub-Saharan Africa in history; U.S. goods exports have increased by 130 percent since 2000, or an average of 6.7 percent annually.

3. Small and medium-sized businesses are finding success in SSA. More than 92 percent of businesses exporting to Africa are considered small and medium-sized enterprises—those with fewer than 500 employees. They accounted for a 53 percent increase in the value of exports to the region from 2009-2012.

4. Most export growth originates from Texas, Louisiana, New York, Illinois, New Jersey and Georgia. In total, these states accounted for 60 percent of total exports and more than 70 percent of growth in exports to SSA in 2013. Mineral fuel and oil drilling, automotive parts and supplies, precious metals, and boilers and machinery parts are the top export sectors to SSA common among these states.

5. Total U.S. Foreign Direct Investment (FDI) in Africa has grown by 37.5 percent since 2009. While world foreign direct investment position in 2012 was 27 percent greater than in 2009, U.S. FDI position grew by 40 percent during that period.

As evidence of the report’s positive outlook for U.S. trade with Sub-Saharan Africa watch this short video of many of the deal signings that happened last week at the U.S.-Africa Business Forum. 

If your business is ready to do business in Africa, visit Trade.gov/dbia or contact your nearest Export Assistance Center.

The U.S. Partnerships and Initiatives Spurring Economic Growth in Africa

President Obama has called Africa “the world's next great economic success story.” According to the African Development Bank, Africa maintained an average GDP growth rate of 3.9 percent in 2013, exceeding the 3 percent rate for the global economy.  U.S. exports to the continent of Africa have grown 39 percent since 2009, reaching $50.2 billion in 2013. The brightest spot has been U.S. merchandise exports to sub-Saharan Africa, which have increased 58 percent since 2009.

Building on this progress, the Department of Commerce and Bloomberg Philanthropies are co-hosting the U.S. Africa Business Forum on August 5, a day focused on trade and investment opportunities on the continent. Part of the first-ever U.S.-Africa Leaders Summit taking place August 4-6, the Forum is part of the Administration’s efforts to explore Africa’s huge economic potential:

  • U.S. Strategy Toward Sub-Saharan Africa: In 2012, President Obama announced the U.S. Strategy Toward Sub-Saharan Africa, a comprehensive policy strategy to address the opportunities and challenges in Africa in a forward-looking way. The Strategy focuses on strengthening democratic institutions; spurring economic growth, trade, and investment; advancing peace and security; and promoting opportunity and development. 
  • Doing Business in Africa: As part of the Strategy, the Department of Commerce launched the Doing Business in Africa Campaign, which has helped U.S. businesses take advantage of the many export and investment opportunities in sub-Saharan Africa. As part of the campaign, Commerce has expanded trade promotion programs tailored toward Africa and dedicated an online Africa business portal directing businesses to federal resources.
  • Commercial Service expansion: To expand Commerce’s human resources footprint in Africa, Secretary Pritzker recently announced the opening of new U.S. Commercial Service offices across the continent. The U.S. Commercial Service helps U.S. businesses start exporting or increase sales to new global markets. By expanding its Commercial Service teams in Ghana, Kenya, Morocco, and Libya, and opening offices in Angola, Tanzania, Ethiopia, and Mozambique for the first time, the Department of Commerce hopes to help U.S. businesses find their next customer abroad and create jobs in Africa.

U.S.-Africa Business Success Stories: How a Texas Oil Company Started Doing Business in Cameroon and Morocco

Note: This post is part of the U.S.-Africa Business Success Stories series highlighting the work of the Department of Commerce to strengthen the economic relationship between U.S. and African businesses. This series will lead up to the U.S. Africa Business Forum on August 5th, the first of its kind event, which will convene African heads of state and government, U.S. government officials and business leaders to discuss trade and investment opportunities on the continent.

The geographic distance between Texas-based Arnold Oil Company and Sub-Saharan Africa may be thousands of miles, but their economic relationship has never been closer. U.S. businesses like the Arnold Oil Company are increasingly finding economic opportunity in Sub-Saharan Africa: between 2001 to 2012, U.S. trade to sub-Saharan Africa tripled from $6.9 billion to $22.5 billion dollars. Africa is now home to six of the top ten fastest growing economies in the world, leading President Obama to call sub-Saharan Africa the “world’s next major economic success story.” That is why the Department of Commerce is working to facilitate and advocate for American businesses in this growing region, and U.S. firms are eager to help unlock even more of Africa’s economic potential.

A family-owned supplier of automotive and oil lubricant products, the Arnold Oil Company became interested in expanding its business abroad. They met with the U.S. Export Assistance Center (USEAC) in Austin to request assistance in developing an exporting and marketing plan for their products. After creating a plan that satisfied the company, the USEAC arranged for a meeting with a representative from the U.S. Export-Import Bank to assist the Arnold Oil Company with financing its exports.

But the USEAC took its assistance one step further, introducing the Arnold Oil Company to a buyer in Cameroon, who eventually was signed as a distributer. As a result of this relationship, the Arnold Oil Company was able to ship their first exports of oil lubricants to Morocco, generating revenue of more than $24,000 in 2013. With assistance from the USEAC, the Arnold Oil Company was able to expand its business into one of the most economically dynamic regions in the world.

Commerce Connects U.S. Businesses to Opportunities in Africa’s Power Sector

Energy for Africa: 600 million people, 70% of the population of Sub-Saharan Africa are without electricity

With its fast-growing middle class and tremendous human, agricultural, and mineral resources, the continent of Africa is attracting investors and businesses from all around the world. Home to seven of the world’s ten fastest-growing economies, Sub-Saharan Africa outpaces global average growth. That is why, in 2012, President Obama launched the Presidential Policy Directive (PPD) on Sub-Saharan Africa, now known as the U.S. Strategy Toward Sub-Saharan Africa. The Strategy recognizes that Africa holds the promise to be “the world’s next major economic success story,” and the Commerce Department is working help businesses be part of that success story by promoting U.S. trade and investment through the Doing Business in Africa (DBIA) campaign.

Today, the Commerce Department’s Minority Business Development Agency’s (MBDA), Miami MBDA Business Center hosted the Power Africa B2B Summit to promote the public-private partnership model envisioned by President Obama’s Power Africa Initiative. President Obama announced Power Africa last year as an initiative to double the number of people with access to power in Sub-Saharan Africa, where 600 million people lack access to electricity. The United States is investing more than $7 billion in this effort.

At today’s Summit, prominent government and business leaders, including Nigeria’s Power Minister the Honorable Muhammed Wakil, CEOs of Africa’s major power companies, and representatives from the U.S. Export-Import Bank and USAID, joined MBDA to share opportunities for accessing the energy sector in African markets.

Why is Everyone Talking About Africa?

President Obama and Senegal President Sall at press conference. Photo by White House, Pete Souza.

Claudia Easton is an intern in the International Trade Administration’s Office of the National Export Initiative and Trade Promotion Coordinating Committee. She’s studying Economics and Political Science at Amherst College. Cross-posted from Tradeology.

With the President’s recent trip to Senegal, Tanzania and South Africa, as well as the announcement of two new trade initiatives, the spotlight is on Africa – and with good reason.

While speaking at the Business Leaders Forum in Tanzania, President Obama spoke of beginning a new level of economic engagement with Africa. The Doing Business in Africa Campaign (DBIA) is part of the president’s strategy, and the International Trade Administration (ITA) is proud to join other government agencies to support  DBIA initiatives that are helping U.S. businesses compete on the continent.

Trade Africa aims to facilitate expanded trade on the continent. Its initial focus will be on the East African Community (EAC), a market with increasingly stable and pro-business regulations. The plan will support increased U.S.-EAC trade and investment, EAC trade competitiveness, and regional integration. The United States seeks to expand this initiative to other regional economic communities on the continent.

Power Africa is intended to build on Africa’s enormous power potential to expand electricity access to the more than two-thirds of the population that is without power. The President pledged $7 billion in U.S. government support, in addition to $9 billion in private money, over the next five years to double access to electricity in sub-Saharan Africa. Power Africa will help attract investment in Africa’s energy sector, build capacity for reform in the energy sector, and encourage transparent and responsible natural resource management.

Exporting to Africa: The Success of the DBIA Campaign

President Obama and Senegal President Sall at press conference. Photo by White House, Pete Souza.

President Obama believes sub-Saharan Africa could be the world’s next major economic success story. That is why in June 2012, he issued the U.S. Strategy Toward Sub-Saharan Africa (PDF) to escalate the U.S. efforts to stimulate economic growth, trade, and investment in the region. One year later, the President is in Africa to highlight our success under this strategy.

A key component of the President’s strategy is the Doing Business in Africa (DBIA) Campaign, which was launched by the U.S. Department of Commerce in Johannesburg, South Africa last November. Its main objective is to bolster federal trade promotion and financing capabilities in order to help U.S. businesses obtain trade and investment opportunities. With these opportunities, the United States’ commercial relationship with Africa will continue to grow.  

Since its unveiling, Commerce has been working alongside other federal agencies to encourage U.S. companies–with a focus on small- and medium- sized businesses and African Diaspora-owned business–to trade and invest in the region. A little more than six months into the Doing Business in Africa Campaign, we wanted to share some of successes with you.

Doing Business in Africa Forum Presents Opportunities for American Businesses in Sub-Saharan Region

Francisco Sánchez, Under Secretary of Commerce for International Trade and Minority Business Development Agency National Director David Hinson Address the Doing Business in Africa Forum

Guest blog post by Francisco Sánchez, Under Secretary of Commerce for International Trade and David Hinson, National Director, Minority Business Development Agency

Earlier this week, we attended the Doing Business in Africa Forum at the White House. This was the first forum of the Doing Business in Africa campaign that the Commerce Department launched three months ago in Johannesburg, South Africa. Deputy Secretary of Commerce Rebecca Blank gave the opening remarks and focused on strengthening commercial ties between the United States and Sub-Saharan Africa. She emphasized that as the continent’s wealth increases, so does the demand for improved infrastructure, energy services, and high-quality consumer and agricultural products – all of which American companies are well positioned to provide. In fact, Sub-Saharan Africa is home to six of the ten fastest-growing countries in the world, which helps explain why over the past decade, U.S. trade to and from Africa has tripled, with U.S. exports now topping $21 billion.  Michael Strautmanis, Deputy Assistant to the President and Counselor for Strategic Engagement, welcomed the group of federal government officials, African-born U.S. business and financial leaders, and African-American entrepreneurs, corporate executives, fund managers and investment advisors. Mr. Strautmanis emphasized the need for a collective approach from federal agencies to provide expanded investment and trade financing support to help U.S businesses become more effective global competitors, particularly in the Sub-Saharan region.

Amplifying that message, both of us, along with representatives from government entities including the Overseas Private Investment Corporation, Export-Import Bank, Small Business Administration, Office of the U.S. Trade Representative, U.S. Trade and Development Agency and Millennium Challenge Corporation, described for the assembled group how all of our services are structured under the Doing Business in Africa campaign to help them seize opportunities in the Sub-Saharan Africa region.