Black Affairs, Africa and Development
Despite Obama Hype, Africa Remains Economic Disaster Zone
Trade: Though Beijing’s colonial ambitions in Africa make the continent an area of economic and strategic interest for the U.S., it’s hardly the lucrative market that the president is portraying it to be.
No, Mr. President, Africa Is Not The Next Asia
Yet to hear Obama talk up business opportunities in Africa, you’d think it were roaring like the Asian Tigers of the 1990s.
In an interview last week, he likened the alleged “Africa Rising” phenomenon to the “Asia model.”
Obama then recited his favorite talking point about Africa boasting “six of the 10 fastest-growing economies,” a largely meaningless stat considering the relatively low gross domestic product base that Ethiopia (yes, that Ethiopia) and the other five supposed economic “dynamos” are coming off.
“There are smartphones everywhere in Africa,” Obama naively offered as proof of the continent’s emerging modernization and technological prowess.
He also hosted a lavish business expo for tinhorn African dictators and clown-kings at the White House, followed by a press conference that sounded more like an infomercial for African investment.
“We’re seeing the emergence of a new, more prosperous Africa,” Obama gushed. “Africa’s progress is being led by Africans, including leaders here today.”
“The United States will increase our support to help build Africa’s capacity to trade with itself and with the world,” he vowed, while calling on Congress to clear billions more in aid for the continent.
In an earlier press event, held just before his African economic summit, Obama asserted that subsidizing — er, “investing” in — Africa was “one of our top priorities,” and promised to steer more taxpayer-backed Export-Import Bank loans there. He even committed troops to “deal with conflicts” in Kenya, Nigeria, Mali, Niger, Ghana and Tunisia and stabilize markets there.
Whoa. While Africa’s economy shows more promise than in the past, and its people show genuine gratitude toward America, the continent remains a difficult — and potentially dangerous — market for U.S trade and investment. Tens of billions in aid have already been wasted there, sucked away by rampant corruption.
You wouldn’t know it from sentimental media who have fallen prey to the White House’s “Africa Rising” meme, but the numbers tell a much different story about the value of markets there. Here’s a rundown:
Commerce Department data show less than 1% of U.S. exports go to all 54 African countries combined.
America in June exported more goods to the tiny country of Belgium than the entire continent of Africa ($3.3 billion vs. $3.2 billion).
Africa remains a chiefly agricultural economy with little of the industrialization seen in Asia.
In fact, in a recent U.N. report, Africa’s share of global manufacturing, value-added exports fell in the prior decade, while Asia’s share doubled.
African commerce is plagued by rampant corruption and theft at all levels.
A recent African Development Bank study reveals that Africa from 1980 to 2009 lost as much as $1.4 trillion in illicit financial outflow — dirty money from corruption, tax evasion, bribes and other crimes.
South Africa, Africa’s second largest economy, lost $103 million from illicit outflow in 2012 alone.
The resource drain from corruption over the past 30 years almost equals Africa’s GDP and continues to suck away wealth — along with U.S. aid.
Like no other economic region, Africa depends on global aid — some $50 billion a year.
Though heralded as as an “emerging” economy, Ethiopia relies on foreign aid for 90% of its budget.
Obama’s hype notwithstanding, Africa appears more economic disaster area than lucrative trade zone.
Certainly, the continent is not the Next Asia, not even close. And while we ought not ignore it, neither should we rush into it with false hopes.
Investor — and taxpayer — beware.