Investing in Africa

Africa has long been a battleground for world powers. Two giants playing there these days are China, which is spending freely throughout the continent to scoop up resources and tap some of the world’s fastest-growing economies, and the U.S., which is looking to do more business. Both Chinese and U.S. companies expect to profit from their African stakes. The question is whether Africans can win, too.

China’s investments in sub-Saharan Africa have grown 40-fold since 2003 and have been made in every country on the continent, building things like hydroelectric dams, highways to oil regions and railways to carry iron ore. China’s government joined with the African Development Bank to create the $2 billion Africa Growing Together Fund. While Chinese companies have been criticized for importing Chinese labor rather than training and employing locals, they’re now building garment manufacturing plants to take advantage of Africa’s cheap labor amid high unemployment. U.S. development in Africa has been private-sector driven and concentrated in just a few countries including Liberia, Mauritius and South Africa. In 2014, U.S. companies pledged $14 billion in investments at the U.S.-Africa Leaders Summit in Washington. And the U.S. began the Power Africa initiative in 2013 to create the capacity to build electricity grids and generators across six countries by working with African companies and American partners with top-of-the-line technology, including General Electric. PowerAfrica pledged $7 billion in financial support and loan guarantees over five years to achieve 60 million new connections and generate 30,000 megawatts of power — a lofty goal. Yet by mid-2016, it had produced less than 5 percent of the new power generation it promised. This was partly due to U.S. congressional gridlock that has stymied the Export-Import Bank, which was going to provide $5 billion of the financing. Meanwhile, power shortages are cutting into African growth.