Obama’s 4th Trip To Africa: Major Investments And Deals Signal Africa’s Growth As A Hot Destination Of Foreign Direct Investment From The US

As president Obama’s tour of the East African nations of Kenya and Ethiopia ends on a more political note, with his highly mediatized address at the African Union, many are those who might not take proper notice of the economic importance of what could very well be his last visit to the continent.

According to many observers, President Obama’s trip was as much about business as it was about the key themes of good governance, fighting corruption and upholding human rights. According to the US press secretary’s statement back in March 2015, POTUS’ (President of the US) trip was to build on the August 2014 U.S.-Africa Leaders Summit. The statement further notes that the President’s fourth trip to Africa was part of the US’ efforts to work with countries in Subsaharan Africa to accelerate economic growth, strengthen democratic institutions, and improve security.

The Global Entrepreneurship Summit (GES)
According to the official website of the GES, it is a brainchild of President Obama consisting of an annual gathering of entrepreneurs at all stages of business development, business leaders, mentors, and high-level government officials. It is geared towards fostering entrepreneurship around the world by providing a platform to showcase innovative projects, exchange new ideas, and help spur economic opportunity. The 2015 GES agenda focuses on generating new investments for entrepreneurs, with a particular focus on women and youth.

Alongside the summit, several high level deals were signed and announced by American firms and investors, totaling several billions of USD. Although Kenya came out as the top African beneficiary, there were several major announcements that spanned across several other countries. One of such is the announcement of General Electric’s investments in Africa’s healthcare sector, skills development and energy. The company also announced that it has recorded $2.5 billion in new orders in 2014 across the continent, indicating that the continent’s uptake of advanced technology and infrastructure is on the rise.

This figure includes the $850 million order of Oil and Gas equipment for Eni Ghana, including turbomachinery and subsea elements for the offshore project. The order includes three gas turbines for power generation and four centrifugal compressors. The first shipment is scheduled for the end of 2015 and the project is planned to deliver first oil by 2017.

The firm also announced a partnership with Kipeto Energy Limited to build a new wind farm in Kenya’s Kajiado County. GE will be the sole equipment supplier for the 100MW project, some 50 kilometres from the capital Nairobi. This project is expected to make a significant contribution to the installed energy capacity in Kenya, where up to 80% of the population currently lacks electricity access. The $155 million contract will include 60 GE 1.7-103 wind turbines, as well as a 15-year service agreement.The project will be financed by Overseas Private Investment Corporation (OPIC) as sole lender to the project. OPIC is the US government’s development finance institute and is part of the Power Africa Initiative.

In August 2014during the US-Africa Leaders’ Summit in Washington DC,the American conglomerate had committed to invest $2 billion in facility development, skills training, and sustainability initiatives across Africa by 2018. Substantial investment and progress has been made against those commitments, and this week GE announced its involvement in several new projects in Kenya.

Another key west African beneficiary is Nigeria, following GE’s heavy investments in manufacturing, training and assembly Facilities in the country which, upon completion, will make up GE’s $250 million capital expenditure investment commitment to Nigeria that will create 2,300 direct and indirect jobs.

The theme of technological innovation seems to be very dear to President Obama’s administration and quite central to the Global Entrepreneurship Summit initiative. This is however easier said than done, considering that very few Africans have access to specialized technical training required to use, leave alone develop the technological tools needed for fast-paced industrialization. In fact, this shortage of skills could be a reason for investors to shy away from Africa and set up shop in markets such as India or China where skilled labour is available and cheap.

GE doesn’t seem to be in this category however, opting to invest in skills development on the continent. It’s announcement pointed to a number of training programmes and projects in Mozambique, Nigeria, Angola, South Africa and Kenya. Earlier this year, the American firm entered into a number of partnerships with a number of Universities in for training and capacity building in the Oil and Gas sector. Could this be a model for investors to emulate?

Jay Ireland, president and CEO of GE Africa commented on the announcements:“GE’s capability and global expertise in power generation, healthcare, rail transportation, water, oil and gas, and aviation industries allows us to play a significant role as a partner in the development of Africa. This expertise also allows us to share knowledge and build skills of local employees in this critical sectors. We have an opportunity and a responsibility.”

This and other announcements made in the margins of the GES are an indication that the United States economic community is starting to pay more attention to Africa, and is willing to invest in what is now hailed as the next growth frontier.