U.S. Army Africa
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A group of girls gathers in Uganda, where the U.S. Army reports that new infrastructure and electricity could stimulate widespread economic development.
U.S. Army Africa

The U.S. And China’s Battle for Africa

This week, President Obama is hosting about 50 heads of state from Africa, all convening to discuss the continent’s future. For most of its recent past, Africa has been propped up by development aid, a large chunk of which from the United States, its biggest donor. At a meeting Tuesday, Obama announced a $14 billion public-private package to spur growth in construction, clean energy, banking, and IT projects. The goal, the White House says, is to create jobs in both Africa and the United States.

But the U.S. may not be Africa’s top benefactor for long. Since 2001, China has steadily increased its investment on the continent, where more than one-fifth of people are undernourished and three-quarters don’t have access to electricity. Some estimates of Chinese non-public spending puts the number at $75 billion that has flowed to several large African capitals since 2001.

Why the interest in Africa’s economy? It’s one of the few places on the planet still poised for immense growth. It’s been depleted of much of its agricultural potential, but still holds promise for minerals and other natural resources. What’s more, once the promising economies in countries like Ghana, Mozambique, and Nigeria turn their people into consumers, you can count the industries—from energy to health care to manufacturing—that would boom.

China and the U.S. have different strategies for betting on Africa. The U.S. has mainly gotten behind energy generation with the wisdom that if you can get the continent onto the electric grid, growth will ripple in all directions. China has poured most of its foreign direct investment in infrastructure. The thinking goes that the root of many of Africa’s problems stems from roads and bridges not being able to distribute essential goods, including food. Fortify a highway system and the continent, with its 1.1 billion population, becomes accessible to the world.

Both electricity and infrastructure are undoubtedly needed. But the more immediate innovation seems to be a way to cut back on corruption to ensure well-intentioned money doesn’t disappear into convenient cost overruns and kickbacks—money that ends up in the hands of unstable governments.

In April, the U.S. Justice Department announced a new Kleptocracy Asset Recovery System to ensure U.S. money is well spent. It was created to hunt down stolen assets in Ukraine, but Attorney General Eric Holder suggested it would help police the prudent flow of money around the world. Holder said the idea behind the plan was “to help sovereign nations chart their own courses for transparent and accountable government in order to secure the better and brighter futures.” And when they reach those futures, they’ll be financially tied to the countries that helped them get there.