Bridging “Trade not Aid” 

I gave a presentation earlier this week on how investment was key to moving the needle on transforming economic engagement with African countries from development aid to infrastructure. Here is my brainstorm in preparation for that talk, with some edits.

During the IMF Spring Meetings a couple weeks ago, I heard a theme of working with the private sector to foster investment on the continent. For the past several years, the conversation around Africa’s economic engagement with the rest of the world has often circled around the phrase, “trade not aid.” President Obama’s Doing Business in Africa Advisory Council held its first meeting last month and discussed setting an ambitious goal for doubling US trade market share across Africa – 7 percent to 14 percent. The U.S. has watched China overtake market share the past several years, going from 3 percent to over 14 percent. 

The reality is that for effective trade to happen, you’ve got to have the infrastructure, systems, markets, etc for it to make sense. I worked on a project several years ago where a client wanted to import peanuts from Ghana during a drought Georgia was going through. Making that happen would have been difficult because of how long it would have taken the nuts to get from Upper East and Upper West Ghana to port in Tema. While Ghana has invested in road infrastructure, connecting northern Ghana with the rest of the country, there is still a lot of work to do. 

This is where private investment on the continent comes in, filling the gap between the “trade not aid” tag line. The developments here are exciting, especially for investments led by African investors. For example, pension funds on the continent seem to be gaining comfort in being limited partners in alternative investments likes private equity. Hopefully, the African Development Bank is close to launching the Africa50 fund it announced a couple years ago. Alike Dangote and the Blackstone Group are partnering in developing power projects. The list goes on. 

While these are exciting developments, I’m wrapping my head around the reality that bridging the gap between aid and trade is not a something that will happen quickly. This could very well be something my daughter works on (hopefully). So much of the continent’s development is interconnected when thinking about port access, broadband penetration, and transportation. It’s hard to compare to China’s rapid development or that of South Korea and Singapore. I’m excited about the continent shaking loose and carving out its own path. 

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Kwame Som-Pimpong

My name is Kwame Som-Pimpong. This is my blog. You can email me at kwame (at) afaraglobal (dot) co.

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