When Uganda sought bids last month for an $8 billion contract to expand the East African nation’s rail network, it only invited Chinese companies to apply.
That condition, agreed to by the Ugandan and Chinese governments, illustrates the hurdles President Barack Obama must overcome as the U.S. tries to challenge China’s status as Africa’s No. 1 investor and trading partner. China’s trade with the continent exceeded $200 billion last year, more than double that of the U.S, which it overtook five years ago.
Obama will step up his efforts to forge closer ties with Africa when he hosts more than 40 of the continent’s leaders at a summit in Washington next week. While the World Bank projects African growth of 4.7 percent this year, the U.S. is looking beyond securing deals and access to a consumer market of 1 billion people to promoting democratic principles and countering Islamist-inspired security threats from Nigeria to Kenya.
“China has got a massive head start,” Daniel Silke, director of Cape Town-based Political Futures Consultancy, said in a July 23 phone interview. “From both a diplomatic and economic point of view, China has made all the running over the last few years so there is quite a catch-up for the U.S.”
China has held five conferences with ministers and leaders across Africa since 2000 as it fosters ties with a continent that provides both resources and a market for manufactured goods. Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current populations of France and Germany, New York-based McKinsey & Co. said in a report last week.
In November, China said it would extend $1 trillion of loans to Africa by 2015, most of it via Export-Import Bank, the South China Morning Post reported, citing Zhao Changhui, the lender’s chief country risk analyst. Chinese Premier Li Keqiang detailed $10 billion of new loans on a four-nation African tour in May, including financing for 90 percent of a 380-mile rail (611-kilometer) link between Kenya’s capital, Nairobi, and the port of Mombasa.
“The Chinese strength really comes in projects funded by China itself,” said Paul Hinks, chief executive officer of Symbion Power LLC, which has built power plants in Nigeria and Tanzania and competed with Chinese firms for World Bank-funded projects.
China’s Foreign Ministry in Beijing didn’t respond to an e-mail seeking comment.
While oil companies such as Exxon Mobil Corp. and retailers like Wal-Mart Stores Inc. and YUM! Brands Inc. have entered the African market, other U.S. businesses have held back because of fears about corruption and security risks.
“Part of the challenge involves reorienting Africa as a continent of opportunity,” said Witney Schneidman, senior international adviser for Africa at Covington & Burling LLP, a Washington, D.C., law firm. “Too many still see it as a continent of crisis.”
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