In Africa, Obama’s Hot on Xi’s Trail

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In Africa, Obama’s Hot on Xi’s Trail

China will be the unspoken backdrop to President Obama’s trip to Africa this week.

President Obama began his nearly week long trip to Africa on Wednesday when he arrived in Senegal. After spending two full days in Senegal, Obama will be in South Africa for Saturday and Sunday, before ending his trip in Tanzania on Monday and Tuesday.

A White House statement in May said Obama intends to use the trip to  “reinforce the importance that the United States places on our deep and growing ties with countries in sub-Saharan Africa, including through expanding economic growth, investment, and trade; strengthening democratic institutions; and investing in the next generation of African leaders.”

Although it’s unlikely to be mentioned overtly, China will be lurking in the background of the entire trip. This is evident from the countries Obama chose to visit; when Xi Jinping made Africa part of his first trip abroad as head of state in March, Tanzania and South Africa were two of the three countries he visited (Republic of Congo was the third.)

Obama’s trip underscores the intensifying competition for global influence between the U.S. and China. In May, for instance, President Obama visited Mexico and Costa Rica at the beginning of the month, and Vice President Joe Biden ended the month with a trip to Columbia, Brazil and Trinidad & Tobago. Similarly, before his summit with Obama in California, Xi Jinping spent the first week in June on a trip to Latin America, with stops in Trinidad & Tobago, Costa Rica, and Mexico.

As The Economist noted at the time, “On this trip, his first to Latin America as president, Mr. Xi did not visit Brazil, China’s biggest trading partner in the region, nor ideological allies Cuba and Venezuela. Instead, he chose two free-trade partners of America, one of which, Mexico, is so tightly bound to its northern neighbor that it sells to America in eight days what it sells to China in a year.”

Like Latin America—which the IMF expects will grow by 3.4 percent this year—Sub-Saharan Africa is emerging from decades of turbulence to become a stable region with enormous economic potential. In May, the IMF forecast that Sub-Saharan Africa would grow by 5.5 percent in 2013-2014, following its 5 percent growth rate in 2012. Similarly, the World Bank noted that many of the fastest growing economies in 2012 were in Sub-Saharan Africa, and predicted that regional economic growth would be more than 5 percent through 2015, greatly outpacing global growth.

China has been integrally involved in the region’s rise. Indeed, China’s US$200 billion in trade with Africa last year was more than double the US$95 billion of trade the U.S. conducted with Africa.

Beijing is also South Africa’s biggest trading partner and, in the first six years after China and Senegal normalized ties in 2005, bilateral trade flows grew by an average annual rate of 30 percent! As in other countries of Africa, China has also invested heavily in Senegal’s infrastructure.

Chinese-Tanzanian relations are much more developed, however, dating back to 1964 when the two countries first established diplomatic ties. After Tanzania's President Julius Nyerere visited China in 1965, Beijing agreed to finance and build the 1860-kilometer long Tanzania-Zambia Railway in 1967. Starting in 1970, tens of Chinese workers began traveling to the country to construct the railway, which was completed in 1976.

This relationship has continued to present times as Tanzania has quietly expanded its economic reach. Between 2000 and 2012, for example Tanzania exported more goods and services than South Korea, Thailand or Brazil. China was a large part of this. From 2001 to 2010, bilateral trade between Beijing and Dodoma increased more than 16-fold, from US$93.4 million to US$1.65 billion. Chinese investment in Tanzania is also greater than in any of the other four East African Community states. While much of this is in the mining sector, China has also focused on infrastructure and recently pledged US$800 million to help finance a new and much larger port in Bagamoyo, compared to the country’s traditional port in Dar es Salaam.

Clearly, the United States has a lot of catching up to do, especially given the Obama administration relative indifference to Sub-Saharan Africa to date. Obama himself has visited the region only once during his presidency, touching down in Ghana for a few hours back in 2009. In Africa more generally, the administration’s focus has been on security issues in northern Africa, not economic with Sub-Saharan Africa. Even when senior officials like Hillary Clinton visited the more economically dynamic parts of Africa, she gave the impression the U.S. was more interested in balancing China than engaging the region for its own sake. 

President Obama’s trip this week is seeking to change all this. Stopping in eastern and southern Africa exclusively, the White House has said that economic issues will dominate the trip, with a lesser focus on governance issues. America’s security concerns are likely to barely merit mention.

To his credit, the president does seem intent on modernizing U.S.-African relations, by moving away from a relationship based on assistance and aid to one based on trade and investment. As the new U.S. Trade Representative Michael Froman put it this week, the President plans to eschew philanthropy and instead make “hard-headed, for-profit, market-oriented, risk-adjusted return-oriented investments [in Africa]. If we are to achieve sustainable development, it is our view that investment must be the driver. In Africa, we want to seed the next round of BRICS.”

The delegation accompanying the president on the trip reflects this mentality. Along with Froman, it will include American CEOs and business leaders; Valerie Jarrett, a close personal friend and advisor to President Obama who serves as the White House’s liaison to corporate America; and the heads of the U.S. Export-Import Bank (Ex-Im Bank), U.S. Trade and Development Agency (USTDA) and the Overseas Private Investment Corporation (OPIC).

The scheduled events on the trip also reflect the president’s economic focus, particularly in Tanzania where Obama will hold a CEO roundtable and give a major speech outlining his strategy to promote trade and investment with Africa, primarily through the East Africa Community. He also intends to promote and build upon the African Growth and Opportunity Act, a law passed under Bill Clinton that seeks to stimulate economic ties to the region.

In South Africa, Froman and Jarett will lead a U.S. delegation in a meeting with leaders in the banking and financial industries across Africa, which will be aimed at increasing capital and investment. President Obama will also symbolically mark the importance his administration will place on power and electricity, by visiting a power plant in Tanzania.

Although late to the game, Obama’s decision to re-engage sub-Saharan Africa comes at an opportune time, as there are signs emerging that some African countries and leaders are becoming wary of their growing reliance on China. If they play their cards right, Sub-Saharan African leaders can have the U.S. and China competing for their countries’ attention—and economic opportunities. Thus is the benefit of being located in a prosperous part of the world’s fastest growing continent as a nascent global rivalry takes shape among extra-regional powers.