The US is optimistic that if the Africa Continental Free Trade Area (AfCFTA) is implemented the right way, it could help the continent solve most of its industrial challenges and attract more foreign investment.

In a press statement released by the White House during the Dec. 13-15 US-Africa Business Summit in Washington, the Biden Administration expressed confidence in Africa’s transformation journey.

“Africa’s integration into global markets, demographic boom, and continent-wide spirit of entrepreneurship and innovation present an extraordinary opportunity for the US to invest in Africa’s future,” it reads.

A Memorandum of Understanding (MoU) signed between the US and the AfCFTA Secretariat on Dec 14. could boost trade and investment in the continent, while unlocking trillions of dollars from Africa’s hidden potential.

“Once fully implemented, the agreement establishing the AfCFTA will create a combined continent-wide market of 1.3 billion people and $3.4 trillion, which would be the fifth largest economy in the world,” the statement says.

The US says its government has helped close over 800 investment deals across 47 African countries for a total estimated value of over $18 billion in 2021 alone, while its private sector has pumped $8.6 billion worth of investments in Africa.

US trade with Africa totaled $83.6 billion in 2021. This is a fraction of Africa’s trade with the EU (€ 288 billion) and China ($254 billion) in the same year.

To play catch-up with the EU and China, president Joe Biden has announced around $15 billion in two-way trade in Africa, to increase investments in agriculture, digital economy, health, energy, infrastructure, and finance.

Breakdown of Biden’s goodies to Africa

The Millennium Challenge Corporation (MCC), an independent US government foreign aid agency, has signed trade agreements worth $519 million with Niger and Benin. It has also signed a $825 million trade pact with Malawi, Lesotho, and Gambia. MCC is “working in 14 African countries with more than $3 billion in active compact and threshold programs and approximately $2.5 billion in the pipeline.”

The Export-Import Bank of the United States (EXIM), which has invested $7 billion in Africa signed several new MoUs with the largest being three with the African Export-Import Bank (Afreximbank), Africa 50, and Africa Finance Corporation totaling $1.3 billion to expand US-Africa trade.

Prosper Africa is hoping to boost African exports to the US by $1 billion and mobilize an additional $1 billion in US investments in Africa. The US Department of Commerce says it has supported business deals between the US and Africa worth over $11.9 billion under the Biden administration.

In a period of rising prominence of innovations across Africa, Biden has also unveiled the Digital Transformation with Africa (DTA), an initiative aiming to expand digital access and literacy across the continent. The plan is to invest “over $350 million and mobilize over $450 million in financing commitments for Africa, in line with the African Union’s Digital Transformation Strategy.”

To support food security, health and energy projects, the International Development Finance Corporation (DFC) announced $469 million in new investments across Africa. The US Agency for International Development (USAID) is promising $100 million “to accelerate last-mile delivery of agricultural innovations” and unlock $300 million in private financing.

Power Africa and Prosper Africa announced the launch of the Clean Tech Energy Network (CTEN) to raise their energy investments in Africa to $500 million. The US African Development Foundation (USADF) promised a $56.84 million investment to electrify Africa in 2023.

The US Trade and Development Agency (USTDA) announced over 15 initiatives that it believes will “unlock close to $1 billion in financing for Africa’s clean energy, digital, and healthcare infrastructure priorities and create more than $500 million in export opportunities for U.S. firms.”

The Washington summit is a follow-up of the US-Africa Summit held in Morocco in July. This was after four years of inactivity of the forum during Donald Trump’s reign.