U.S. Sends Mixed Signals While Increasing Federal Investment in Africa
Despite having sent conflicting signals in recent years regarding its interest in investing in Africa, the U.S. federal government will nonetheless see its efforts in the continent bolstered by the creation of a new $60 billion agency, the U.S. International Development Finance Corporation (IDFC).
As noted by Yinka Adegoke in Government Executive, the move is especially notable due to the way the IDFC came about, with the agency replacing the Overseas Private Investment Corporation, which “mobilized private capital to help solve critical development challenges,” including in Africa.
In its first budget, the Trump administration gutted OPIC, with Adegoke noting that organizations generally aligned with the administration had previously argued that OPIC was “institutionally ill-suited to its mission” and that the agency “harms people around the world.” A 2015 paper from the libertarian-leaning think-tank the Competitive Enterprise Institute suggested that OPIC’s investment decisions are heavily politicized, which means that many OPIC-financed projects, rather than helping the least well-off, end up enriching the politically connected.”
However, even as OPIC was facing its demise, simultaneous efforts ostensibly to improve federal investment efforts in Africa were ongoing, with the president signing the Better Utilization of Investments Leading to Development (BUILD) Act on October 5th.
As explained by Adegoke, the bill “does do away with OPIC, but by doubling its budget to $60 billion and giving it a new name, the U.S. International Development Finance Corporation.”
The agency is said to be better empowered with tools OPIC lacked, including the ability to make equity investments and “to make deals and loans in local currency thereby saving investor currency exchange risk.”
“Part of the motivation has been China, which is very active in a lot of markets,” explains Tod Moss of the Center for Global Development in addressing the seeming change-of-heart.
Importantly to that end, Adegoke notes that Africa will be just one of the locations targeted with the $60 billion IDFC operating budget. Meanwhile, for its part, “last month, China pledged $60 billion towards development on Africa alone.”
Posted in Featured News