American corporate investment in Africa is not keeping pace with other parts of the world. That's according to 800 business and political leaders meeting this week in South Africa. They're searching for ways to accelerate economic ties with the United States. For VOA, Terry FitzPatrick reports.
Delegates to the U.S.-Africa business summit say Africa is open for business. Many sub-Saharan economies are growing by more than five percent per year. Wiseman Nkuhlu of Pan-African Capital Holdings says much of the continent has entered a productive era.
"There are large chunks of Africa that are politically stable and their economies are well managed. That really is new space for long term investments going forward," said Nkuhlu.
But only three percent of the world's foreign direct investments are currently made in Africa, and most of that money comes from Europe and China. According to Robert Mosbacher, who heads the US Overseas Private Investment Corporation, American companies still regard Africa as a risky business environment.
"I would say the single biggest impediment for most American companies would be the enforceability of a contract," he said. "Clearly there are nations in Africa that have made enormous progress in that regard, but it is not nearly wide enough to overcome the perception that enforceability of contracts is an extremely difficult thing."
The African Growth and Opportunity Act, or AGOA, facilitates trade between the US and Africa. But Namibia's president, Hifikepunye Pohamba says so far AGOA has benefited mostly the oil and energy sector.
"Most of AGOA trade continues to be concentrated in a few product lines. A clearly undesirable situation for the continent's aspiration to diversify its economies," he said.
President Pohamba called for the U.S. to do more to open its markets for African clothing and farm products. One speaker at this summit noted that trade works both ways. Stephen Cashin of the Pan African Capital Group says Africa's growing economy provides a rich marketplace.
"Africa's rising middle class are increasing their consumption of telecommunications, banking, financial products, electricity, food, beverages, entertainment, travel, computers. I would contend that the largest opportunity of all is represented by the rising middle class and the rising educated class," said Cashin.
Delegates here seem to agree that business ties, rather than development aid, is the sustainable way to improve living conditions for Africans.