This week’s U.S. Africa Leader’s Summit highlighted the importance of increasing the presence of U.S. businesses abroad and the need to reauthorize the Export-Import Bank this fall.
One of the challenges U.S. businesses face in Africa is obtaining financing partners—commercial banks may be unwilling to take on that level of risk. The Ex-Im Bank provides insurance and loan guarantees, which reduce the risk for commercial banks and allow these transactions to take place.
Here’s why that’s important:
By 2050, Africa will supply 1 out of 4 of the world’s workers. This will make it a large market for U.S. goods, presenting a huge opportunity for U.S. businesses that make investments now. Even today, seven of the top 10 fastest growing economies are in Africa.
The U.S. exported over $50 billion in goods and services to Africa in 2013, supporting approximately 250,000 jobs. However, Africa-bound exports only represent about 1 percent of total U.S. exports, despite rapid growth in recent years.
Only about 5 percent of the Ex-Im Bank’s support goes to Sub-Saharan countries, as there are limited opportunities for businesses to export to the region. However, the bank plays a greater role in supporting the businesses that are able to export to Africa than in any other region. Nowhere else does the bank support a greater share of U.S. exports than in Africa.
General Electric CEO Jeff Immelt was vocal about the role the Ex-Im Bank plays in Africa:
“We don’t want to get in the middle of Washington’s political wars, but how important do you think it is for the future prospects of getting more financing in Africa for American businesses to renew the Export-Import Bank?”