You can read all day about Africa and never get beyond stories of poverty, violence, corruption and health crises, including the current fears over an Ebola outbreak. But look closely and you'll see an emerging success.
Sub-Saharan Africa's economy is growing about 5.4 percent a year — outpacing the global rate of 3.6 percent according to the International Monetary Fund. It is home to many of the fastest-growing economies in the world, including Angola, Nigeria and Ethiopia, though of course that's growth from a comparatively small base.
This represents an extraordinary opportunity for American businesses, who find they're increasingly competing against China for African markets ... and playing catch-up.
Congress is threatening to put American businesses at a greater disadvantage in this competition.
Much of Africa's growth is connected to the export of natural resources, such as oil, platinum and diamonds, which spurs demand for everything expanding economies need and want, from construction equipment to trains to beer and maybe hamburgers, too. Don Thompson, CEO of Oakbrook-based McDonald's, mentioned this year that Nigeria is on the radar as a potential new market for his firm.
The African economy, which still has its struggles, got a promotional boost this month from the White House, which held a U.S.-Africa Business Forum as part of a three-day summit with African leaders. "All told, American companies — many with our trade assistance — are announcing new deals in clean energy, aviation, banking and construction worth more than $14 billion," President Barack Obama said at the meeting.
Did you catch that phrase about "trade assistance"?
That's a reference to the Export-Import Bank of the United States, which supports big and small American companies selling products around the world by making and guaranteeing loans and providing other financial-related assistance in exchange for fees. The Ex-Im Bank plays a small but vital niche role in the U.S. economy as backstop because commercial banks and other financial firms often find ways to say "no" to deals involving selling goods in developing countries.
The problem is the Ex-Im needs reauthorization from Congress by Sept. 30. Republican Sen. Mark Kirk of Illinois and others have sponsored a five-year extension, but some conservatives want to kill the bank. Critics see it as a government intrusion in private markets, a risk for taxpayers and an example of "crony capitalism."
Ideally, the U.S. government wouldn't need to act as a commercial banker. The Ex-Im Bank hasn't operated flawlessly. But on the whole, there's strong evidence that it is needed to help U.S. interests compete in international markets. Without it, European and Asian manufacturers will take away business from American companies by offering customers better deals supported by their export banks.
We recently wrote in this space about how the bank helped one local company do a deal in Africa. W.S. Darley & Co. of Itasca, which makes firetrucks and firefighting equipment in the Midwest, last year sold 32 firetrucks to the state government of Lagos, Nigeria, because the family-owned company came to the table with a $15.7 million direct Ex-Im loan for the Nigerians to use.
These deals support American jobs, and at low risk. The Ex-Im Bank, which did about $27 billion in business last year, is profitable. It returns money to the U.S. Treasury.
Many smaller companies say it's impossible to export to the developing world without Ex-Im assistance because U.S. banks and credit insurers won't take on the risk or the complexity. For bigger companies selling things like airplanes or construction equipment, it's just as crucial to have Ex-Im involvement because post-financial crisis regulations on international banking make those long-term loans untenable for big banks — unless a government export bank guarantees the loan.
Part of the promise of global trade is the role it plays in bringing prosperity, and order, to countries where chaos and deprivation have reigned. That's certainly becoming true in Africa. For the U.S. to fully benefit from globalization, including Africa's progress, we need the Ex-Im.Copyright © 2015, The Baltimore Sun