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Members of the Sub-Saharan Africa Advisory Committee (SAAC) of US Ex-Im Bank have called on US companies to sell more aggressively to Sub-Saharan markets. The recommendation was made during the group’s quarterly meeting at US Ex-Im Bank headquarters in Washington, DC.

 

Ex-Im chairman and president James Lambright says the bank is committed to financing US exports to Sub-Saharan Africa, but “the first requirement is for US companies to successfully sell into the region”. Lambright notes frequent remarks by potential African buyers who want American companies to be more aggressive in their markets.

 

Exports to Africa from the US in 2006 totalled US$12.2bn, an increase of almost US$2.8bn over the previous year.

 

In 2006, Ex-Im Bank financed US$532mn in US exports to Africa through 145 transactions. While the US remains Africa’s largest trading partner, China’s trade with Africa has grown 66% from 2004 to 2006 according to Sherry-Lee Singh, director of market research and member services at the Corporate Council on Africa.

 

Singh says US companies seeking to do business in Africa enjoy a number of strengths, including US technological leadership in information and communication technology (ICT), oil and natural gas exploration and production, heavy equipment and other sectors.

 

She says Americans enjoy brand positioning and are the preferred business partner for a number of African countries who value technology transfer, training and project expertise.

 

John Rauber, John Deere & Company’s director of international affairs, discussed his company’s strategy in assessing the critical factors to determine market emphasis. Is the market sustainable

  • Is there scale
  • Does the company have the right product offerings and the right distribution channels
  • Is there adequate financing as well as workforce quality and skills in the host country

 

 

In Africa since 1962, using both dealer and distributor models, John Deere has been very successful in the African market, Rauber says. He expresses his optimism that John Deere’s ongoing strategic review of the market will result in an even more aggressive marketing initiative over the next several years.

 

Diane Willkens, president and CEO of Development Finance International, suggests American companies need to include in their marketing strategies the investments being made by the World Bank and the African Development Bank in the region.

 

Willkens outlines the factors her company takes into account when recommending to a client that they should focus on any particular market: strength of the banking sector; the macroeconomy of the country and per capita GDP; funding ranking and risk exposure level by the international financial institutions; the corruption index; quality of the basic infrastructure in the country; the specific product focus of the client and the percentage of the GDP for that product’s sector.

 

Last year, for the third year in a row, Sub-Saharan Africa recorded growth in the 5-6% range. Growth this year is expected to increase by 6-7%. The World Resource Institute and the IFC identified sector requirements in Africa as: housing US$42.9bn, energy US$26.6bn, transportation US$24.5bn, health US$18bn, ICT US$4.4bn, water US$5.7bn and food (seed, fertilisers, pesticides, farming equipment, irrigation systems, and so on) US$215.1bn.

 

Senior vice-president Fred Berger of The Louis Berger Group, the largest US design engineering firm on the continent, says that American firms are often dissuaded by the relatively small size of projects in Africa, especially when it comes to consulting opportunities, but adds that the Africa Growth and Opportunity Act (Agoa) is doing its job.

 

Singh earlier said that Agoa trade has grown threefold to US$44.2bn since 2003. Non-oil Agoa growth has been much more moderate, increasing by just 3.6%. Berger expressed his industry’s view that US companies’ being involved in the early project planning and design phase of projects places US manufacturers in a competitive position at the procurement point.

 

Participants in the meeting concluded by reaffirming their belief that more US companies need to become acquainted with business opportunities in Sub-Saharan Africa. Ex-Im Bank board member Joe Grandmaison said the US government’s efforts are important – be it Ex-Im Bank’s willingness to accept additional risk or the Department of Commerce’s information and assistance becoming more transactional.

 

However, Grandmaison stressed, “The first and most necessary step is the decision by US corporate decision makers to commit themselves to the world’s last emerging market before it is too late.”