WASHINGTON, D.C. — Africa’s burgeoning young adult population promises to be an alluring target market for U.S. companies, policymakers and company executives said Tuesday at the largest-ever gathering of African government officials and American businesses here.
Some of those businesses pledged their commitment to investing in Africa with billions of dollars worth of deals to be rolled out in the coming years. The Obama administration, which put on this week’s U.S.-Africa Leaders Summit, announced $33 billion in deals at the summit’s business forum on Tuesday, $14 billion in private sector investments and the rest in government financing.
General Electric will funnel $2 billion into the continent by 2018, with investments in infrastructure and skills training. IBM is giving $66 million in technology services to Ghana’s Fidelity Bank. Marriott is investing $200 million across Africa and plans to create 10,000 new jobs and build 36 new hotels by 2020.
Marriott is counting on Africa’s growing middle class to boost travel throughout the continent. More than half of Africa’s population is under age 35, and they’re growing up more educated and wealthier than ever.
“That growth in the future means those folks will be traveling within Africa but also traveling outside of Africa,” Marriott CEO Arne Sorenson told USA TODAY. “We want to make sure they know our brands.”
Marriott is the largest hotel operator in Africa. In April, it acquired Protea Hotel Group and now operates hotels in nine African countries.
MasterCard, which has been doing business in Africa for more than 20 years, is also hoping to capitalize on the continent’s youth, especially as more countries embrace electronic payments.
From 20% to 30% of Africa’s people have access to a bank, which means “the majority of the population is outside the banking system,” says Daniel Monehin, MasterCard’s division president for sub-Saharan Africa.
MasterCard is trying to target that market with initiatives such as one that provides Nigerians with ID cards that also function like prepaid debit cards, allowing people to add funds and make payments. Last year, 13 million cards were issued in a pilot program, and there are plans to distribute more than 100 million to Nigeria’s population of 167 million.
“Effectively, every adult 16 years old and above in Nigeria will … have access to financial services for the very first time,” Monehin told USA TODAY. “That’s another opportunity. That’s another way of reaching the unbanked.”
Both Monehin and Sorenson say investment in Africa has been hindered by misperceptions held by U.S. companies. Monehin says people are often surprised to hear MasterCard does business on the continent at all.
“It’s almost like a jaw dropper,” he says. “They’re like, really? Seriously? It’s amazing the volume and the resources that are locked up within Africa. It is enormous.”
Sorenson says people don’t realize how much Africa has matured in recent decades.
“I think the American view of Africa is still one that starts with, ‘it’s a basket case economically,’ ” he says. “The economies are growing. Governance is getting better and better. There is money to be made in Africa.”
The Obama administration is also touting the opportunity to expand U.S. business internationally and simultaneously create jobs at home.
Commerce Secretary Penny Pritzker said Tuesday that a $175 million deal by Charlotte-based SEWW Energy to upgrade the electricity grid in Ghana’s capital would create jobs in Charlotte; and a $300 million investment by Procter & Gamble toward a manufacturing plant in Nigeria’s Lagos would support job growth in Cincinnati, where P&G is headquartered.
“Goods and services exports from the United States to African markets support roughly 250,000 jobs here at home,” she said. “As Africa’s middle class continues to expand, we hope to see our export numbers grow, too.”
Monehin hopes other businesses follow MasterCard’s lead by becoming more involved in African economies.
“We believe in the prospects of Africa,” he says. “MasterCard realized several years ago that Africa is where the business of the future will happen.”