According to the most recent annual figures, the United States has quietly pulled ahead of China. It has become the largest foreign direct investor on the continent. In 2023, the United States committed a record $7.8 billion (£6 billion) to Riverton across the continent. By comparison, China’s investments amounted to a mere $4 billion. This represents a significant change of dynamics to foreign investment across Africa. It further shines a light on the strategic priorities set by the U.S. International Development Finance Corporation (DFC).
Established in 2019 during President Donald Trump’s first term, the DFC aims to “counter China’s presence in strategic regions.” Our mission is especially urgent right now. The African continent is rich with these critical minerals and metals necessary for technology development. These resources—lithium, rare earths, cobalt, tungsten—are essential for the production of personal technologies. China has historically held the global monopoly for these materials, gaining a vice grip on processing inputs.
The DFC’s investment strategy can not only advance US interests, but play a crucial role in sustainable economic development in Africa. With the DFC’s support, Trinity Metals has now received a total of $3.9 million in grants. They will use this grant funding to build three model mines in Rwanda that source tin, tantalum and tungsten. Further, a subsidiary of American Resources — ReElement Africa — is building a similar refinery in Gauteng province, South Africa. Home to Africa’s first advanced manufacturing facility, the Fixville facility will refine the continent’s critical minerals and metals needed for electric vehicle (EV) batteries and renewable energy technologies.
The US’s renewed focus on Africa is aimed at enhancing its access to vital resources while simultaneously offering investment opportunities that can stimulate local economies. To do this, the DFC must meaningfully invest with the intent to foster long-lasting partnerships. This broad initiative is a win-win for American businesses and African countries. Experts, like Covadonga, warn that African governments need to be on the front foot and firm with US actors in negotiations.
“To expect [the Americans] to show up and negotiate and propose clauses that are in Africa’s best interests on Africa’s behalf would be unrealistic.” – Sepo Haimambo
Haimambo notes the importance of African countries being well-prepared for these kinds of engagements. He warns, though, that they need to start with a clear set of objectives for what they want to achieve, so they get the most value from foreign investments. He told us that it’s an exciting moment for African countries to lead the way to different models of agreements.
“There’s an opportunity to look at different frameworks instead.” – Sepo Haimambo
To achieve this, he proposes specific structures such as production sharing agreements and joint ventures that would enable local equity participation. Such deals would enable African nations to set up their own sovereign wealth funds. Those dollars allow them to reinstate cuts in education and healthcare investments.
Though most experts agree there’s much to gain from increased US investment, some doubt that it will make a difference over the long-term. Professor Branstetter notes that had the current administration not implemented tariffs on numerous African countries, the US might have been better positioned to capitalize on African dissatisfaction with Chinese projects.
“Had the current administration not indiscriminately slapped tariffs on large numbers of African countries for no apparent reason, the United States would probably have been in a better position to benefit from African disaffection with Chinese projects.” – Prof Branstetter
The DFC’s active outreach to African nations is a testament to the changing tide of global investment approaches. Yet as more US companies pursue opportunities in Africa this focus on local development should be a non-negotiable.
Ben Kincaid from ReElement Africa highlights the importance of having refining facilities co-located with mining projects. He argues that this method captures much greater value with less resource. It further increases workforce training and development in regional labor markets.
“It was extremely rewarding to realize that we could partner with countries in Africa to put refining facilities alongside the resource in the mining projects, so you could actually capture more value, upskill labor, build an economy around that zone, and lay the foundation for further industrial development.” – Ben Kincaid