Prosper Africa Reboot Revitalizes Investment Opportunities in Africa

By Jeffrey Karp, Senior Counsel, and Caroline Lambert, Associate

The United States (US) government’s Prosper Africa project is getting a reboot by the Biden administration, renewing the government’s commitment to increased trade with African countries and incentivizing American companies to invest in projects, particularly clean energy, climate solutions, health, and digital technology projects, across the African continent. This initiative presents a multitude of opportunities for US companies looking to expand into a growing market.

What is Prosper Africa?

The Prosper Africa initiative was started in 2019 with the same goals of increasing trade between the US and countries on the African continent and supporting investment by US companies in African countries.[1] In 2021, the Biden administration announced a renewed commitment and relaunching of the initiative under the Prosper Africa Build Together Campaign. This reboot of the Prosper Africa initiative aligns with the Biden administration’s trade and investments goals outlined at the June 2021 G7 Summit, including the Build Back Better World campaign to invest in infrastructure in low- and middle-income countries.[2]

The Prosper Africa initiative has engaged 17 US government agencies, including the United States Agency for International Development (USAID), the United States Trade and Development Agency (USTDA), the Export-Import Bank of the United States, and the United States International Development Finance Corporation, to coordinate and provide support for the initiative’s goals.[3] In addition, Prosper Africa works with private sector actors, governments, and multilateral organizations in African countries to increase communication and cooperation and strengthen institutional channels for investment.

What Kind of Projects are Promoted?

The investment opportunities that the Prosper Africa aims to promote and foster appear to cover a wide variety of sectors and provide diverse prospects for US companies. The Biden administration highlighted clean energy, climate solutions, health and digital health, and digital technology sectors when discussing the campaign.[4] The Prosper Africa website further emphasizes financial technology; infrastructure such as telecommunications, energy, water and sanitation, and transportation; and a number of other sectors including agriculture, aerospace and defense, consumer goods, environmental technology, food and beverage, design and construction, and textiles and apparel.[5] On the finance side, the venture capital, private equity, institutional investments, and foreign direct investment sectors can also take advantage of the Prosper Africa opportunities.[6]

What Elements of Support are Being Offered?

Prosper Africa’s goal of increasing trade and investment cannot be reached without significant channels of support. To that end, Prosper Africa aims to streamline and coordinate cross-party involvement, whether that be between governments, the private sector, or multinational organizations, and help guide companies as they navigate in unfamiliar and unique markets. Prosper Africa intends to engage stakeholders in African countries to strengthen business channels, provide market insights, and provide deal support.[7] Financially, support from USAID in the form of financing and transaction assistance such as transaction facilitation, targeted policy intervention, and a pledge of up to $500mm over the next five years, along with training grants and project preparation assistance from the USTDA, has been initiated.[8] To coordinate these resources, Prosper Africa has a "Toolkit" for investors to explore targeted areas of support and available opportunities, including a "Virtual Deal Room" which adds curated investment opportunities each week.[9]

What are the Risks?

While all investments inherently espouse a level of risk, investments like those Prosper Africa aims to promote can likely be characterized by a higher-than-typical risk level: "[d]espite the wealth of opportunities, doing business in Africa continues to be associated with real and perceived risks. Institutional and infrastructure barriers, risk and reward and imbalances, and high transaction costs can make it difficult for U.S. investors to find opportunities and close deals."[10] A report on the Prosper Africa initiative by McKinsey & Company and the CrossBoundary Group identified, among other things, a number of the challenges that US companies face when trading or investing in countries in Africa: institutionally different national markets and different national currencies; a lack of transparency in some countries, leading to anti-money laundering, anticorruption, and bribery concerns; and finance concerns such as securing working capital, capital investments, transaction costs, and incongruent requirements and expectations.[11]

How Sullivan Can Help

The opportunities advanced by Prosper Africa are intriguing, enticing, and are poised to increase with the Biden administration’s renewed commitment. A smart, careful, and seasoned approach to evaluating opportunities with African countries can help companies navigate towards successful outcomes. Sullivan’s global and multidisciplinary team featuring both US and United Kingdom (“UK”) professionals has provided the smart, careful, and seasoned approach leading clients towards success in other investment opportunities in African countries—including advising the UK government and UK exporters in 2020 on the largest ever UK government direct loan into Africa.

Sullivan has extensive in country experience advising financiers and investors on projects across Africa. Including most recently advising on construction, energy, health[12], transportation[13], and infrastructure[14] projects across Eritrea, Ghana, Ivory Coast, Mozambique, Zambia and Zimbabwe.

With significant experience in Asset & Export Finance, Insurance, Regulatory Compliance (including bribery, corruption, modern slavery and sanctions issues), Environmental & Energy, and Infrastructure and Project Finance, the Sullivan team is poised to help companies take advantage of all the opportunities Prosper Africa has to offer.

[1] https://prosper-africa-assets.s3.us-gov-east-1.amazonaws.com/wp-content/uploads/2021/01/22094806/Prosper-Africa-Roadmap.pdf

[2] https://www.gtreview.com/news/global/questions-raised-over-g7-plans-to-take-on-chinas-belt-and-road-initiative/

[3] https://www.prosperafrica.gov/toolkit/invest-in-africa/

[4] https://www.usaid.gov/news-information/press-releases/jul-28-2021-usaid-advances-prosper-africa-build-together-campaign

[5] https://www.prosperafrica.gov/toolkit/invest-in-africa/

[6] Id.

[7] https://www.usaid.gov/news-information/press-releases/jul-28-2021-usaid-advances-prosper-africa-build-together-campaign

[8] https://www.usaid.gov/prosperafrica

[9] https://prosperafrica.asokoinsight.com/

[10] https://www.prosperafrica.gov/toolkit/invest-in-africa/

[11] https://prosper-africa-assets.s3.us-gov-east-1.amazonaws.com/wp-content/uploads/2021/01/22094806/Prosper-Africa-Roadmap.pdf

[12] https://www.gov.uk/government/news/uk-government-provides-over-140-million-of-support-for-exports-to-ghana

[13] https://www.gov.uk/government/news/uk-exports-boost-critical-infrastructure-projects-in-africa

[14] https://www.gov.uk/government/news/uk-government-provides-over-140-million-of-support-for-exports-to-ghana