U.S. TRADE AND INVESTMENT IN SUB-SAHARAN AFRICA

The United States seeks a stable, economically dynamic and democratic Africa with which it can trade, in which it can invest profitably, and with which it can work to advance U.S. interests globally. This goal will be impossible to achieve unless and until Africa is fully integrated into the global economy. To this end, President Clinton's Partnership for Economic Growth and Opportunity in Africa, announced last June, is intended to spur African nations to implement significant economic reforms to achieve sustainable growth and development. By supporting African reform efforts, the Partnership also seeks to create opportunities for U.S. companies to trade with and invest in Africa, to create U.S. jobs and further our mutual prosperity.

As economic reforms take hold, African nations are becoming players in the global trading system, creating new opportunities for American business. U.S. trade with Sub-Saharan Africa has grown on average by 16.9 percent annually since 1994, outpacing growth in global trade in 1995 and 1996. U.S. exports to Africa reached $6.2 billion in 1997, while African exports to the U.S. -- 70 percent of which are crude oil -- totaled $16.4 billion. Africa's $10.2 billion trade surplus with the United States in 1997 accrued almost entirely to oil exporters.

Although U.S. exports to the region account for less than 1 percent of total U.S. exports, U.S. exports to Africa now exceed by 20% those to all of the former Soviet Union combined. Manufactured exports accounted for 86% and agricultural exports 14 percent of U.S. shipments to the region in 1996. Yet the United States accounts for only 7 percent of Africa's imports, putting it in third place among industrial country suppliers to the continent. As the huge, mostly untapped African market of 660 million people grows and our market share increases, thousands of new American jobs will be created.

Return on U.S. direct investment in Africa has been dramatic. During 1990-94, the average annual return on book value of U.S. direct investment in Africa was nearly 28 percent, three times the rate of worldwide return. And in 1995 and 1996, the return on book value exceeded 30 percent. High rates of return reflect investor perceptions of high risk in Africa, but high returns also mean that Africa has significant opportunities for investors who know where to look.

At year-end 1996, U.S. direct investment in Sub-Saharan Africa totaled $4.9 billion, up 11 percent from 1995 and 30 percent from 1994. A total of $1.4 billion of that position was in South Africa, exceeding the value of U.S. investments in major emerging markets such as Turkey and India. U.S. investment in South Africa is mostly in manufacturing. Elsewhere in the region U.S. investment is largely in petroleum and mining.

U.S. direct investment in Africa supports U.S. trade with the region and fuels American industry. For example, U.S. merchandise exports, valued at $684 million, were shipped to U.S. majority-owned affiliates in Africa in 1994.