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

The United States seeks a stable, economically dynamic and democratic Africa with whichit can trade, in which it can invest profitably, and with which it can work to advanceU.S. interests globally. This goal will be impossible to achieve unless and until Africais fully integrated into the global economy. To this end, President Clinton's Partnershipfor Economic Growth and Opportunity in Africa, announced last June, is intended to spurAfrican nations to implement significant economic reforms to achieve sustainable growthand development. By supporting African reform efforts, the Partnership also seeks tocreate 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 globaltrading system, creating new opportunities for American business. U.S. trade withSub-Saharan Africa has grown on average by 16.9 percent annually since 1994, outpacinggrowth in global trade in 1995 and 1996. U.S. exports to Africa reached $6.2 billion in1997, 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 1997accrued 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 Unioncombined. Manufactured exports accounted for 86% and agricultural exports 14 percentof U.S. shipments to the region in 1996. Yet the United States accounts for only 7 percentof Africa's imports, putting it in third place among industrial country suppliers to thecontinent. As the huge, mostly untapped African market of 660 million people grows and ourmarket share increases, thousands of new American jobs will be created.

Return on U.S. direct investment in Africa has been dramatic. During 1990-94, theaverage annual return on book value of U.S. direct investment in Africa was nearly28 percent, three times the rate of worldwide return. And in 1995 and 1996, thereturn on book value exceeded 30 percent. High rates of return reflect investorperceptions of high risk in Africa, but high returns also mean that Africa has significantopportunities for investors who know where to look.

At year-end 1996, U.S. direct investment in Sub-Saharan Africa totaled $4.9 billion, up11 percent from 1995 and 30 percent from 1994. A total of $1.4 billion of thatposition was in South Africa, exceeding the value of U.S. investments in major emergingmarkets such as Turkey and India. U.S. investment in South Africa is mostly inmanufacturing. 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 Americanindustry. For example, U.S. merchandise exports, valued at $684 million, were shipped toU.S. majority-owned affiliates in Africa in 1994.