US and China race towards Africa

While in Africa, U.S. State Secretary Hillary Clinton delivered a speech on August 1st before an audience at Senegal’s University of Cheikh Anta Diop. She mainly discussed US and Africa’s partnership, which aims to promote trade and oil investment, economic growth, peace and security, among other issues.

She explained that the Obama administration is forming partnerships with energy-rich countries to ensure that the citizens benefit from their own vast resources.  She continued by saying that there are outsiders who approach Africa and take advantage of its resources, but sadly do very little to help improve, develop, and spur the growth of the continent’s economy.  It’s time to put this to an end, she said.

While the Secretary of State did not make any inference to the term “outsiders,” China felt slighted and subsequently issued a statement that Clinton was referring to China’s Africa policy.  China’s leading newspaper reported that Clinton’s visit to Africa was aimed at creating a rift between the communist country and Africa and that her alleged insinuation of China’s exploitation of African resources is quite deceptive.

Some observers note that there’s a covert race going on between the two giants as both try to gain a strong economic foothold in Africa.  Aside from rampant attempts to invest in oil exploration, both were seen to have stepped up trade relations with the emerging African nations.

From 2006 to 2011, bilateral trade between Africa and China rose by a hefty 300 percent, reaching a level of $166 billion in 2011.

Meanwhile, U.S. and African bilateral trade figures reached a little over $95 billion during the same period.  While this represents just about half of China’s trade figures, the U.S. is striving to come up with more favorable trade levels, realizing the huge potential of the African market.

Energy-wise, the U.S. and China are two of Africa’s big oil clients.  Last year, Angola’s crude exports to China were valued at close to $25 billion. Crude makes up 62 percent of Africa’s total exports to China.  On the other hand, Africa’s total exports to U.S. consisted of 89 percent petroleum products. Nigeria’s crude exports to the same country comprise 40 percent of its total exports.

U.S. oil companies actively investing in oil exploration and production in African states include Exxon-Mobil, ConocoPhillips, Chevron, and Occidental Petroleum.  China’s Sinopec and Cnooc also have major oil stakes in the region.

If indeed there’s an on-going race, some suggest that the U.S. take heed of what China has offered Africa.  Last month, China has generously pledged $20 billion in funding, education and training, scholarships, medical aid, and other support programs – all in favor of Africa.

Africa might try to recompense, and huge oil discounts are likely to be offered.