Janet Yellen to visit African countries as US steps up overtures to continent

Washington is seeking to entice nations away from financial and resource ties to China

US Treasury secretary Janet Yellen this week begins a 10-day tour of three African democracies, as President Joe Biden’s administration steps up overtures to a continent where both China and Russia have made inroads.

Yellen will during her trip seek to flesh out a new US agenda to entice countries away from financial and resource ties to China, the continent’s biggest creditor, and persuade them to take a more robust line against Russia’s invasion of Ukraine.

The former Federal Reserve chair will visit Senegal, Zambia and South Africa, countries where the US has been touting investments in infrastructure, metals for electric vehicle batteries and renewable power. She is also expected to discuss rising debt levels in Africa after several defaults and the prospect of more as interest rates rise in the US and elsewhere.

“There’s a coming storm,” said Aubrey Hruby, cofounder of the Africa Expert Network in Washington. “A lot of what was borrowed in eurobonds is going to come due.”
Biden’s administration has stepped up engagement, hosting more than 40 leaders at a US-Africa summit in December in Washington, the first in eight years. The US made investment pledges worth $55bn over three years and backed the idea of the African Union joining the G20 permanently.

Last year, the US issued a new African strategy, which de-emphasised competition with China and Russia, but which made clear that Washington was seeking to make up for lost ground

By 2050, one in four people will be African and at least a third of minerals required for the green transition lie under its soil. Yet Barack Obama’s administration struggled to keep up engagement with the continent while Donald Trump did not attach great diplomatic importance to Africa.

The Biden administration is taking a different approach. “We believe Africa’s growth will be a key driver of global growth over the coming decades. As its population grows, it is essential that economies of African countries generate high-quality jobs at the needed pace. It’s in the US interest to be a partner in this growth,” a senior US Treasury official told reporters ahead of the trip.

Yellen is the first of several senior US officials expected to visit this year, including Biden and vice-president Kamala Harris. “It’s run-of-the-mill regular engagement and that’s what we were missing,” said Hruby.

The US is seeking to emphasise private sector activity as an alternative to Chinese state-backed loans that many indebted African nations can no longer afford.

Yellen’s trip “will highlight the Biden-Harris administration’s work to deepen US-Africa economic ties, including by expanding trade and investment flows,” the US Treasury said.

It also said that Yellen would “underscore the spillover effects of Russia’s illegal war in Ukraine, which have disproportionately hurt developing countries”. She would note the US provision of $13.5bn in food assistance, it said.
Yellen will meet President Hakainde Hichilema of Zambia, which is struggling to make progress on a restructuring of defaulted debts, many owed to Beijing.

Zambia, which defaulted more than two years ago, is meant to set a precedent for Beijing to work with other creditors on debt restructuring after a surge in lending by Chinese state banks to Africa in recent years.

But Zambia’s Chinese creditors are yet to agree debt relief terms, even though a bailout from the IMF hangs on the outcome. Yellen said last year that in Zambia’s case and that of other defaulting frontier economies, “the barrier to making greater progress is one important creditor country, namely China”. 

In South Africa, Yellen will visit the coal-producing region of Mpumalanga to emphasise US support for a “just transition” to renewable energy. The US is contributing to an international package worth more than $8.5bn to accelerate the transition, which is contentious in South Africa, while seeking to soften the blow on coal-dependent communities through training and alternative industries.

Yellen’s visit comes soon after the traditional new year’s African tour by Qin Gang, China’s foreign minister, the 33rd year that the continent has been the foreign minister’s first port of call.

This originally appeared in the Financial Times

Photo: Saul Leob/AFP/Getty Images