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AFRICAN MIDWEST DIASPORA
AMERICAN
INVESTMENT FOR AFRICA
President Joe Biden has announced that the United States will bring together leaders from across the African continent for a major summit in Washington, DC this December to discuss pressing challenges from food security to climate change.
African Development Bank chief urges investors at US-Africa Business Summit
MARRAKECH, Morocco (ADBG)—The president of the African Development Bank (ADB) Dr. Akinwumi Adesina has given strong assurance to US investors that the continent of Africa is a secure, competitive and profitable market for investment.
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Speaking at the recent US-Africa Business Summit in Marrakech, Morocco in July, Adesina told American investors to view Africa as a logical investment destination and to engage with the continent in win-win part- nerships. Adesina stressed US investments were critical for accelerating infrastructure development on the continent.
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"This is an opportune time for American investments in Africa, at scale," Adesina said. "Tomorrow cannot wait. Africa’s time is now. Africa’s future is bright. We are open for business, and we welcome you with wide open arms."
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The US Corporate Council on Africa partnered with Morocco to organize the summit under the theme, "Building Forward Together." The event brought together global investors and corporate executives. Dignitaries and global leaders included President Mokgweetsi Masisi of Botswana and US Vice President Kamala Harris who con- ferred with delegates via a video message.
Other dignitaries included Morocco’s Minister of Foreign Affairs, African Cooperation and Moroccan Expatriates, Nasser Bourita; Alice Albright, CEO US Millennium Challenge Corporation; Chakib Ali, president General Con- federation of Moroccan Enterprises; and Nardos Bekele-Thomas, CEO African Union Development Agency NEPAD.
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More than 400 business and government representatives discussed building stronger US and Africa trade, investment and commercial ties. In a video message, Vice President Harris said the US has an eye on food stability in Africa—that public-private partnerships could play a key role in this regard.
"We are focused on the urgent need to increase food production and exports with and within Africa," she said, recognizing the critical importance of strengthening the US relationships with nations across Africa. "President Biden and I are looking forward to welcoming leaders from across the African continent to Washington, DC from December 13th through the 15th, for the United States-Africa Leaders Summit,” she said.
Adesina listed some of Africa’s multi-billion investments as proof of the continent’s investment potential. He cited the Dangote Group's $20 billion petroleum refinery and fertilizer production complex in Nigeria, and the South Africa Mobile Telephone Network (MTN) Group, which currently operates in 19 markets.
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The African Development Bank head said that despite the disruptions of the Covid-19 pandemic and its impact on economies, the number of private equity deals in Africa increased from 230 in 2019 to 255 by 2020, stressing that even in turbulent times, opportunities still abound in Africa.
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Adesina spoke about the African Development Bank Group’s investments to help improve livelihoods and econ- omies. He said the Group had committed more than $44 billion to infrastructure across the continent in the last six years alone, most notably in transport, energy, and water and sanitation. But he pointed out that Africa still faced an annual infrastructure financing gap of $68-108 billion.
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Alice Albright said the US Millennium Challenge Corporation is firmly invested in creating more pathways to prosperity across the African continent. Through Prosper Africa, she said—the US Government's initiative to increase trade and investment and promote sus- tainable development across the continent—and our collective efforts, we are strengthening partnerships to ensure people on both sides of the Atlantic have the opportunity to create a better life for their children, their families, and their communities, and to realize their full potential.
Since launching Prosper Africa two years ago, the U.S. Government has supported 800 two-way trade and investment deals in 45 countries in Africa, worth an estimated $50 billion. Adesina invited American businesses to invest in the opportunities created by the African Development Bank Group’s $1.5 billion African Emergency Food Production Facility, designed to ease the impact of the current global food crisis, worsened by Russia’s invasion of Ukraine.
The facility, the first of its kind, will help countries purchase and distribute agricultural fertilizer and seeds, pro- vide emergency support over four planting seasons, increase food production by 30 percent, and produce $12 billion worth of food.
In his opening speech, Moroccan Foreign Affairs Minister Bourita said that never had the time been more opportune for strengthened cooperation between Africa and the United States than now.
"It is time for Africa to reap the fruits of its potentials, play a central and natural role on the international scene, and in major developments taking place at the global level."
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American Development Bank Group.
PERSPECTIVE: African sustainability into the future
By JARRETTE FELLOWS, JR.
Africa possesses the most arable land on Earth and COULD feed the world. The problem, however, is Africa's inability to process the food it grows.
What good will it do Africa if the nations there were able to till 20 percent of the fertile land, but could not process the rice, wheat, corn, cocoa beans, coffee, tea, and other items without having to turn to Europe for help?
Then Europe sells these goods back to African nations at exorbitant costs? That would be purely counterproductive. In this scenario, Europe would exert a type of 21st century colonial rule over Africa.
To offset this, the African Development
Dr. Akinwumi Adesina, president, African Development Bank. Courtesy of African Development Bank
Bank would better serve Africa investing in modern regenerative agronomy, farm machinery such as tractors, combines, threshers, harvesters, headers, feeders, aerial drone pest control sprayers, and in the recruitment of agri-trained graduates from colleges and universities throughout the Diaspora.
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An agricultural policy embracing such will assure the trade partnerships and sustainability between African nations and those throughout the globe well into the future.
The African Development Center of Minnesota services citizens mainly from Somalia, Ethiopia, Eritrea, Djibouti, and Kenya.
How Minnesota’s East African small business community are faring in the face of crises
By ROBERTA DOWNING and MICHOU KOKODOKO
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ST. PAUL—Minnesota is home to more than 85,000 East Africans, about 3,000 of whom are self-employed or have established their own businesses. These small businesses benefit Minnesota communities, providing products, foods, and services that enrich the state’s culture and contribute to economic prosperity. However, like many other small business owners, East African entrepreneurs are now struggling with pandemic-induced challenges.
And on top of that, many are recovering from damage to their premises sustained during civil unrest in the Twin Cities following the killing of George Floyd last May.
East Africans in Minnesota
East African communities in Minnesota originate mainly from Somalia, Ethiopia, Eritrea, Djibouti, and Kenya. To estimate the population of East Africans in Minnesota, we looked at data for individuals with the following places of birth—Ethiopia, Eritrea, Kenya, and Somalia.
Somalis are the largest group within this community and are the second-largest group of foreign-born Minneso- tans behind Mexicans. About 57 percent of Minnesota’s East African community are of prime working age (25- 54 years old) and nearly 20 percent are under age 18. Nearly half, about 46 percent, arrived in the U.S. between 2000 and 2010, and 37 percent arrived after 2010. Those that are of working age (16-64), 5 percent are self-employed.
East African households in Minnesota are mostly renters (86 percent), and their median annual household income was $36,283 in 2019, according to American Community Survey Public Use Microdata. To learn how
the East African small business community in Minnesota is faring in these unprecedented circumstances, the Community Development and Engagement team at the Federal Reserve Bank of Minneapolis conducted a listening session and one-on-one interviews with East African entrepreneurs and their support network.
We heard about the adversity this community is experiencing and the information gaps that compound it. We also heard ideas for how to help East African small businesses buffer the effects of the economic downturn and emerge stronger than before.
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Pandemic, civil unrest strain business
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The East African businesses we heard from included restaurant owners, small retailers, cosmetologists, and providers of home health care and other services. Like many small businesses across the country, they have experienced significant losses due to COVID-19 stay-at-home orders and social-distancing measures.
Businesses like coffee shops and restaurants have had to cease or reduce services. Not every food-related business we spoke to was struggling—for example, one African restaurant pivoted to producing 1,200 meals a day for a local Meals on Wheels program and had to double its staff to fulfill the contract. But most noted the difficulty of paying rent and other fixed costs as their customer numbers dwindled. Some reported that people were not ordering takeout or delivery, which further reduced business incomes.
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Business owners from another industry, non-emergency medical transportation, reported that the scaling back of medical appointments to reduce the spread of COVID-19 significantly reduced their customer volume. Their bus- inesses have survived by transporting patients who need dialysis and other critical care, but the overall loss of clients has led to layoffs.
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Adding to the challenges posed by the pandemic, several days of civil unrest took place in Minneapolis and St. Paul in May 2020 following the police killing of George Floyd on Memorial Day. The State of Minnesota estimates property damage resulting from the unrest at $500 million. According to Allison Sharkey, executive director of the Lake Street Council, a nonprofit organization serving the commercial corridor where the bulk of the unrest in Minneapolis took place, the damage affected East African entrepreneurs more than any other group of business owners.
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Businesses generally carry insurance to cover costs associated with damage to their premises, loss of income, or loss of inventory. However, due to the high cost of premiums for full-scale coverage, very few East African business owners carried enough insurance to cover catastrophic losses in all three areas, and many had no insurance at all.
Organizations representing immigrant businesses reported that their clients who did have insurance had trouble getting their claims filed, in part because they could not provide appropriate documentation showing the income their business generated both before and after the damage occurred. Many East African business owners did not have full information about their responsibilities to their insurance companies in the event of a loss.
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Sharkey noted, "as businesses rebuild, there is a need to make sure that small business owners have insurance, improved financial record-keeping, and mitigation of damage that insurance companies will not cover."
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East African small businesses reported a number of challenges learning about, participating in, and qualifying for government pandemic-relief programs. Only a few owners had succeeded in accessing the first round of the U.S. Small Business Administration’s Paycheck Protection Program (PPP), the signature business-relief program included in the federal Coronavirus Aid, Relief, and Economic Security Act.
As East African business owners continue to recover, their experiences suggest that more communications and
outreach could have helped their hard-hit community. Most cited a lack of knowledge about government pro- grams. Many East African business owners missed out on opportunities to receive COVID-19 relief because they were not familiar with how government small business assistance works and didn’t know what aid was available or what the requirements were to access it. East African business owners in central Minnesota conveyed that very little outreach about COVID-19 business relief was disseminated in their community.
Inadequate documentation
East African small business owners often track their income and expenses informally rather than with the formal profit-and-loss statements necessary to access government assistance. Similarly, many sole proprietorships had not filed the paperwork necessary to conduct business in Minnesota under a name other than a personal name, and needed this documentation to receive aid.
Some East African business owners did not have the familiarity or comfort level with information technology needed to access aid, such as knowing how to use smart phones to apply for assistance, how to digitize documentation for a successful application, and how to access informational sessions through video confer- encing tools like Zoom or WebEx.
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Without existing relationships with financial institutions, East African business owners we talked to did not receive timely communications or guidance about those institutions’ participation in pandemic-relief loan programs and were then often the last to get in line for small business assistance.
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Few East African business owners benefited from existing relationships with community development financial institutions, credit unions, banks, business associations, or state agencies like the Minnesota Department of Employment and Economic Development. Without existing relationships with financial institutions, East African business owners we talked to did not receive timely communications or guidance about those institutions’ par- ticipation in pandemic-relief loan programs and were then often the last to get in line for small business assis- tance. Most of these businesses did not receive any money; sometimes they missed the deadline due to a lack of awareness of the application process or timeline.
As a result, most East African businesses did not apply for the first round of PPP aid. The experience of East African small businesses was consistent with that of other businesses with weak relationships with lenders; the Federal Reserve’s 2021 Small Business Credit Survey found that respondents who applied for PPP loans were more likely to receive all the funds they sought from lenders if they had an existing relationship with the institution.
Overcoming barriers
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The experiences business owners shared with us point to some actions the public and private sectors could
take to help ensure that East African small businesses come back stronger after the pandemic and economic downturn subsides. By addressing the barriers identified in our outreach, the small business development ecosystem could more effectively support this important community of entrepreneurs.
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Support nonprofits, which play a critical role. Local nonprofit organizations that provide business-development services are a vital resource for East African entrepreneurs. Representatives of these nonprofits reported that business owners have flocked to their offices to get assistance. Nonprofit staff have worked overtime to respond to questions and make in-person visits to the homes of the people they serve. Without these nonprofit service providers, small business owners would have had few avenues for accessing linguistically and culturally competent assistance.
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Without these nonprofit service providers, small business owners would have had few avenues for accessing linguistically and culturally competent assistance.
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According to Ahmed Mohidin, career counselor at Career Solutions in St. Cloud, whose organization helped more than 100 small enterprises ultimately receive grants from the county, problems for many East African business owners were compounded by limited English proficiency.
"Understanding the computer itself requires basic knowledge for business owners in our community," he said. "We couldn’t use Zoom technology with many of them, so they had to bring everything to us and we met face-to-face, taking all COVID health precautions, and we helped them understand what steps they needed to take.
"Our office stayed open until ten o’clock at night so that people who were working a second shift were still able to get help from us," said Mohidin.
East African business owners need a better understanding about how government aid works and opportunities that exist. Sharing information regularly in different languages is critical to reaching this community. With rela- tively low computer literacy in the East African community, procedures like handing out fliers and advertising on the radio may be more effective to inform community members about where they can go for help and what they need to do to access it.
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East African small business owners could benefit from training in topics like formal bookkeeping, using com- puters to track their finances, and maintaining a separate business account. Expanding technical assistance in the form of legal advice, access to accountants, guidance around appropriate amounts of insurance, and other supports will help businesses survive through the pandemic and accelerate recovery.
Finally, partnerships with financial institutions would help small business owners access the right resources at the right time. Few East African business owners had existing connections to lenders. In normal times, such relationships are an important support for entrepreneurs as they start and grow businesses. In times of crisis, relationships with financial institutions can also be a crucial pathway to financial relief.
Roberta Downing is assistant vice president, Community Development and Engagement, Federal Reserve Bank of Minneapolis. She identifies and develops policy solutions for issues affecting low- and moderate-income com- munities and for tribal nations.
Michou Kokodoko is project director, Community Development and Engagement, Federal Reserve Bank of Minneapolis. He leads the Bank’s efforts to promote effective community-bank partnerships by increasing awareness of community development trends and investment opportunities