Benjamin Todd is a business development officer with the Export Import Bank of the United States, Exim. His portfolio is Africa, and he was the third and final speaker at the GBD colloquium on September 10, when the topic was
"Africa and American Trade Policy." We have taken today's quote from something Ben Todd said near the end of his presentation. As we will explain below, by "others" Mr. Todd didn't mean others in America; he meant America's competitors. He began his presentation, however, just as you would have expected him to, with a statement of what Exim is and what it does.
"We are the official export credit agency of the United States," he said.
"Our job is to create jobs in the United States." The bank does this, he explained, by the providing working loan guarantees and export credit insurance for U.S. exporters, and by financing overseas companies that purchase made-in-the-USA goods and services.
Exim in African. The Bank has been operating in Africa since 1944, when it provided post-World War II reconstruction assistance to Ethiopia. Among the projects Mr. Todd talked about were:
A flour mill in Nigeria. In 1961 Exim provided the financing that helped to build it.
The Akosombo Dam in Ghana. In 1962, Exim provided $10 million in support of this project, which, among other things, created the world's largest man-made lake. It covers over 3,000 square miles. Part of the original purpose of the project was to provide electricity for the aluminum industry.
Firefighting Equipment for Ghana. In June 2010, Exim announced it was supplying $41 million in loan guarantees to support the sale of 121 firefighting vehicles and equipment to Ghana. Those vehicles (and supplies) were made in Wisconsin, Pennsylvania, Iowa, Illinois, Virginia, and Nebraska, he said.
Dow Chemical Solar Power Liquids to South Africa. Exim supports these sales. We are not sure what years to assign to Exim's commitments, but a press release issued by Dow in February 2013 explained what is at issue. The product is DOWTHERM A. This is a High Temperature Heat Transfer Fluid, and it is used in more than 30 of the largest concentrated solar power (CSP) projects around the world. These systems are worth a digression. So here is a little more from that Dow press release:
"CSP uses parabolic mirrors to reflect and magnify heat from the sun on to a closed circulating loop containing DOWTHERM A heat transfer fluid. The fluid collects the heat energy and transports it to a power station where it is used to produce steam, which drives turbines to generate electricity."
The Azito Power Plant in Côte d'Ivoire - This past July, Exim worked with the West African Development Bank in support of this project.
Locomotives for South Africa. "In July," Mr. Todd said, "we authorized $563 million for Transnet, the state-owned logistics company of South Africa," for the purchase of locomotives. That transaction, he said, supported 2,500 jobs in the United States and 12,000 jobs in South Africa.
Fishing Lures for South Africa. "Most of what we do is small deals," Mr. Todd said, and he illustrated the point with the example of support for U.S. exports of fishing lures - they are made by Cast Industries in Springfield, Illinois - to sport fishing outlets in South Africa.
Scope and Contradiction. If a subject is at all complex, invariably some of the bullet points don't seem to fit with others. They are all true, but they seem contradictory. America's trade with Africa is a case in point.
"Our pipeline is robust," Mr. Todd said at one point, "and it is across the board: mining, oil and gas, aviation, civil works, water, sanitation health care. And so we are going to see a lot more business in sub-Saharan Africa because a lot more U.S. businesses are engaged in doing business there."
He also said, however, that
a constraint on the bank's activities in sub-Saharan Africa is a lack of U.S. exports. It's a robust and growing market, but the U.S. is very much in third place as a supplier. "The U.S. ... is lagging in the region," he said, adding that Europe accounts for almost half of all exports to sub-Saharan Africa and China for another quarter. That leaves the U.S. sharing the last quarter with the rest of the world.
Africa, the U.S., and the Power Sector. Two-thirds of sub-Saharan Africa is is without power, Mr. Todd said. That's 600 million people, and the power that is available is, in large measure, unreliable and very expensive. The need is obvious enough and the business potential is enormous. Sub-Saharan African, he said, will require more than $300 billion in investments if it is to have universal electricity assets by 2030.
And it is a sector where the U.S. has already made some commitments. In Cape Town last June, for example,
President Obama announced Power Africa. According to a USAID press release, this is an "initiative to double the number of people with access to power in Sub-Saharan African." And it is an initiative that Exim is strongly supporting. The bank has already committed $5 billion over the next five years to drive transactions in Africa's power sector.
That, of course, raises the question: will there be an Export-Import Bank of the United States in five years? We'll get to that in a moment. First, it is worth highlighting some of what Mr. Todd said in response to the not-entirely-rhetorical question,
why Exim?Put differently, the question is, can't the commercial banks do it all? Mr. Todd's answer to that was, no, they can't. They can't in general because the rules under which they operate - both the Basel Accords and national rules - often make such lending impossible. And the African banks can't do it because essentially they don't provide long-term financing. Long-term for them is four years, and, as Mr. Todd said,
"You can't finance a power plant with four year money."Now, let's pick up the passage that includes today's featured quote. Mr. Todd was talking about the difficulty of financing large infrastructure projects. He said:
"So we fill that void.
"If we weren't there, don't worry. There are others that will fill that void. There are the European export credit agencies, and there is the Chinese export credit agency. And there is the Brazilian export credit agency, and the Indian export credit agency. They are all helping their companies sell more into Africa."
