The Senate is set to vote on a bill authorizing the Millennium Challenge Corporation (MCC), a U.S. foreign aid agency that gives large grants to developing countries, to enter regional compacts in Africa.
What's next: The bill, which passed the House last month, authorizes MCC to support increased regional integration efforts and cross-border trade in Africa by removing single-country investment restrictions. If signed into law by President Trump, the bill will give MCC the freedom to facilitate U.S. engagement in the transportation, energy and agricultural sectors of emerging economies.
African economies account for many of the world’s fastest growing economies and are increasingly attractive as investment locations due to low labor costs. However, poor energy and transportation infrastructure stymie much of this potential, particularly in Africa’s sixteen landlocked countries. Under the new law, MCC would be able to contribute to greater infrastructure solutions, including road construction and large-scale projects like the West African Gas Pipeline, which carries crucial energy resources across borders.
MCC would also be poised to better engage in a space that has been dominated by China, which has invested heavily in regional projects such as the $4 billion Ethiopia-Djibouti railway. Historically, the United States has limited itself to smaller, country-specific engagement, while the estimated $1 trillion China has committed to its Belt and Road Initiative aims to link economies across borders.
The bottom line: This new effort by Congress will go a long way to removing self-imposed obstacles and modernize the United States’ involvement in emerging economies.
Aubrey Hruby is a nonresident senior fellow in the Atlantic Council's Africa Center.
