Black Businesses Struggle In U.S. And Africa

Black Businesses Struggle In U.S. And Africa
U.S.-Africa Leadership Summit is America’s attempt to muscle in on the African economy

AFRICANGLOBE – As the United States pivots to strengthen economic ties with Africa, there’s a good chance Black-owned businesses may be left behind because of some of the same factors that limit their growth in America.

During the recent U.S.–Africa Summit, a historic meeting of nearly 50 African presidents, prime ministers and diplomats in Washington, D.C., Bloomberg Philanthropies and the Department of Commerce hosted a business forum to highlight the need to increase trade and build relationships between firms in the U.S. and African-owned companies.

The African Development Bank reported that more than one-third of the population of Africa is considered middle class and by 2040 the African labor force will be bigger than the labor force in China.

White House officials estimated that the African economy will grow at 5.4 percent this year, expanding at a higher rate than the rest of the world’s economy.

To encourage U.S. exports and investments in Africa, President Barack Obama pledged $7 billion in new spending under his Doing Business in Africa campaign, a program launched in 2012, and partnered with private firms, the World Bank, and the government of Sweden for an additional $12 billion deal.

In a press statement released during the business forum, the White House said that U.S. firms committed to “new deals in clean energy, aviation, banking, and construction worth more than $14 billion.”

The statement continued: “Taken together, these new commitments amount to more than $33 billion, supporting economic growth across Africa and tens of thousands of U.S. jobs.”

Black-owned businesses and Black leaders of major U.S. companies were virtually shut out of the business forum, an omission that drew criticism from the Black community.

Despite significant contributions to the U.S. economy, Black-owned businesses continue to face significant hurdles that limit their ability to take advantage of opportunities abroad.

Ian Oliver, a senior international trade consultant at the Small Business Development Center in Washington, D.C., said, “One of the biggest challenges, this goes for all entrepreneurs, but it affects minority businesses to a greater extent, is the access to finances and resources,” said Oliver. “There’s a concerted effort, at the federal-level to fix that, but there’s a gap between what they hope to do and what community-based organizations, that have the sole purpose of helping to grow small businesses can do.”

The U.S. Small Business Administration designed the 8(a) Business Development Program to support small, disadvantaged businesses. Companies owned by minorities, women, veterans and people living with disabilities often benefit from the program.

Small businesses are encouraged to balance their federal and private sector contracts, but what Oliver has found is that the transition from federal contracting to the commercial marketplace can be challenging for 8(a) program minority companies.

And even though President Obama has expressed the need for American companies to increase exports, many Black firms have products and services to offer that would be valuable in other markets, if they had access to capital to increase the scale of their operations. Black participation in the SBA loan program is down under the Obama administration.

According to analysis of FY2013 data by the Wall Street Journal, less than 2 percent of the $23.09 billion in SBA loans went to Black-owned businesses, down from the 8 percent of loans that went to Black-owned businesses in FY2008 under President George W. Bush.

Ron Busby, president of the U.S. Black Chambers, Inc. (USBC), a group that supports the development of Black enterprises, said that the recent U.S.- Africa Business Forum was a good start to that dialogue, but was unsure if the summit addressed many of the issues and concerns of Black-owned businesses, including access to capital and business opportunities in the private sector.

“When you get to the commercial side, it’s more fluid, it’s built off of relationships,” explained Busby. “It’s a different sales process and many times those sales opportunities never go out to the general public to bid. Many Black businesses never get into that private sector because they’re not invited and corporate America doesn’t deem it necessary to include us in those business opportunities. We have to do better in transitioning into the private sector, if we’re going to continue to grow.”


By: Freddie Allen


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