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US Ex-Im Bank Faces Criticism for Lack of Clear Growth Strategy in Africa

Audit reveals US Ex-Im Bank's strategy deficit in Africa, despite significant loans in Mozambique and Angola.

By Mackenzie Crow

5/15, 08:35 EDT

Key Takeaway

  • US Ex-Im Bank criticized for lacking a clear growth strategy in Africa, despite being the region's largest credit exposure.
  • Audit reveals operational challenges and minimal impact on employment, amidst efforts to compete with China for critical minerals.
  • Notable transactions include a $5 billion loan for Mozambique LNG project and $907 million for Angola solar plants, highlighting financial involvement but overall authorizations below 2014 levels.

Strategy and Performance in Africa

The US Export-Import Bank (Ex-Im), the official export credit agency of the United States, has been critiqued for its lack of a clear strategy for growth in Africa, as highlighted in a recent audit by the inspector general. The report, authored by Michael Ryan, assistant inspector general for special reviews and communications, points out that despite the bank's long-standing presence in sub-Saharan Africa since the 1940s, its efforts to expand performance in the region have not been successful. The audit reveals that no specific office within Ex-Im has been designated to oversee strategy in the region, and the bank's programs have had minimal impact on employment. This evaluation emerges amidst President Joe Biden's increased efforts to engage with the continent, particularly in competing with China for critical minerals essential for transitioning to cleaner energy sources.

Ex-Im's Response and Operational Challenges

In response to the findings of the inspector general for audits, Ex-Im stated that sub-Saharan Africa represents the bank's "largest credit exposure by geographic region." The bank contested the audit's conclusions, suggesting that the review overlooked certain critical elements that might have influenced the findings. The report also notes operational challenges faced by Ex-Im, including a period of four years within the decade evaluated (2013-2023) when the bank could not authorize deals over $10 million due to the absence of a board quorum. Despite these challenges, the bank managed to authorize two significant transactions in Mozambique and Angola, although overall authorizations remained below the levels seen in 2014.

Significant Transactions and Trade Dynamics

The audit highlights two notable authorizations by Ex-Im in recent years. In 2019, the bank authorized a $5 billion loan for a liquefied natural gas project in Mozambique, undertaken by TotalEnergies SE, which has since been halted due to an insurgency. Additionally, a $907 million loan was approved for solar plants in Angola, accounting for the majority of sub-Saharan authorizations last year. These transactions underscore the bank's continued financial involvement in the region. Furthermore, the report situates the US as sub-Saharan Africa's fourth-largest trade partner as of 2020, trailing behind China, India, and the UAE, indicating the competitive landscape of international trade relations with the continent.