US Overtakes China as Top Foreign Investor in Africa Amid Critical Minerals Race

The United States has surpassed China as the largest foreign direct investor in Africa, with $7.8 billion invested in 2023, signaling a significant shift in economic influence as both nations compete for access to vital resources.

This marks the first time since 2012 that the US has held the lead in foreign direct investment on the continent, according to data from the China Africa Research Initiative at Johns Hopkins University. The surge in US investment is largely driven by the US International Development Finance Corporation (DFC), established in 2019 with a stated mission of countering China’s strategic presence in key regions. The DFC has been actively funding projects aimed at securing access to critical minerals – like lithium, rare earths, cobalt, and tungsten – essential for technologies ranging from electric vehicles to artificial intelligence.

Rwandan mining company Trinity Metals recently secured a $3.9 million grant from the DFC to develop its mines producing tin, tantalum, and tungsten. “The US government has been very supportive of what we’ve been doing, to look at bringing that supply chain directly to the United States,” said company chairman Shawn McCormick. Trinity now exports tungsten to a processing plant in Pennsylvania and has a deal to send tin to a Pennsylvania smelter. Economists like Sepo Haimambo of FNB Namibia emphasize the need for African nations to proactively negotiate favorable terms with US entities, warning against expecting concessions. For more on the importance of these resources, see the International Energy Agency’s report on critical minerals.

While the increased investment offers opportunities, some experts point to potential drawbacks, such as former President Trump’s trade tariffs on African nations, which may have hindered stronger relationships. The competition for resources is expected to intensify as other nations, including Brazil, India, and Japan, also increase their engagement with African countries. Officials say the US will continue to prioritize partnerships that promote responsible mining practices and benefit local communities, as detailed in the DFC’s strategic priorities.

The DFC indicated it will continue to assess investment opportunities and work with African partners to build resilient and sustainable supply chains.