Capital Investment Group
22365 Barton Rd. Suite 204. Grand Terrace, CA 92313
951-750-8429 Fax 909-498-0352
1600 Pennsylvania Avenue
NW Washington, DC 20500
7/5/10
Dear Mr. President, Happy Fourth of July. In addition to everything else on your plate, I am sure creating jobs for Americans is your number one priority. When you hear the cries of unemployed Americans, I am sure you can’t wait to do something about it. My number one fear is that our unemployment problem may become more chronic unless we take drastic steps. Even though experts like Paul Krugman are calling for more stimulus funding, I am not sure that congress will approve any more stimulus. Your export initiative of doubling U.S. Exports over the next 5 years is very promising. However, we have to look at it from a different angle. We need a new export market, like the giant continent of Africa. Here’s why, the domestic consumption may not solve our unemployment problem this time because the American consumer has now discovered saving. Our traditional export markets like Europe and Asia may not be enough either. That leaves us with creating capacities in African countries where the market exists to absorb American exports for the next 50 years, just like Europe did for the last 50. The United States built Europe, we built Japan and Korea. U.S exports several billion dollars worth of products to these countries, while exports to Africa are very small. If we had not made the effort to build, nurture, and support those three economic powers after the war, it is unlikely we could look up to them to absorb the amount of exports they absorb from our economy. That is exactly why the U.S. needs to help build the African economy. Africa is the new frontier in consumption growth over the next 50 years. The population will exceed 1 billion people, and the economy will be over $1trillion strong. According to the author of Africa Rising, “50-150 million Africans are classified as economic elites with spending power similar to our working class citizens in the west” “There are 350-500 million people in the African aspiration classes from households with stable jobs” These consumers will demand the same products that American consumers demanded over the last 50 years, like housing, appliances, automobiles, and infrastructures. The question is how do we merge our needs with the African consumer for mutual benefits? According to a Washington Post article, “Why U.S. needs Africa, “ the author, Paul Kagame, stated, “The United States has committed less to African markets than the emerging economies of Asia have; China guarantees nearly 30 times more in loans for investment in Africa than the United States does. Africa’s needs are so great that there is ample room for both U.S. and Chinese investment. Increased U.S. investment in Africa would translate into more opportunities for U.S. companies, with high potential for profit flowing back to the U.S. economy.” For example, Nigeria has a population of 150 million, projected to grow to 300 in the next thirty years. Currently, Nigeria generates less than 5,000 megawatts of electricity. Nigeria needs a minimum of 100,000 megawatts. The US has the manpower and equipment to build both the power plants and the grids to power Nigeria. At the rate of $1million per mega watt, the US can line up an export market of $100 billion immediately by helping Nigerians to find a solution to their power problem over the next ten years. This will create thousands of jobs both in the US and Nigeria. With a stable power supply, the Nigerian economy can grow at a minimum rate of 8-12% per year. This will lead to a middle class that will demand more American products. According to the Nigerian minister of Agriculture, Nigeria needs a minimum of 2 million agricultural tractors. Nigeria also needs to build a minimum of 2 million homes per year for the next 30 years to accommodate their citizens. Therefore, if a company like John Deer were to establish an assembly plant in Nigeria, all the engines will come from the U.S. Jobs will be created in both countries. We can extend this process over several industries and create tax incentives for companies that can create a minimum of 10 new jobs that depends on a partnership that creates jobs in both countries where the goods are partly assembled in Nigeria and the raw materials comes from the U.S. If we can sign up 100,000 manufacturers into the program, who each creates 10 jobs, that is 1,000,000 jobs we can create within months. Nigeria recently signed into law, the oil and gas local content law. This is a 20 billion dollar industry that is designed to help Nigerians participate in the oil industry. But for Nigerians to realize these goals, they need experienced oil and gas servicing partners who can provide the initial equipment and training. So we need to encourage American companies to form joint venture partnerships with enterprising Nigerians, provided such partnerships create more jobs on both ends. Every consumer and industrial product is in short supply in Nigeria, and by extension Africa. According to a Wall Street Journal article, David Rubenstein, co-founder and managing director of Carlyle Group, stated that “he expects economic growth in Africa to outpace every other region over the next decade.” So rather than rely on the same old trade partners, congress and the Obama administration needs to work together and create tax incentives that can open new export markets in the fast growing and emerging African market. These are some of my ideas and I would be glad to assist in any way possible to implement them. Thank you for your time.
Regards.
Toyin Dawodu
Managing Partner
Capital Investment Group
22365 Barton Rd. Suite 204
Grand Terrace, CA 92313
Phone: 951-750-8429
Fax: 909-498-0352
Email: toyin@capvestgroup.com
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