The US Fiscal Cliff has been avoided but there would be budget cuts which would certainly mean less money for US efforts in Africa, it has emerged.

Stephen Hayes, the CEO of the Corporate Council on Africa said: “To engage economically in Africa, we need financing. In periods of austerity, uncertainty, and fear, which a jump over the cliff portends, US banks will not be loaning money to many citizens, and are far less likely to support businesses wishing to invest in Africa.

“We have already seen the shrinkage of loans for the American public. Why should we think that banks would be more likely to loan for ventures in Africa, which are deemed often unfairly as ‘high-risk’? Our economic engagement with Africa will shrink at a time when other nations such as China, India, the Arab states, and our traditional economic competitors of Europe are engaging Africa because all realize the enormous importance Africa represents to our economic and political futures.”

He said Africa was the last great untapped marketplace on a continent full of nearly unlimited opportunity. He added that if the US wanted a healthy economy, it needed to be engaged in the international marketplace and Africa was that marketplace.

A “fiscal cliff” of massive tax hikes and drastic spending cuts in the US was avoided at the 11th hour on Tuesday. The House of Representatives voted to approve a bill which averts tax increases for the middle classes – and the possibility of sending the country into recession.

The bill – which also stops massive spending cuts – was approved by 257 votes to 167 after being supported earlier by the Senate. President Barack Obama welcomed the deal and said it was just one step in a broader effort to strengthen the economy.

He said: “Thanks to the votes of Republicans and Democrats in Congress I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing tax hikes that could have sent the economy back into recession.”

The vote came just hours before financial markets reopen following the New Year holiday. In early trading on Wednesday Asian markets were up over 2 percent.

Some House Republicans had wanted to amend the bill to incorporate more spending cuts, but they dropped the idea. In the end, 172 Democrats and 85 Republicans voted in favour of the bill.