The enormous potential of a strong trade partnership between the U.S. and Africa will be a key takeaway from last week’s inaugural U.S.-Africa Leaders Summit in Washington.
Hosted by President Obama and drawing representatives from 47 African countries, the three-day conference was aimed at strengthening trade and economic ties with sub-Saharan Africa. Obama announced at the conference that together the U.S. government, World Bank and businesses will invest a combined $33 billion in Africa’s economy.
Six of the world’s 10 fastest-growing economies are in sub-Saharan Africa. The continent has the world’s fastest-growing urbanization rates. Wireless and Internet use has been growing at five times the global average for the past ten years. By 2050, one in four workers in the world will be an African.
This means African countries will not only to continue grow as a major exporters; Africa stands to become a major market for U.S. exports. Already this is being reflected in specific cases. For example, U.S. goods exports to Nigeria in 2013 were $6.5 billion, up 28.8 percent from 2012, according to the office of the U.S Trade Representative.
But the U.S. has competition. China’s 2013 exports $75 billion to Africa compares to $25 billion from the U.S., according to the International Monetary Fund. The IMF also reports that in the same year China imported close to $90 billion in goods from Africa, compared to $35 billion in U.S. imports. Nevertheless, the US and China trade volume is expected to increase as both countries deepen their engagement with Africa.
Legislation such as the Africa Growth and Opportunity Act, passed in 2000 under the Clinton administration, helps narrow that gap. AGOA is due to expire in 2015. Congress should renew it without delay. While recognizing that humanitarian aid remains critical to economic development, AGOA also acknowledges sustainable economic growth is necessary to stability. AGOA grants trading benefits, such as no tariffs or most-favored-nation trading status to African countries based on their progress toward a market-based economy, rule of law, economic policies to reduce poverty, protection of internationally recognized worker rights, and efforts to combat corruption. As of August 2014, 41 sub-Saharan African countries qualified.
These are reasons why Congress should renew AGOA, as well as continue to support the Export-Impost Bank, the Overseas Private Investment Corp.(OPIC) and the Millennium Challenge Corp. (MCC), agencies that provide pro-business, free enterprise support for Africa.
But policies that foster greater trade and investment can only go so far. African nations, too, must embrace reforms that encourage entrepreneurship and open markets. Although corruption, poverty and civil strife remain pressing problems, many African nations are reforming their economies and moving towards open market in order to address these problems. Too often bad news eclipses reports of genuine progress toward peace and prosperity.
One of the best examples can be found in Katanga, a province of the Democratic Republic of the Congo. This region, located in the southern part of the country, is rich in both agriculture and minerals. For years, its natural resources were plundered by corrupt officials until Moise Katumbi, a successful Congo businessman, became governor of the province in 2007. Katumbi combined energetic enforcement the DRC’s export laws with private sector partnerships with foreign companies seeking an environment where rule-of-law prevailed. The province’s wealth is now being returned to its citizens in the form of new schools, roads and clean water initiatives. His popularity is such that when he sought to step down in 2011, nearly 1 million people signed a petition asking him to stay on.
Last week’s summit was a watershed moment on the path to a great future of U.S. and Africa trade relations. There are still challenges ahead, but with the U.S. government and industry’s support and encouragement of the continent’s transition to democratic government, free trade and rule of law, African nations have a bright future as significant participants in the 21st century global economy.
Ayodele is the director of Initiative for Public Policy Analysis, a public policy think-tank based in Lagos, Nigeria.