U.S. Should Heed Senators' Warning on Africa

There is a bipartisan push in the Senate to encourage U.S. investment in Africa.

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Sen. Chris Coons, D-Del., watches election returns at the Delaware Democratic Party Election Night at the Queen theater in Wilmington, Del., Tuesday, Nov. 6, 2012.

Stephen Hayes is president and CEO of the Corporate Council on Africa.

In a press conference this week, U.S. Sen. Chris Coons, a Democrat of Delaware and chairman of the Africa Sub-Committee on the Senate Foreign Relations Committee, said that we do not have 10 years before U.S. business will essentially be shut out of Africa by our international competitors and particularly China. Coons proposed a six-point plan for the United States to become more actively engaged in Africa economically, for the sake of the American economy as well as for the sake of our political relationship with the 54 nations of Africa. One need only look at the dramatic increase of Chinese investment in Africa to see that Senator Coons might be right. Chinese investment in Africa edged ahead of U.S. investment on the continent in 2009. Until then the United States was the largest single nation investor in Africa, albeit mostly in energy. Today, only four short years later, Chinese investment is estimated to be three times the investment in Africa that the United States has.

It is an estimated figure that might be even higher. Even the Chinese government is unsure how much Chinese investment there is in Africa. Their official figures do not include investment made from Hong Kong or from off-shore accounts, as one of America's experts on Chinese investment in Africa, Dr. David Shinn of George Washington University points out. Furthermore, a growing Chinese private sector is also investing in Africa separate from the state-owned enterprises so the real figure is likely higher than presented by Senator Coons at his press conference.

Coons is not alone in his concern. Sens. Dick Durbin, a Democrat of Illinois, and John Isakson, a Republican of Georgia, are also leading the charge for the United States to become far more active in the African economies. Durbin has proposed separate legislation that will be re-introduced for passage in the next Congress. The Coons initiative will now be added into the mix. The relationship between Senators Coons and Isakson is a close one and one of the few examples of a bipartisan approach to governance. What these three senators have in common is first-hand experience in Africa and seeing the stream of Chinese companies in nearly every country in Africa they have visited. What they did not see was a heavy presence of U.S. companies. Their concern is that countries will naturally gravitate towards those who are investing in them. Indeed.

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The Coons recommendations are consistent with much of the Durbin proposals and his points are at the heart of our problems in increasing U.S. investment in Africa. Coons calls for a more robust support of African-led initiatives for its own development, particularly as they regard the development of regional, not national markets, and more cohesive infrastructure that allows goods to move throughout the continent more efficiently and effectively, thus reducing what are now massive costs in transportation alone. Regional coordination would also include a harmonization of customs duties and services that would draw U.S. companies to invest in larger markets.  What is not said, but clearly understood, is that our approach to development in Africa must move away from a donor-supplicant relationship and into a more active partnership with African leadership. In so doing our whole approach to AID-based development projects will be under serious review. We must see Africa differently for what it has become, not what it once was.

Coons also calls for the reauthorization of the African Growth and Opportunity Act. While the law has not brought about the economic change that many had hoped, it remains our single-most important piece of legislation towards Africa, and without it we have nothing upon which to build. Many changes are needed to make it more effective but in symbolism alone, and until something replaces it, the African Growth and Opportunity Act is vital to our relationship with Africa.

All three senators also recognize that a key to Chinese investment is the coordination between its top-down approach to government and its growing and thriving private sector emerging from the bottom of its traditional structure. There is a kind of Chinese cooperation on Africa not seen in the United States. The division between government and the private sector in the United States is palpable. Coons especially recognizes that before one can expect stronger cooperation between the public and private sectors in America one must have greater cooperation within the public sector. Coons rightly notes that within the U.S. government alone there are 10 different agencies working on economic programs in Africa, and there is virtually no cooperation or coordination among these agencies. Programs often compete with one another and are frequently at cross-purposes. Both Durbin and Coons call for coordination of the programs under one designated office. Furthermore, many of the programs compete with the private sector programs and businesses. There has to be a better way to run a country.

[See a collection of political cartoons on the economy.]

At the same time we have at least 10 different agencies running economic programs in Africa we have reduced the presence of commercial officers on the ground in Africa. We have such in four countries of the 54 in Africa. The Chinese have commercial officers in every country in Africa. Need more be said on this issue? One might reduce the costs of programs run by 10 different agencies (and many more sub-agencies) and perhaps shift some of that spending to more commercial presence to help U.S. businesses on the ground in Africa.

Ironically, the shift of Senator Isakson from ranking member of the Africa subcommittee to the Finance Committee strengthens the push to address one of the major impediments to the ability of U.S. companies to do business in Africa: a lack of financing. Isakson, as are both Durbin and Coons, is a major proponent for increasing the financing guarantees available to U.S. companies seeking to do business in Africa. There will now be far greater pressure on U.S. financial institutions, and especially on the Export-Import Bank of the United States, to find ways to broaden their support of U.S. business in Africa. The leadership of the Export-Import Bank had objected to parts of the Durbin bill that would require a minimum level of financing for businesses engaging in Africa each year and their objections may have been a major factor in the failure of the Durbin bill to pass last year. It will be harder to block this year with Isakson on the Finance Committee, a committee vital to the Export-Import Bank.

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Finally, Senator Coons recognizes the enormous untapped potential in America of the diaspora community, not only the African-American population, but also of the growing number of African professionals residing in the United States. Coons recognizes that the strength of America has been built through the centuries on an immigrant community, and that we need to recognize that more readily through the African immigrant community as well. Coons calls for the U.S. government and the private sector to work more actively with this part of America so that the whole American economy, as well as Africa, will benefit.

Coons is right. Africa should be one of our highest national priorities. Our relationship with more than a billion people is at stake. Our relationship with the largest emerging market in the world is vital. Six of the fastest growing economies in the world are in Africa. The question is "Why aren't we?"

We are running out of time.

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