As President Obama continues his trip to Africa this week, his agenda reflects not just the changing face of a dynamic continent, but the elevation of trade and investment in Africa as a top priority for the United States.
Much of the impetus for moving economic issues to the forefront of a policy that has largely focused on counterterrorism, democracy and development in recent years has come from the private sector, but also from China, India, Brazil and other emerging economies more deeply engaging with African countries.
We spoke with Rosa Whitaker, founder of The Whitaker Group and the former assistant U.S. trade representative for Africa who was the driving force behind the African Growth and Opportunity Act, about how the U.S. can catch up. Below is an edited version of her remarks.
The State Department briefing on this trip listed trade and investment at the top in terms of priorities for this trip. What does that say about U.S. Africa policy today?
I think it's good that trade and investment top the list because for too long the U.S. has seen Africa through the prism of vulnerabilities rather than possibilities. A lot of that changed with President Clinton when he introduced his African Growth and Opportunity Act and really had a policy of partnership, not paternalism. But there was a lot of concern that Obama's Africa policy was really NGO- and aid-based. So I think it's very good that they listed trade and investment because that helps to give clarity.
But I think when you look at all of the things that will be covered in this short trip, one can conclude, and I think what many people are saying is there's no defining, identifiable Obama policy towards Africa. And so what many of us are hoping is that this trip will be significant in defining the Africa policy and legacy. That is one of the things we hope will be a deliverable.
What are the primary economic issues facing each of the three regions he'll visit??
One thing facing the three regions and what is happening all over Africa that is truly exceptional – and hopefully President Obama's trip will bring a global spotlight to this – is that Africa's living standards and annual growth rates have increased more than 30-fold over the course of a human single life. There are very few, if any, parallels in human history where you see that kind of progress. That is the big story and the big development that is not being talked about enough, especially in America.
But despite this astonishing economic development, too many people feel disconnected from this progress on the continent. And so there are several crosscutting economic issues that are holding back progress that I hope President Obama will address. One of the big issues is youth unemployment, the youth bulge. You've got 70 percent of the population in sub-Saharan Africa under the age of 30; 60 percent of the unemployed are young people. So the question is this demographic dividend, people talk about the dividend in Africa, is it going to be a dividend or is it going to be a disaster? We really have to focus on job creation, private sector development, and foreign investment to address this.
I think the other issue is infrastructure deficits. I mean, no economy in the world has developed without infrastructure, particularly in the power sector. I understand that the president will roll out a power initiative in Tanzania; I think that's very good. Africa needs to spend about $90 billion a year to upgrade its infrastructure, and so that's going require a lot of investment, and that's going to be a catalyst for growth in so many areas because one thing that represents the highest cost of doing business in Africa is the lack of infrastructure. It is also hampering intra-Africa trade and Africa trade with the rest of the world.
How much is the president's agenda is being driven by China's economic engagement with Africa?
I don't think the trip is a direct result of China's engagement in Africa, but the U.S. government has definitely taken note. In 2009 China replaced the U.S. as Africa's largest trading partner. I remember in 2000 when U.S. trade with Africa was about $30 billion and China's was just about $10 billion. And now China is at $160 billion.
China has incentivized their companies, some $40 billion that they have made available to their companies. I'm not saying that America should do it the way China is doing it, but I am saying we are not doing all that we can do. China, for example, is also incentivizing companies through tax benefits, and that is something that President Obama said today in Senegal that he's looking for ways to expand the African Growth and Opportunity Act to achieve that.
The South African ambassador once told me something very interesting. He said that the view from Africa was in line with a song by Crosby, Stills and Nash that says, “If you can't be with the one you love, love the one you are with.” And I think that Africa's primary choice of partners would be American companies, but if we're not there, they are going to go with whoever is willing to partner with them to bring development.
Beyond the rhetoric being offered ahead of this trip, what are the concrete policies the American private sector and investment community would like to see as a result of this visit?
That rhetoric and those pronouncements have to be translated into comprehensive policies. One way to do that is to institute U.S. tax incentives for U.S. companies to invest in non-oil and non-extractive sectors in Africa. If we told U.S. companies that if you invest in Africa in sectors with development dividends, you can repatriate your profits back to the U.S. tax free, or if you import goods from Africa with significant African content, you get a development tax credit. That would be significant, and I don't think it would cost us a lot because also these initiatives are two-way.
I think he needs to make AGOA permanent.
He needs to expand OPIC, the Overseas Private Investment Corporation. They are returning money to the Treasury, and that can support U.S. companies in doing more in Africa.
Also, President Obama needs to engage more. Look at China, the China–Africa Forum, where heads of state come and talk to the leadership, and what China has committed, more than $40 billion. Just last month, Japan had their summit with African heads of state. They committed $32 billion, $6.5 billion in infrastructure alone. Turkey, Brazil, India. We cannot be comfortable leading from behind. Africa represents the global swing vote, and it's not swinging in our direction. We are missing out here on Africa's strategic importance to the U.S.
You've been bullish on Africa as a growing consumer market. Yet U.S. exports to Tanzania, the last stop on Obama's trip, were just $284 million versus $1.8 billion from China. How important is it for the U.S. to export more to Africa as its economies grow?
We need to look at Africa as a potential market. It's got a consumer base of 300 million people, and when we look at our growing exports to Africa, growing by over 23 percent in one year to $21 billion, it's not something we can ignore. So I don't know why, it just seems counterintuitive that America has retreated right as Africa has taken off.
One must also take a broader look at the new Africa. You can't just look at Tanzania because Tanzania is part of a block. It's part of COMESA, the Common Market of East and Southern African States; it's part of the East African Community; it's a part of the Southern African Development Community. COMESA has 21 countries in it. So, for example, the East African Community is a market of over 130 million people, so when you consider doing business with Tanzania, increasingly it is easier to use Tanzania as a gateway to doing business with all of those other quickly fast growing markets.
Robert Nolan is an editor at the Foreign Policy Association and producer of Great Decisions in Foreign Policy on PBS. You can follow him on Twitter @robert_nolan. Hannah Gais is assistant editor at the Foreign Policy Association and editor of ForeignPolicyBlogs.com. You can follow her on Twitter @hannahgais
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