United States and Africa to Strengthen Trade Through AGOA and Private Sector Collaboration
By Kestér Kenn Klomegâh
With over 1300 delegates at the US-African Business Summit held mid-July in Gaborone, Botswana, the main focus was on mapping out strategies to strengthen trade and economic relations between the United States and Africa. Majority of the speakers emphasized reviewing and widening collaboration between governments, while others underlined the importance of the private sector as the key driver in achieving robust economic growth in African countries.
African leaders together with corporate business executives and
majority of the participants called for extension of the Africa Growth
Opportunities Act (AGOA) which grants African countries the freedom to
export products tax free into American market. It is the traditional
market from where most of them earn revenues for their national budget.
Renewing
the African Growth and Opportunity Act AGOA immediately would remove
uncertainty about the future of the pact and allow for suppliers and
partners to better plan and maintain investments in African economies,
ministers said during discussions in Botswana.
Chairman
of the Board of Directors for the US Corporate Council on Africa (CCA),
Dr. Jeffrey L. Sturchio, underlined the importance of collaboration
between governments and private sectors, describing partnerships as
vital ingredient for achieving robust trade and economic targets during
the previous years.
The Corporate Council on
Africa organized the mid-July summit as a follow-up to the December 2022
US-African Leaders Summit in Washington under the patronage of
President Joe Biden where the White House and the United States offered
$55 billion for tackling various development projects across Africa.
African
leaders urged renewal of the long-standing Africa Growth Opportunities
Act (AGOA), which gives some African countries preferential or even
tax-free access to the US for their exports. The agreement is due to
expire in 2025, and African delegates at the summit want the deal
renewed without much delay. As already known, AGOA has been credited
with creating employment in Africa and bolstering exports to the United
States.
"It is also our earnest hope that in
consonance with the letter and spirit of the U.S.-Africa Leaders Summit,
the Biden administration will renew the African Growth and Opportunity
Act initiative, which expires in 2025," Botswana President Mokgweetsi
Masisi, addressing delegates gathered in Gaborone. "The AGOA renewal
now, with expanded mandates, will give a strong signal and confidence to
the markets and serve as a catalyst for Africa's industrialization and
inclusion into the global value chains."
Florie
Liser, chief executive and president of the Corporate Council on Africa,
which organizes the U.S.-Africa Business Summit, said there is a need
to examine AGOA in light of the newly established African Continental
Free Trade Area (AfCFTA). And United States is exploring opportunities
that the African single market offers.
A lot has
changed in Africa and beyond since AGOA came into practical operation
more than two decades. Florie Liser pointed out that "the advent of the
African Continental Free Trade Area is fostering much closer economic
and commercial integration on the continent, which will spur the
creation of regional and continental value chains and increase value
added across key sectors. In many ways, the question is how best we can
support this development.”
The Atlantic Council
Africa Center produced a report titled - The Future of U.S.-Africa Trade
and Investment, which analyzes the future of the AGOA. The report was
issued at the summit.
Frannie Leautier, a senior
fellow at the Atlantic Council and the report's lead author explained
that extending or renewing AGOA, the idea is to realize the potential of
AGOA for long-term development through greater certainty, planning and
skilled up support for capacity development and investment flow.
The
first recommendation is straightforward: just extend it. The second one
is to provide longer-term certainty about AGOA eligibility because
investors are waiting for that.
He said the act
"should be renewed by the US Congress for at least a ten-year period as
soon as possible." There was also a call by ministers for the AGOA rules
to be streamlined and made less cumbersome in order for more countries
to be able to benefit more from the program.
"There
is a compelling case to reauthorize the AGOA ," wrote Daniel F. Runde
and Thomas Bryja for the Washington DC-based Center for Strategic and
International Studies (CSIS) in a new paper on calling for AGOA to be
renewed.
According to reports, not all African
countries benefit from AGOA. Some, like Ethiopia, Mali and Guinea, were
barred because of coups and human rights violations. These African
countries were not invited to the Washington December gathering. South
Africa's eligibility is being reviewed over the alleged sale of arms to
Russia.
South Africa has been the biggest
beneficiary of the 23-year old AGOA act in monetary terms, largely
thanks to the car sector. With current geopolitical changes, it fears to
loose this traditional market opportunity and the United States. The
South African media has also reported that President Cyril Ramaphosa
sent senior members of his cabinet to Washington to discuss South
Africa's trade and the future of AGOA.
The White
House in November told this author in an email response to media enquiry
the criteria for inviting African governments and the primary goal was
to strategize a broad inclusive gathering of high-powered delegations
from across the African continent, but a number of African countries
were blacklisted.
It explained that four countries
were not invited because they were suspended by the African Union (AU)
following military coups and counter coups. These four countries –
Burkina Faso, Guinea, Sudan and Mali – were suspended by the AU and were
not invited. All the four countries not invited are currently run by
strong men who took political power by the barrel of guns.
According
reports monitored by this author, the U.S.-African summit discussed the
emerging global order, changing geopolitical and economic issues and
also offered enormous funds for various development projects as well as
for good governance and human rights. Under the plan, Washington is
focusing on existing challenges, especially those relating to peace and
security, food security to climate change and poverty alleviation across
Africa.
The subsequent high-level dialogues are
expected to set the scene for reviewing the opportunities for the United
States and corporate leaders from various African public and private
sectors, review thoroughly how to strengthen trade and overall economic
partnership between the United States and Africa.
Scott
Nathan, chief executive of the U.S. International Development Finance
Corporation, who is leading the U.S. government delegation at the
summit, pledged continued support for Africa. "The United States is
focused on what we will do with African nations and people, and not for
African nations and people. We work to deepen and understand our
partnership, amplify African voices and support the empowerment of
Africans," according to Scott Nathan.
Zambia's
trade and commerce minister, Chipoka Mulenga, said his country had
benefited from the trade agreement but remained "at the bottom of the
benefits of the AGOA platform" due to a lack of the industrialization
needed to produce more "value-added products" rather than merely
exporting raw materials such as minerals or agricultural produce.
If
the U.S. government want to see AGOA succeed in Africa, it must support
African countries to industrialize to give value addition. Mokhethi
Shilele, trade minister from Lesotho cautioned against a complete revamp
of AGOA for fear of delaying the act's renewal. "There is a sentiment
that AGOA should be reformed or changed but I’m indifferent to that
because if we push for that how are we going to get it renewed this
year?”
Atlantic Council views an interconnection
between the AGOA and new African Continental Free Trade. The future of
US-Africa trade and investment, policymakers in the US and Africa must
decide the basis for stronger US-Africa trade going forward. With the
African Growth and Opportunity Act (AGOA) set to expire in 2025, the U.S
has an opportunity to update what its economic offer for Africa.
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United States and Africa to Strengthen Trade Through AGOA and Private Sector Collaboration
By Kestér Kenn Klomegâh With over 1300 delegates at the US-African Business Summit held mid-July in Gaborone, Botswana, the main focus was on mapping out strategies to strengthen trade and economic relations between the United Sta