macroafricaintel | Prosper Africa – America’s renewed outreach

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

In June 2019, America’s deputy commerce secretary Karen Dunn Kelley launched the President Donald Trump-led American government’s “Prosper Africa” initiative at the biennial Corporate Council on Africa’s US-Africa Business Summit, which was held this year in Maputo, Mozambique. This was the first cabinet-level engagement by the Trump administration on the continent.

Kelley echoed commerce secretary Wilbur Ross’ views two years earlier, at the same summit held in Washington DC then, about Africa’s relatively high economic growth, increasing urbanization and expanding consumer class.

And even as Prosper Africa is by far the most significant African policy initiative of the Trump administration thus far, it could be objectively inferred the continent may still not be a major priority for it by the fact that it was a junior commerce secretary that presented the signature programme on the continent.

Still, and as mentioned by Kelley, America remains the largest donor of aid to Africa. American trade with Africa has been declining, however. US exports to Africa are down 32 percent from a 2014 high, for instance. While not mentioning China directly, Kelley suggests the decline can be attributed to the “increasingly sophisticated but too often opaque business practices of foreign competitors.”

Still, Kelley notes other reasons for the decline in American trade with Africa. Many US businesses seem ignorant of their government’s “export, investment and risk-mitigation tools”, for instance. Another reason, Kelley says, is that American officials working on the continent do not cooperate well enough with one another. In her words, they “too often worked in silos”.

US companies also face significant constraints when doing business in Africa. Poor infrastructure, scanty data, shallow capital markets, hard currency shortages, exchange rate volatility, complicated regulatory regimes, cumbersome customs practices and local content requirements are some examples.

Trump’s Africa initiatives thus far are as follows. The Better Utilization of Investments Leading to Development (BUILD) Act signed into law in October 2018 enabled the establishment of a new frontier markets-focused International Development Finance Corporation.

Months earlier, in April 2018, Trump also signed legislation to increase the number of African countries utilizing preferences under the African Growth and Opportunity Act (AGOA) and increase the flexibility of the Millenium Challenge Corporation. In the same year, the Trump administration also launched “Power Africa 2.0” to help facilitate solutions for the continent’s power shortages.

The American government is also looking to negotiate bilateral free trade agreements (FTAs) with interested African countries. In this regard, it has already signed memoranda of understanding with Cote d’Ivoire, Ethiopia, Ghana, Kenya and Mozambique. But how would these potential bilateral FTAs fit with the recently operationalised African Continental Free Trade Agreement (AfCFTA)?

Judd Devermont, director of the Africa program at the Centre for Strategic and International Studies (CSIS) in Washington DC and former US national intelligence officer for Africa is unequivocal about the answer when I asked him in mid-July. Devermont argues they would not. While acknowledging the significance of the AfCFTA, he asserts “the US government has been disappointingly absent as a voice in support of continental integration.”

Simply put, Prosper Africa is largely a coordination framework. The American government will be providing a one-stop shop that synchronizes the resources of more than a dozen US government agencies to provide technical assistance, capacity-building and so on for the facilitation of transactions. It also aims to ease the trade barriers that constrain American businesses, and indeed African ones as well, on the continent.

Is countering China the key motivation?
There are doubts about whether Prosper Africa is really intended to help African countries. Some believe the motivation is largely China’s currently dominant position on the continent. Such suggestions are not unfounded.

Trump’s national security advisor John Bolton did not mince words about his country’s geopolitical goals on the continent in his mid-December 2018 speech at the Heritage Foundation in Washington DC.

“Under our new approach, every decision we make, every policy we pursue, and every dollar of aid we spend will further US priorities in the region,” Bolton said in what he described as “the Trump administration’s new Africa strategy”.

Bolton also identified China and Russia as key competitors on the continent, arguing China and Russia use corruption and indebtedness to hold African countries “captive”.

CSIS’ Devermont says “Prosper Africa is more than merely an effort to compete with China”, however. He argues it is about increasing American trade and investment in Africa. To buttress his point, he asserts Africa “has been a consistent priority for the United States, and successive US administrations have developed signature initiatives to advance this goal – even before China’s dramatic rise in Africa.”

“Prosper Africa is really about addressing longstanding challenges within the US government that have impeded support for the US private sector”, Devermont adds. However, he acknowledges China’s expansion may have added a new urgency and focus, but considers it inaccurate to interpret the US effort solely in terms of “great power competition.”

Ways to maximize benefits for both sides
In a recent publication by the Brookings Institution, a public policy thinktank in Washington DC, Landry Signe, Rubenstein Fellow at the Africa Growth Initiative of the Brookings Institution and Shanghai-based Eric Olander, managing editor of the China Africa Project (CAP), a multimedia platform on China’s engagement with Africa, suggest US policymakers and business leaders should focus on manufacturing and intra-African trade instead of commodities.

Brookings’ Signe and CAP’s Olander also suggest the US embrace the AfCFTA, which is expected to boost consumer and business spending on the continent to $6.7 trillion by 2030 and annual manufacturing output to $1 trillion by 2025 and create over 14 million jobs.

“For Prosper Africa to benefit both the US and Africa, both sides need to…consider each other as friends”, add Signe and Olander. That is, “Prosper Africa should focus on winning the hearts of African leaders and citizens, as well as addressing Americans’ lack of trust in African countries as reliable business partners.”

An important point raised by Signe and Olander is the need for post-AGOA certainty. Thus far, the Trump administration has not made known whether AGOA would subsist beyond 2025. That Prosper Africa does not clarify the American government’s position on this or announce an alternative is a major shortcoming.

CSIS’ Devermont disagrees. “The U.S. initiative is neither about AGOA nor trade preferences for quota and duty-free entry of certain goods into the United States. I would not interpret that as a weakness or an indication of its sustainability. Prosper Africa is about improving US government coordination to support trade and investment whereas AGOA is focused on access to US markets for African products. AGOA’s future most likely will be addressed in a different venue and in conjunction with the US Congress.”

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