Opinion
Weekend Reading: Putting U.S. – Africa Trade in Context
Africa’s top trading partners. COURTESY/U.S. Senator Chris Coons
According to Standard & Poor’s, the U.S. government shutdown ‘… shaved at least 0.6 percent off of annualized fourth-quarter 2013 GDP growth …’ In simple terms, the 16 days of partial government government was, at US$24 billion, even more valuable than every ounce of business the American private and public sectors do with sub Saharan Africa.
Basically, even if sub-Saharan Africa is home to 7 of the top 10 most rapidly expanding markets, even when African economic growth rates have been 5-6 percent per year since 2000; and is also the second most populated continent with a middle class that has nearly tripled since 1980 to 350 million consumers, the overall value of America’s annual outlay in Africa – trebled over the past 10 years – is only about US$23 billion.
Pffft!
Without necessarily scoffing at anyone or anything, US$23 billion in trade is pittance. And while there’s much blame to go around, the essence here is not the green shoots of hope we mention above. Time must not be taken to understand the culture. No. There must be a total paradigm shift; in Malcolm Gladwell proportions! Like Daren Acemoglu and James Robinson argue in their Why Nations Fail, this dearth of business between the U.S. and Africa has nothing to do with African culture, geography or ignorance of policies, but man-made political and economic institutions that underlie economic success.
From the American side, it is going to take a conscious effort to recognize that Africa is not those lifeless children covered by flies and in dire need of aid, help and handouts. Fortunately, Michael Froman – Obama’s man at the U.S. Trade Representative’s Office – and his staff seem keen on ensuring that the meme is changed. Following his appointment earlier this year, Ambassador Froman undertook a journey to Addis Ababa for the 2013 African Growth and Opportunity Act (AGOA) Forum, planning to listen to what the Africans wanted and how they wanted to ensure that they received a more equitable amount of business and resource base from the United States. After all, like the U.S. Chamber of Commerce suggested, business between the U.S. and Africa supported about 100,000 U.S. based jobs. In an economy like this, perhaps a pivot towards doing more business might even increase these numbers a hundredfold!
Nonetheless, a proactive U.S. government must have a partner at the other side of the table. Of course, we must remember that the current trade regime between the U.S. and Africa is not dominated by a negotiated agreement. AGOA, signed by Bill Clinton at the sunset of his presidency is the most portentous thing between America and sub Saharan Africa’s 39 member countries. And no: The African countries do not come to any negotiating table. A program is a program and AGOA is, at its core, simply a trade provision that allows countries to export their stuff duty free to the U.S.
But this is where Africa gets things a little lopsided. Just because someone gives you something does not mean that you do not have any rights and obligations or responsibilities. You have a right to administer the ‘given’ as best as possible, and you must, under all circumstances, seek to either improve the circumstances or ‘teach’ the ‘giver’ how best to approach their gift-giving abilities.
This is not a matter of being the polite Africa – one steeped in good manners and grace. This is exactly like being given a big motor vehicle to travel between your house and your neighbors’ compound only a few meters away. Of course, if you know that the person who gave the gift is coming back every year, you may bring it out and shine it – drive around a bit – and try to show them that things are perfect.
Invariably, this back and forth can grow old; especially if the person that gave you the gift can see that you’re not using things as well as you ought to. Thus, one must get up and either ask for a more efficient vehicle – or demand that they be treated like a negotiating partner. For the latter part, everyone knows that Africa is not ready to be an equal partner. Africa is not fully or appropriately integrated. Africa neither has the effective supply chains or distribution networks, nor does it have the requisite or favorable ‘rules of origin’ environment.
Conversely, Africa has a mouth. It must speak up. And it must speak up in one voice or Acemoglu and Robinson’s book will become a proper imprecation. Worse still, America will shut down for 20 days – and shave even more money that could be going to doing business with an ambitious continent of over 1 billion people.
The Habari Network Editorial Board
Friday – October 25, 2013