Washington, DC — A Meeting with Members of the African Diplomatic Corps. Linking U.S. and African Small Business Enterprises
The Constituency for Africa (CFA) convened a meeting on Tuesday, December 4, 2001 with members of the African Diplomatic Corps to seek their input and advice on the implementation of CFA's Africa Trade and Investment Policy (ATRIP) initiative.
As part of this CFA ATRIP initiative, this was the first of an ongoing series of meetings with the African Ambassadors and Economic Counselors to continuously review, discuss, and agree on an integrated approach between CFA and the African representatives in the U.S. With the African Growth and Opportunity Act (AGOA) as the trade and investment policy framework, the CFA approach involves the development and implementation of a strategy to facilitate the full participation of U.S. and African small businesses in a new, two-way trade and investment relationship between the U.S. and Africa.
Specifically, CFA wanted to hear, and will continue to seek, the African viewpoint in regard to AGOA, AGOA implementation, and small business participation. Approximately 35 representatives of the African Diplomatic Corps attended this session. The Honorable Lauri J.
Fitz-Pegado, President of Fitz-Pegado International and a member of the CFA Board of Directors, moderated the session.
Background
CFA has recently been awarded a grant by the U.S. Agency for International Development (USAID) in support of USAID's Africa Trade and Investment Policy (ATRIP) Program. Under this grant, CFA will focus its efforts on strengthening the U.S.-Africa trade and investment relationship by focusing on the three central themes of ATRIP:
(1) AGOA Implementation; (2) Trade and Investment Policy Reform; and (3) Business Linkages.
CFA's approach includes working with the U.S. and African public and private sectors to assist in the development of the appropriate policy framework and in the development of sustainable vehicles to support the linkages between business enterprises, with a particular emphasis on small and minority-owned businesses. An initial ATRIP planning meeting was held in September 2001, hosted by ChevronTexaco. Approximately 40 representatives of the public, private, and non-governmental sectors participated in that meeting.
The December 4th meeting was a "by invitation" session with the African Diplomatic Corps, and had as its focus on obtaining input and advice from this group, a critical partner in the successful implementation of the ATRIP initiative. There were approximately 35 participants at this two-hour session.
The meeting agenda, included in Attachment 1, included a brief overview of the CFA ATRIP program and an introduction to one component, the planned African Embassy Trade & Investment Internet Portal Concept. The majority of the time was spent in discussion with the African Diplomatic Corps representatives on issues critical to consider for successful ATRIP implementation.
CFA ATRIP Program Overview
Because of the importance of AGOA in fostering trade with Africa, an update on AGOA implementation and current issues were briefly summarized. The primary implementation issues identified were:
- Country eligibility - Eligible products under expansion of Generalized System of Preferences (GSP) - Compliance with conditions for apparel benefits - U.S.-Sub Saharan Africa Trade and Economic Forum - Technical assistance
It was also noted that, even with the issues identified affecting AGOA implementation, there have already been some significant increases in trade to and from Africa since the adoption of AGOA. It was noted, for example, that U.S. exports to eleven AGOA countries increased by 100 percent in the first six months of 2001. In the same time period, U.S.
imports from four AGOA countries, Senegal, Seychelles, Eritrea and Madagascar, also grew by over 100 percent.
The CFA ATRIP program initially includes four key partners for its implementation:
(1) African Diplomatic Corps (2) U.S. Small Business Administration (SBA) (3) Howard University Small Business Development Center (SBDC), and (4) African Development Foundation (ADF).
The four program objectives include:
- Strengthen institutional capacity within each African Embassy's Commercial Office - Increase business linkages with U.S. and African small business enterprises - Improve two-way information flow between U.S. and African private sector interests - Ensure that small businesses fully participate in opportunities created by AGOA.
The initial implementation period of the CFA ATRIP program is November 2001-November 2002. After this initial twelve-month period, CFA plans to launch an ongoing trade and investment initiative incorporating all lessons learned from this initial, "pilot" period.
Currently there are five primary activities proposed by CFA for the ATRIP program. These include:
1) African Embassy Economic Trade and Investment Counselors' Forum Initiative. This year, CFA has already convened at least six meetings with the African Commercial Counselors Corps to identify issues and challenges for them. Another meeting is tentatively set for December 12, 2001 at the Ralph Bunche Center at Howard University in Washington, DC. It is intended that these meetings will be held monthly, similar to the monthly Ambassador meetings held at Africare.
2) CFA Town Hall Meeting (THM) Series. CFA has held Town Hall Meetings since 1997, with strong participation by the African Diplomatic Corps and a strong emphasis on trade and investment and other issues seeking to strengthen the U.S. government policy environment towards the continent of Africa. Fifteen to twenty THMs are proposed for 2002-trade and investment will be an important component of each THM for the year.
The schedule and list of sites should be available by early January 2002.
3) Small Business Outreach. In the U.S., along with the THMs, the SBA and Howard University's SBDC will be key resources in supporting and enhancing CFA's outreach efforts to reach small and minority-owned business enterprises (SMEs). Likewise, CFA will expand its network throughout Sub-Saharan Africa by developing and strengthening relationships with "CFA-like" organizations and with Investment Promotion Agencies, chambers of commerce, and local and regional trade organizations throughout SSA. It is expected that a database of companies will be developed.
4) Small Business Roundtables and Workshops. These will be held in both the U.S. and Africa as a mechanism to foster dialogue and interaction with U.S. and African small businesses, bilateral and multilateral development organizations, domestic and international financing institutions, and other relevant project and transaction support resources.
5) Small Business Trade and Investment Missions to Sub-Saharan Africa.
There are two trade missions of U.S. small business enterprises planned for 2002, with the possibility of two additional trips being held in 2002 or 2003. While a decision has not yet been made on which countries will be part of the trade missions, the preference will be for those actively working with CFA. Over the project life, the objective is to have trade missions to all AGOA eligible countries.
6) African Embassy Internet Portal. This is intended to provide "one-stop" information on individual African countries and businesses, and link to existing sites on export promotion, export financing, etc.
(This is further explained in the next section of this report).
As part of the implementation of the ATRIP program, CFA also hopes to develop strategic partnerships with individual African Embassies. These partnerships would address such concerns as industry sector linkages for potential trade and investment ties as well as barriers and challenges to AGOA implementation. CFA would then work to develop specific plans with each embassy in developing trade and investment programs for small businesses that are relevant to each country's needs.
African Embassy Trade & Investment Internet Portal Concept
LEI Corporation, a small business partner of CFA on the ATRIP program, provided an overview of the planned Global Portal Network (GPN). This is the technological tool that LEI will provide through the ATRIP program, which will create and support linkages between small and minority businesses in the U.S. and their African counterparts. This network is intended to provide the consular network and their partners a global platform that supports a comprehensive range of public and private initiatives and needs. The software facilitates the connection of:
- local, national, and regional government agencies to each other, - intermediary associations and networks with each other as well as to their local communities, - organizations and government agencies, and - businesses to each other, to their customers, and to domestic and international markets.
The Consular or Embassy Portal Network portion of the GPN will enable governments to offer e-Procurement opportunities for their suppliers and buyers by utilizing Internet applications to conduct business. Some of the procurement activities that can be performed electronically include:
- Requisitioning - Purchase order transmission - Notification of electronic quotation requests and electronic quote response for informal bidding - Receipt of goods and services
The Embassy Portal can also provide information on a wide variety of other country specific information including:
(1) visa applications and other consular services (2) country economic information (3) information on business development and investments, and (4) foreign policy.
This network can also facilitate communication between and among the network members, Ambassadors, Commercial Attachés, and other key staff.
It will enable these individuals to take advantage of the full communication tools of the portal and engage in real-time communication with each other over a secure GPN interface.
Discussion
The three principal areas of discussion focused on AGOA, the ATRIP program, and how to work together to help U.S. and African small businesses.
AGOA. Most comments were received about the implementation of AGOA I.
It was noted that there are now eleven African countries that have U.S. apparel markets. African businesses are still learning to access U.S. markets. Non-English speaking countries tend to get missed even though they are about half of the countries in Sub-Saharan Africa. Since most ventures are in agriculture as well as in textiles, U.S. Department of Agriculture (USDA) involvement is needed. An example of this is in South Africa where USDA inspectors are providing training on how to meet U.S. import requirements in these markets.
One country representative noted that in this first year of AGOA implementation, there has been an upsurge of business inquiries. This has almost overwhelmed the staff capacity to respond and is much higher than in past years. AGOA seems to have helped sensitize the U.S.-African connection. It was also noted that in the U.S., because there is so much happening, one can "starve" in the land of plenty; it is difficult to access and manage all the information that is currently available.
Several cautions were put forth. It was stated that for the most part, U.S. and African businesses ignore each other. In part because the U.S. was not a colonist, current African markets are 40 percent European, while only 8 percent American. It was also noted that many European countries have import promotion offices for helping developing countries. While a key component of AGOA is providing liberalized access to the U.S. market for African exports, there are no U.S. resources in place to assist African countries and companies throughout the complete process of exporting goods and services to the U.S.
Several participants expressed concern for simplicity in the process. They felt the intent of AGOA was to do this, improving and simplifying access of African exports to U.S. markets as long as the countries met certain conditions. It was felt that the U.S. should do all it can to give improved access to imports. Organizations such as U.S. Customs, USDA and the U.S. Commerce Department should be easier to access and provide more assistance to AGOA importers. The rigid U.S. Customs interpretation of AGOA was noted by one participant.
One country, Kenya, was asked to share its utilization of AGOA. They noted that Kenya has had a textile industry since independence (1963).
Trade to the U.S. in textiles did well until 1994, when quotas were put on some Kenyan textiles. There were believed to be two possible reasons for this:
(1) imports were growing too fast for the U.S.; and (2) some believed, but never proved, that there were transshipments being made.
The AGOA legislation addressed the issue of transshipments and removed quotas. Kenya worked to meet visa rules requirements and was the first country to be designated eligible. Kenyans then went on a promotional tour to investors. They are looking at the feasibility of revitalizing the cotton industry because of its potential help and linkage to the textile industry. There are export zone schemes that have worked. A coordinating council regarding private sector-government policy has been established. Additionally, the private sector is currently certifying textiles, not the government.
Several comments addressed AGOA II in a general way. It was noted that for AGOA I, African Ambassadors sent a memo to the U.S. Congress in 1996; for the current AGOA II legislation, the U.S. has not sought any input. One participant felt that even further legislation after AGOA II might be needed.
ATRIP Program
Since it is counter to U.S. policy to help importers, there is no mechanism for one stop shopping for Africans exporting to the U.S. This makes the job of the African Commercial Counselors critical. Since most Counselors are overburdened with responsibilities here, CFA wants to know how it can best present support that is helpful to the Counselors through the ATRIP program. CFA wants to provide some training and information on the systems of the U.S. Department of Commerce's Commercial Service (with 130 overseas and 90 U.S. offices) in handling U.S. exports. However, CFA would like to know how important it is to the Commercial Counselors to understand the relevant systems, structures, and programs of the Commercial Service regarding export promotion. CFA would like feedback on the perceived benefit of assisting Commercial Counselors in identifying those processes that are not as resource extensive and might be adaptable in support of African businesses to promote their exports.
One African participant noted that in their country many companies, chambers of commerce, manufacturers' associations, and state governments are making business links directly without using the Embassy. Another noted that the U.S. still doesn't know much about Africa and what business opportunities may be available. It is important to allay fears about trouble spots on the continent in the context of overall economic activities.
It was suggested that for each Town Hall Meeting held by CFA, the local SBDC is linked in through the Howard University SBDC. In addition, links should be made with States that have offices in African countries, some of which finance programs including trade missions to Africa.
Links with all U.S. port cities should be made because of their access to handle imports and exports to Africa. A database of such connections is suggested. There also needs to be involvement of groups such as the U.S. Export-Import Bank (to help SMEs get guarantees to export to Africa), the World Bank, and the U.S. Department of Commerce.
One participant noted that SMEs are divided into three types in Africa-two of which should be the focus of the CFA effort-(1) indigenous production (kente cloth, art, and the like)-stimulate with appropriate outlets to encourage indigenous crafts; (2) manufacturing-focus on, especially because of potential value added to the economy; and (3) service-which are not as important at the current time in increasing wealth. For manufacturing ventures, advisors from the U.S. were suggested to help these businesses start and develop sufficiently.
Another participant suggested that since the U.S. doesn't have import promotion offices, there is a need to work from Africa to help and promote exports. The ADF programs in 15 countries were noted for supporting small and micro-businesses. It is intended to demonstrate through AGOA how these African small businesses can participate in export opportunities to the U.S. and Europe. As suggested earlier, it was stated that for successful African small business participation in exports, there is need for technical assistance, marketing, and financial assistance-especially in products "beyond textiles". "Beyond textiles" means addressing supply chain issues such as supporting organic cotton production (as is done in Uganda), helping organizations to meet Generalized System of Preferences (GSP) product/manufacturing standards for export, and finding linkages to U.S. markets to export materials.
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Representatives from the Howard University SBDC noted that a number of students from African countries are learning how to write business plans and have intentions to start small companies. The idea was raised that perhaps these students can receive some support from their Embassies to, for example, be intermediary traders or serve in some other business support functions.
Several comments were made about the website/portal. One was to recognize that pooling is needed because, for the most part, larger Embassies such as Nigeria and South Africa are large enough to do what is needed on their own. It was suggested that since the African Development Bank, USAID, and the World Bank do the most procurement in Africa currently, they have significant information about the countries they are working with (such as can be found in the U.S. Congressional budget) that would be helpful to potential U.S. business partners with Africa. It was noted that websites need to be kept up-to-date and contain a broad base of information on business issues in working with the country, as well as other issues-the Kenyan example shown during the LEI presentation was referred to.
SME support. Several participants noted that it was important to understand that the definition of a small business in the U.S. (up to 500 employees) included most large businesses in Africa.
For small business finance (capital, loan guarantee, trade finance) to be successful, several participants indicated that it was important to have groups such as AfDB, Overseas Private Investment Corporation (OPIC), and others "in the room" at the same time in order to resolve issues at once. It was noted that U.S. minority firms cannot get access to finance easily, and that African small and micro enterprises cannot generally get access at all.
Regarding outlets for products, the role of joint ventures between U.S. and African companies was stressed. The need for technical assistance (as summarized under the ATRIP program) also applies in this section.
A participant noted that the Corporate Council on Africa Summit held recently in Philadelphia, Pennsylvania had few African small businesses present because of the cost. In addition, few African-American businesses participated. The suggestion was made that the location of these meetings should be rotated-perhaps to Africa the next time. It was also suggested that since one-half of African countries are non-English speaking, American companies need to put forth more effort to do business in Francophone countries.
Conclusions/Next Steps
In summary, CFA challenged the African Diplomatic Corps on the importance of having an active partnership with CFA for the ATRIP program to be a success. CFA has taken this challenge because of the success of its working relationship with the African Diplomatic Corps on several key issues, including the fight against the HIV/AIDS pandemic.
Commercial Counselors are especially key in understanding what is working and what is not during the ATRIP program implementation. A key challenge is whether a private sector or nonprofit mechanism(s) can be identified to provide a "one-stop" source for exports and imports if the U.S. government cannot. It will be important for all involved in the ATRIP program to remain focused and to do a few things well.
The next planned meeting will be December 12, 2001 at Howard University's Ralph Bunche Center. For its success, participation by a significant group of African Commercial Counselors is critical.
Translation will be available as needed by African students at Howard University.
The schedule of the 2002 Town Hall Meetings should be available in early January 2002.
