19 April 2019

Africa: How the BUILD Act Can Invigorate U.S. Economic Ties

Photo: allafrica.com
Rep. Ed Royce and Ambassador Robin Renee Sanders
guest column

Since the U.S. BUILD Act was signed into law last October, many people across Africa as well as members of the Africa Diaspora have been asking what this global initiative might do to help revitalize American engagement with the continent. The answer is: quite a lot!

The goal of BUILD or the -- "Better Utilization of Investments Leading to Development Act" – is exactly what the American private sector has long sought.  BUILD does a number of positive things to boost the U.S.-Africa economic, business, and development relationship: it checks China's growing economic influence in Africa; creates more robust and flexible investment tools for US companies to use; and BUILD expands how America's development funding will promote Africa's job creation, support entrepreneurship, and help grow Africa's small and medium-sized businesses.

Helping American companies compete against subsidized Chinese firms

The BUILD Act establishes the United States International Development Finance Corporation (USDFC) and replaces and adds new business tools, including doubling the lending authority of the soon-to-be transformed U.S. Overseas Private Investment Corporation (OPIC).

The USDFC will focus on facilitating private sector capital, and skills development of low and lower-middle-income nations - the economic level at which many African nations fall. The new USDFC also will assist in helping African countries transitioning from nonmarket to market economies, even more important today as the continent's 55-nations recently formed the Continental Free Trade Area (CFTA), creating a $2.4 trillion market. The CFTA, if realized, would further open-up opportunities for US goods, services and the African private sector.

Make no mistake - BUILD is about aligning U.S. development assistance with U.S. foreign policy objectives.  But BUILD's upside for African nations is that the USDFC will help them achieve their objectives too, such as modernizing their economies, and increase job opportunities and skills training for their citizens, particularly for women and small businesses. And it supports a "Connect Africa Initiative" focused on information technology, transportation infrastructure, logistics, and value chain development, especially for Africa's all-important agricultural and energy sectors.

The other good news is that the BUILD Act is bipartisan legislation, in keeping with what has been a tradition. Since the late 1990s, Congressional Republicans and Democrats have worked together on Africa issues to pass key laws.  This includes the African Growth and Opportunity Act (AGOA), landmark legislation that has drawn investment to Africa and improved the economic well-being being of innumerable Africans.

Bipartisan support means that BUILD will be durable and suggests its possible expansion in the future.

BUILD and the new USDFC are powerful instruments that should create opportunities in African countries eager for jobs and capital to spur economic development. U.S. businesses active in the region will be able to expand using additional financing tools. More importantly, BUILD will modernize America's antiquated development finance capabilities so they can address the challenges of the 21st century and increase U.S. exports and jobs.

The right mix and the right time   

BUILD is a needed response to China's rapidly expanding economic presence in Africa.  Today Chinese companies are the dominate foreign investor in many African countries.  Unfortunately, the practices of many of these companies are harmful.  Labor standards are low, quality can be shoddy, and corruption often underlies Chinese deals.

The USDFC will help U.S. businesses better compete against state-subsidized Chinese firms.  That will offer Africans more options for potential business partners and the benefits of working with U.S. companies that operate with more elevated standards.

Then there is Africa's stability. which is good for U.S. national security. We recognize that economic growth can help stabilize nascent and evolving democracies. The USDFC can play a role in this regard. Its contribution to encouraging market-driven economies can aid in promoting stability.

Creation of the USDFC reflects what many of us who have served in the U.S. government have wanted for many years – more support for American businesses in Africa to boost their competitive edge, especially as a counter to China. This also supports what African nations have said they want to see – a more diversified U.S. private sector operating in the region and more sustainable development and social sector initiatives.

It is the right mix at the right time, and if the United States is going to be competitive in Africa, BUILD is a timely must-do benefiting both Americans and Africans.

We should keep the BUILD Act and its wonderful objectives in view to ensure that it is properly implemented. We must work together to encourage our African partners to see BUILD as an outstretched message that the a vibrant business relationship is both important and potentially very strong.

Ed Royce is former Chairman of the U.S. Congress House of Representative Foreign Affairs Committee, who began his Congressional career in 1992, representing Southern California's 39th District until departing Congress after 26 years. He is a well-respected Africa and Asia policy expert who traveled extensively in Africa, and is a Policy Director at Brownstein Hyatt Farber Schreck.

Robin Renee Sanders is currently CEO of FEEEDS Advocacy Initiative which focuses on Africa development, and FE3DS, LLC, which works on business strategies for Africa. A former U.S. career diplomat who served as ambassador to Nigeria, Republic of Congo, and the West African regional organization ECOWAS, holds a doctorate degree in information systems and communication, is the recipient of six State Department awards and several Africa Diaspora advocacy honors for her work with Africa small businesses. She is the author of two books – The Rise of Africa Small & Medium Size Enterprises and The Legendary Uli Women of Nigeria.

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