Johannesburg — In Biden’s second year of office, US-Africa relations are on the radar, which is hopeful for increased trade flows and investment. The African Centre for the Study of the United States at Wits University has curated insights from some of our leading associates and thought leaders, unpacking the implications of the Biden/Harris one-year anniversary for Africa.
Dennis Matanda, Chief Executive of Morgenthau Stirling based in Washington DC, says:
The first thing Africa should do is recognise is that foreign direct investment is more effective than remittances and overseas development assistance (ODA) at generating sizable economic growth and development. And because the United States is still the biggest source of global investment resources (cumulatively, over US$ 6.15 trillion by 2020), it matters less that we are in the first, second, or fourth year of the Biden Administration.
What matters is that African countries must change their entire strategy to attract foreign capital because something is not working. Illustratively, between 2000 and 2020, the fifty-five Member States of the African Union drew less than 5 percent of global FDI. Worse still, all fifty-five Member States of the African Union attracted a cumulative 0.8 percent (about US$ 47 billion) of United States Direct Investment Abroad (USDIA) for the same period. These figures are especially alarming since the American private equity and venture capital markets raised over US$ 790 billion in 2021 alone.
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On the other hand, the Biden Administration is continuing the Trump Administration’s Prosper Africa. However, although Prosper Africa is a multi-agency/whole-of-government approach, it will not achieve its objectives if the African countries do not emphasise foreign direct investment as a priority for themselves and the Americans. As far as we are concerned, the Americans are ready to do business.
Unless the Africans themselves popularise the fact that the continent is home to the world’s largest free trade area by sheer size and Member States, the world–and especially the American private sector–will never know that there is an incredible opportunity to do business in the continent. The point here is that if you really understand American investment as direct investment abroad, the focus of USDIA is not on trying to take advantage of market access programs. American investment in Europe, Asia, and Latin America focuses on entering the region, working on forward and backward linkages, and then producing goods and services to supply the market. And as the statistics show, most American investment abroad sends less than 5 percent of their total profit back to the United States. The rest is ploughed back into the businesses within which they invest. What better way to do business on a continent than via a trade regime that has such incredible support?
In this case, as the Biden Administration enters its second year, and with the Democrats perhaps losing control of the House, Africa must ramp up its support for the African Continental Free Trade Area (AfCFTA) because it is a strategically and politically strong business project (which the Republicans generally support). Also, as those that worked on the Trade Facilitation Agreement (TFA) may remember, the American private sector was keen on providing resources for trade facilitation. The AfCFTA is the ultimate in trade facilitation infrastructure pieces.
For the past 20 years, African countries have not played a sizable role in ensuring that the African Growth and Opportunity Act (AGOA) serves their interests. In the same vein, African countries have not been ambitious in pursuing their agendas in the United States via interested parties such as those that want to do more business on the continent. And we frame this point like this because American policy is shaped by interested parties. However, there has, ostensibly, been no interest from the Africans themselves on ensuring that programmes like AGOA fit their specific purposes beyond the textiles and apparel industry. Three years before AGOA expires–in the second year of the Biden Administration–the time is ripe for Africans to enter into discussions with the Senate Finance Committee and the House Ways and Means Committee to prevent AGOA from expiring in 2025. While the AGOA extension from 2015 to 2025 was meant to be the longest and last extension, there is no hard rule preventing AGOA from being made permanent. It does not matter that the GSP is undergoing challenges. The best example for Africa is the Caribbean Basin Initiative. It was made permanent.
African countries should choose simple Governance dimensions so that there can guarantee peace and security on the continent. The point here is that there is a symbiotic relationship between governance, economic development, and peace and security. Or better still, there is a positive correlation between governance and peace and security.
No one is going to change the narrative on Africa unless the African countries themselves do something about it. No public affairs or lobby firm in Washington DC can burnish the image of an African country as well as the African country working to control its own image. Starting in the second year of the Biden Administration, African countries must prioritise battling the information asymmetry between their opportunities and potential American investors. As I have said before, there is too much dry powder in the United States. The private equity space has over US$ 700 billion to invest, and the average opportunity in the United States garners over US$ 5 million in seed funding. From that perspective, if Africa wants to obtain at least 0.5 percent of this private equity money (about US$ 35 billion) by 2025, the continent must ramp up its efforts to challenge negative narratives (around stability, risk, economic growth, and infrastructure). Doing this will not only help the Biden Administration point to African countries as partners; African countries will see a significant number of doors opening to engage on trade, investment, aid, remittances, and even tourism.
African countries have presented themselves as viable destinations for tourism, but have left the tourism value chain to other players. And in the process, they have allowed others to control access to the world’s most discerning tourists and investors. For example, while everyone knows that there are lions and elephants in Africa, only a handful of the American populace knows that trips to Africa are affordable. In the same vein, Africa is deemed too exotic to go to, and the few that brave the sojourn to Africa talk of hours and hours spent on flights. African countries can do much more about this. They could invest jointly in the logistics of travelling to their respective countries. The assumption here is that no one invests in a country that they did not enjoy visiting. If African countries can project themselves–prime themselves as places for visitors and tourists–they will eventually attract investment. African countries must emulate countries like the United Arab Emirates and its two airline carriers. Qatar has also successfully leveraged its airline to bring tourists to their small country.
Dr. Nicodemus Minde, the United States International University, Africa, says:
The Joe Biden administration came with a positive shift in US-African relations. After a period of slump in the relations, President Biden was able to refocus US interests in Africa. He reignited the trade relations as well as collaborations that range from security, health, and democracy. US Secretary Antony Blinken in his visit to Africa in November 2021 signalled the shift. At a time when the Chinese influence on the continent is at a record high, Biden’s administration can balance this relationship and broaden the engagements with the continent. In 2022, I look forward to US more concerted efforts in dealing with the conflicts in the Horn of Africa (Sudan, Ethiopia and Somalia). I look forward to the US engaging with the African Union on matters of security, economy, health (Covid19) and humanitarian work.
J. Brooks Spector, US expert and ex-diplomat, says:
It is a sombre truth that despite what anyone in the United States — or in Africa — may have been hoping for from the Biden administration when it took office, the energies of the incumbent president and his senior advisors are inextricably being pulled by several national and international crises that now largely occupy most of the government’s attention. Realistically, this leaves little time for Africa.
The need to deal decisively with the Covid pandemic, fatigue with Covid restrictions, political resistance by many to vaccines and other measures, and the knock-on impacts on the economy are key to Biden’s political relevance and — perhaps — the Democrats’ political viability, post-2022. While the Biden presidency continues until 2024, any hopes for re-election rest on dealing effectively with this massive public health question. While few anticipated the sharp spike in consumer price inflation and major supply chain dislocations, these are now uppermost in the minds of voters and thus politically potent since the US’ 2022 mid-term election is just months away.
Meanwhile, internationally, the Biden administration is, simultaneously, engaged with the vast implications of the Ukraine/Russia crisis and the possibilities of a China/Taiwan imbroglio. But there are also the Iran nuclear negotiations and its larger regional implications. There are other foreign policy issues, but these three take up much of the oxygen in the Biden “crisis management conference room.”
True, the US has not pressed the pause button on engagement with Africa as a whole or the individual nations within it. But there is little energy for new initiatives or engagements. Keeping up ongoing support for anti-terror efforts across the Sahel and in Northeast Africa or efforts at strengthening democracy or tamping down violent conflicts collectively largely represent policy continuity. Similarly, relatively modest efforts to encourage American investment in and trade with Africa will be unlikely to grow substantially at this time, even if many scholars and analysts argue Africa’s consumer market — especially among its young and a growing middle class — are significant opportunities.
Ironically, given the other challenges facing the Biden administration, African nations have an unusual window of opportunity to construct their own agenda for action with the US. But it would need to be an agenda that goes well beyond the more usual pitches for more aid. Three candidates present themselves for such an agenda.
The first is trade. It is vital to understand that the African Growth and Opportunity Act expires in 2025 and there is little likelihood in the present congressional climate to renew or extend it. AGOA, as it is usually called, is not a treaty, but is US law passed by Congress that unilaterally extended duty-free access to American markets for thousands of product lines by African exporters as long as those nations met some fairly basic requirements about the rule of law and fair trade.
While not all African nations have taken effective advantage of AGOA, it has been an important vehicle for both value-added exports and job creation for South Africa. Given AGOA’s imminent expiration, it could be very useful for the continent to formulate new comprehensive but realistic trade and export access proposals given the US — perhaps connected to the momentum of the new, continent-wide, free trade pact. This question should be at the top of a continental agenda, especially since experience demonstrates bilateral and multilateral trade pacts usually take more than a half-decade to negotiate.
A second approach could be a comprehensive approach towards combatting non-state actor terrorism and destabilisation that concurrently reaches the US (and other nations) for support, but in an effort pro-actively led by Africans. Such a proposal would obviously be politically delicate, and it would require complex negotiations to reach a consensus for such an initiative among the nations on the continent, but it would almost certainly draw support from outside Africa, including that of the US.
A final continental initiative could be the creation of a comprehensive investment charter setting standards and ground rules for all outside investors. (One model might be the “Sullivan Principles” of the 1980s that set out voluntary but widely supported guidelines for American businesses active in South Africa, pre-1994. Among other things, those guidelines spelled out equal treatment in the workplace for all employees, as well as special initiatives to enhance the lives of a company’s black employees and their families.) In the current circumstances, such a charter could set minimum requirements for transparency and honest dealing by investors and companies across the continent, as well as to help monitor the real indebtedness of individual countries and their various state institutions to foreign investment agencies and banks in order to help avoid debt traps.
These three initiatives — or, even just a post-AGOA strategy, if necessary, to start off — could become the core for a comprehensive negotiating stance by African states vis-a-vis the US and its otherwise engaged Biden administration. Crucially, it would not be Biden’s agenda for Africa but could become Africa’s agenda for future dealings with the United States, regardless of the party in power there.
Dr. Bob Wekesa, Deputy Director of the African Centre for the Study of the United States
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Domestic versus international: Looking back at the Joe Biden-Kamala Harris administration’s relation with Africa over the past year, it is evident that predictions of domestic imperatives would constrain the administration’s focus on the internal scene have been vindicated. The administration has been so focused on matters internal to the US that focus on Africa has predictably not been top of the agenda. The major battle between Biden’s Democratic Party and the Republicans has been legislation on the so-called “Build Back Better” laws. While the Democrats fought hard and passed through the $1.9 billion infrastructure bill last year, the climate and social spending bills, would-be signature legislation for the Democrats have sapped energy and apparently abandoned while the voting rights bill seems likely to be abandoned as well. Add to this the mid-term elections in November this year and one understands why politics at home will hamstring focus on Africa and indeed elsewhere.
Diplomatic appointments: While focus on Africa at the presidential level may be curtailed by political and economic dynamics in such a way as to dampen focus on Africa, it is also true that the US has a solid diplomatic machinery for engagement with Africa. Significantly, the inauguration of Biden coincided with the rise of African Americans in key political institutions: New York Congressman Gregory Meeks as chair the House Foreign Affairs Committee, U.S. representative from California Karen Bass as Chair of the House Foreign Affairs Subcommittee on Africa and congresswoman Barbara Lee, also from California as the Chair of the powerful House Appropriations subcommittee on State and Foreign Operations. From the executive end of things, the Biden administration appointed Linda Thomas-Greenfield, a former assistant secretary on African affairs as US ambassador to the United Nations, Dana Banks as Special Assistant to the President and National Security Council Senior Director for Africa. In the last quarter of 2021, Molly Phee was appointed Assistant Secretary of State for Africa along with the appointment of Judd Devermont, a leading US-Africa policy specialist as Special Advisor to the National Security Council. Indications are that the vacant ambassadorial positions for key African countries such as Kenya and South Africa are on course. All these are great opportunities for Africa’s engagements with the US if well utilized. Engagement with Africa at this operational diplomatic level will take definite shape in 2022.
Policy: The anticipated US policy towards Africa did not materialize and this is understandable. Diplomatic appointments had to be made before thoughts ideas could be crafted into a Biden policy for Africa. The best place to look for a formal US African policy towards Africa includes Secretary Phee’s speech at Howard University in December. From her speech, the overriding US policy towards Africa will be focused on democracy promotion with links to health security, economic growth, climate sustainability, and peace and stability.
Another potential bellwether of US policy towards Africa is Judd Devermont’s piece for the Centre for Strategic and International Studies in which he urges the building and cultivating relations between the US and Africa. It quite likely that a US policy framework towards Africa will be announced this year. The onus will be on Africans to develop and release their own policy framework towards the US.
