US Congress: Obama Administration needs to engage African markets

22 April 2012

Last month, Senators Dick Durbin, Chris Smith and Bobby Rush introduced "The Increasing American Jobs through Greater Exports to Africa Act", which seeks to create jobs by putting trade and investment at the core of Africa-US relations.

"The name of the game right now is jobs, jobs, jobs-and exports mean jobs," said Senator John Boozman in support of the move. "[We need] our small businesses [to] compete with this huge continent that has so much going for it. With 7 of the 10 top emerging economies coming out of Africa, we are almost doing a disservice to our small businesses by not going forward with this legislation".

Back in 2000, President Clinton first moved US policy in this direction upon signing the African Growth and Opportunity Act (AGOA), which aimed to contribute to African poverty reduction by promoting the continent's trade with the US. Under the Act, sub-Saharan African countries are required to annually satisfy the American President that they continue to meet eligibility criteria surrounding labour-rights and devotion to a market-based economy.

George W. Bush went on to strengthen AGOA legislation a total of 3 times whilst in office. As a result, two-way trade more than doubled to $73 billion, while Africa's non-energy exports to America tripled to $3.8 billion.

"AGOA has created an estimated 300,000 new jobs which are largely filled by women, a genuine and cost-effective contribution to poverty reduction," comments All Africa.

10 years on, despite this success, a counter-trend amongst certain elements of government has prevented AGOA from furthering the goal of poverty reduction. Whilst the Obama administration seems to understand the importance of promoting US businesses in emerging markets - Last month Secretary of State Hillary Clinton convened an unprecedented global business conference emphasizing the connection between creating jobs at home and finding new markets abroad - the US is still reducing its commercial presence in Africa.

"Over the last several years, the Commerce Department has closed offices or withdrawn personnel from Senegal, Ghana, Cote d'Ivoire and the consulates in Durban and Cape Town, South Africa. The Department's flagship location in Africa, the Ron Brown Commercial Center in Johannesburg, has been closed and the last Commerce Secretary to visit the region was Don Evans in 2002" (reported All Africa).

The US is ignoring the continent's commercial potential at a time when sub-Saharan Africa is one of the fastest growing regions in the world, and when other countries have began fighting for a share of its market. According to All Africa, China's two-way trade with Africa went from $10 billion in 2000 to $160 billion in 2011. Brazil's trade with Africa quadrupled between 2002 and 2010, and at the start of this year, India increased its 2015 Africa trade target to $90 billion. The EU's aggressive pursuit of Economic Partnerships Agreements with Africa is yet another example of a large power vying for an advantage in Africa.

"Africa is developing a healthy middle class. This is something new they haven't seen before. And, they're hungry for American products," Boozman said. "This bill challenges us to increase exports to Africa by 200 percent and gives us the incentive and a template for how we do that so we can stop this erosion by the Chinese where they are outdoing us by about 3 to 1".

Senator Durbin's legislation would triple current US exports to Africa to $63 billion over the next ten years. According to Congressman Chris Smith, Chairman of the House congressional panel that oversees African issues, "one out of three Africans is considered to be in the middle class - that's 314 million Africans who have escaped poverty and can now buy consumer goods, including those from the United States".

The Bill is currently working its way through the political apparatus, and was last week the focus of federal and policy expert witnesses at a hearing chaired by Congressman Smith. If successful, the bill would create an estimated 315,000 US jobs, and could furthermore be the catalyst to open the floodgates of American investment that will accomplish the goals of AGOA.

Sources: Africa: U.S. Congress Bill Calls on Obama to Engage African Markets, All Africa, 11 April 2012; Increasing Trade with Africa Means Jobs at Home, Political News, 29 March 2012; The increasing American jobs through greater exports to Africa Act, Sierra Express Media, 18 April 2012.

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