US-Africa trade partnerships key to unlocking continent’s trade potential
With US and Africa joining hands in trade partnerships through AGOA (African Growth and Opportunity Act)and other enactments as the West acknowledges the continent’s bright economic prospects, African countries can be expected to play a more prominent role on the world stage and provide new opportunities for people to better their lives.
Over the last decade, Sub-Saharan Africa was home to six of the world’s ten fastest-growing economies and in the next five years, the region’s GDP is expected to grow 30% faster than that of the rest of the world. In the next 35 years, the continent will account for over half the world’s population growth, according to the latest data released by the United Nations.
These trends will give African countries a more prominent role on the world stage, and provide new opportunities for people to better their lives. As African countries assume their new role, they want meaningful economic partnerships that deliver the sustainable, inclusive growth they seek.
As US President Barack Obama said during his visit to Ethiopia last month, “Real economic partnerships have to be a good deal for Africa. They have to create jobs and capacity for Africans.”
By those criteria, the African Growth and Opportunity Act (AGOA) has been tremendously effective since its enactment in 2000. By removing tariffs on exports to the US from 39 Sub-Saharan countries, it has stimulated growth, encouraged economic integration, and created opportunity where it otherwise might not have existed.
Earlier this summer, the US Congress, recognizing these gains and underscoring the strength of America’s commitment to Africa, overwhelmingly approved legislation to reauthorize AGOA for another ten years.
Making the most of AGOA will also require improvement in the infrastructure – physical and institutional – necessary for promoting investment and facilitating trade. The issues that need to be addressed include the lack of reliable, affordable electricity, high transportation costs, and weak and inefficient trade-related facilities.
Africa needs to build its capacity to trade competitively in today’s global economy. That is why the Office of the US Trade Representative, the Millennium Challenge Corporation (MCC), USAID, and other US government agencies are advancing programs like Trade Africa, Power Africa, and Feed the Future to help the continent develop sustainable infrastructure and increase regional integration.
During President Obama’s visit to Africa, MCC made a further commitment of USD 52 million to support a series of similar public-private partnerships that are expected to generate USD 750 million in investments in Africa. MCC could do even more to increase trade capacity and cross-border engagement if it had the authority to pursue regional investments. By investing in cross-border roads or power transmission, for example, MCC could help increase economic activity and promote regional integration.
Such efforts would help African and American exporters alike, including the 120,000 Americans whose jobs are supported by US exports to Sub-Saharan Africa. That is why leaders in Congress from both parties are working to give MCC this much-needed authority.
Even as we consider how to make the most of AGOA’s historic renewal, we need to look beyond 2025 and imagine what a deeper, more mature economic partnership might entail. Of course, we will need to account for emerging economic realities both within and outside of Africa. Already, many African countries are forging more permanent, reciprocal relationships with other developed-country trading partners.
As President Obama made clear at the US-Africa Leaders Summit in Washington DC a year ago, the US is not new to Africa. US has been engaged in Africa for decades, not as a colonial power, but as a partner. And that partnership is based not on extracting resources from the region, but on unlocking growth for all. As representatives from across Africa gather in Libreville, Gabon, this week for this year’s AGOA Forum, US and Africa have an opportunity and an obligation to take that partnership to the next level.