Thursday, July 10, 2014

Pre-summit Africa Forum focuses on trade and development - Part I

Africa Forum at Gallup Organization HQ in Washington
Starting with the Nigerian ambassador's prediction that by the “last few days of July, you will know the Africans have arrived” in Washington, a forum in anticipation of the first U.S.-Africa leaders summit convened in the U.S. capital on July 10 to discuss trade, development, and governance.

Sponsored by several organizations – FEEEDS Advocacy Initiative, Gallup Poll, The Africa Society of the National Summit on Africa,, and Operation Hope – the forum was held in the headquarters of the Gallup Organization and featured three panel discussions, three shorter presentations, and remarks by five African ambassadors to the United States.

The first panel, on U.S. and African perspectives on African trade, was moderated by Ambassador Robin Sanders, CEO of the FEEEDS Advocacy Initiative, and featured remarks by Florie Liser, Assistant U.S. Trade Representative for Africa; Jean-Louis Ekra, president of the Africa Export-Import Bank, and Ambassador Tebelelo Mazile Seretse of Botswana.

The stage had been set for the discussion on trade issues by Nigerian Ambassador Adebowale Adefuye in his welcoming remarks, when he said that Africans “don't want aid anymore. We want trade; we want access to the market” in Europe and North America.

Ambassador Sanders had pointed out that the U.S.-Africa leaders summit had been authorized in the original AGOA (Africa Growth and Opportunity Act) legislation nearly 15 years ago, so the summit itself is deeply connected to trade.

Ekra offered some general points to begin the discussion, such as how 70 percent of African trade is in commodities. For example, he said, virtually every country on the west coast of Africa exports oil, and more than 70 percent of all the cocoa in the world is produced in four West African countries. Trade in the southern part of the continent is dominated by minerals, while East Africa is producing natural gas and tea.

Ekra's larger point was that all these products are mostly unprocessed and that processing commodities adds value to them, and value-added, in turn, creates jobs.

One barrier to developing value-adding industries, he said, was the lack of infrastructure, starting with unreliable sources of electrical power – despite huge deposits of energy such as oil, gas, and coal – but also including a deficit in roads within and between countries.

The lack of infrastructure means a lack of intra-African trade, a point taken up by Liser, who explained that African regional trade is the smallest in the world. Only 11 percent of trade is among people on the continent, compared to 30 percent of trade in Latin America and 60 percent in Europe.

Despite this, she noted, six of the world's ten fastest-growing economies are in Africa. The barriers to regional trade have an effect on the competitiveness of African businesses. It's difficult, she said, to become competitive globally if you are not first competitive locally or regionally.

That is one reason that African countries have set a goal of continent-wide free trade, so that “if you invest in one country, you have access to an entire continent.”

For her part, Ambassador Seretse agreed on the importance of infrastructure development, something particularly significant for landlocked countries like Botswana. One of the top priorities of SADCC – the southern African customs union and trade area – is to improve infrastructure, transportation, and clearance systems in order to facilitate trade across the subcontinental region.

Liser also pointed out that the U.S. policy emphasis on trade and investment over the past few years is a “change in paradigm” that acknowledges how “Africa is the place to go to if you want a high return on investment” (ROI).

American policymakers have come to realize, she said, that AGOA's focus on reducing tariffs was not sufficient to make African businesses competitive. The problem was not asking, what do Africans have to sell to Americans? The United States would import African oil even in the absence of AGOA, and probably most other commodities, as well. But finished or semi-finished goods need a boost. “Unless you have the capacity to produce competitively,” she said, “duty-free [status] doesn't matter.”

She also noted that utilization of AGOA remains low even after more than a decade since its initial implementation. Forty countries, she said, “exported $4.9 billion in non-oil” products. The focus has to be on more productivity to sell more value-added goods to Europe, the United States, “and each other.”

Every AGOA-eligible country, she added, should have a national export strategy, identifying the top three products it would like to export and then develop public-private partnerships to make that sector more competitive.

As for recommendations for changes in policy, Ekra said that countries have to stop being afraid of the trade treaties they sign but don't implement.

He gave the example of ECOWAS, one of the earliest such treaties. The other countries in the ECOWAS zone were afraid of being overwhelmed by Nigeria. They feared an influx of immigrants from Nigeria if the borders were opened. What happened was the opposite, however. Ghanaians, for instance, who had gone looking for work in Nigeria had a reason to return home once the barriers were lifted and new opportunities became available within ECOWAS but outside Nigeria.

Ekra said there is a need to foster entrepreneurship and to support the building of a regional value-chain. He reiterated the necessity of building infrastructure and said “Power Africa has to be non-stop.”

He also said there has to be a reduction of non-tariff trade barriers in agriculture because, when it is fully developed, “Africa can feed the world.”

Sanders then posed the question: What about China?

Liser replied that the “essence of the U.S. government position on Africa” is that the continent needs “many partners.” Different partners bring different facets to the mix, she said.

“We are not in competition with China in Africa,” Liser said. “We hope Africans are establishing the best deals for themselves” with Chinese partners, because if Africa is benefiting from relationships with China, “it's good.”