US looks to redefine its African footprint

GOOD ONE: Obama shares a joke with colleagues, including President Kikwete.

By John Sambo
Monday, April 27, 2015

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WASHINGTON - Earlier this month, the President’s Advisory Council on Doing Business in Africa (DBIA) came out with its first report on how the United States can strengthen commercial ties with Africa.

DBIA, which is chaired by Dominc Barton who is deputised by Karen Daniel, is a follow-up of President Barack Obama’s hosting of the US-Africa Summit last year.

The report holds back no punches. Africa’s growth is about much more than just resources. Three sectors contributed more to growth from 2007 to 2013 than resources, namely wholesale and retail trade (22% of real GDP growth); agriculture (21%); and transportation and telecom (12%). Resources meanwhile contributed just 11% of growth in this period.

Twenty-eight of the top 30 economies recorded positive growth from 2000 to 2013, and 11 of the top 30 averaged rates above six percent per annum over that period. For companies focused on a few key countries, the top ten economies account for 80% of economic growth – these include six in Sub-Saharan Africa: Nigeria, South Africa, Angola, Kenya, Ethiopia and Ghana; and four in North Africa: Egypt, Algeria, Morocco and Libya.

Over the last decade, trade between the United States and Africa has grown at a healthy rate of seven percent per annum.

By 2013, US merchandise trade with Africa totaled $86 billion, with U.S. imports from Africa ($51 billion) outweighing US exports to Africa $35 billion). Over the last decade, US companies have invested $10 billion into African countries, second only to $11 billion from the United Kingdom.

Over 400 companies generate more than $1 billion in revenue in Africa, and many are American companies such as IBM, Hewlett-Packard, General Electric, General Motors, Proctor and Gamble and Ford. Over the past 20 years, Bloomberg has provided news, media, analytics, and critical trading infrastructure in Africa and has plans to double staff on the continent. Walmart has plans to open 63 new stores in five countries by December 2016.

In 2001, the U.S. share of Africa’s trade was 13%, the highest level of any country, well ahead of China’s share at the time of 3 percent.

The US share in Africa’s trade has since declined to 7 percent in 2013, and has been well overtaken by China’s share, which has grown to 14% over the same period.

Moreover, the Chinese have announced plans to reach $400 billion in bilateral trade by 2020.

The Council puts forward eight recommendations that could hold the key to changing things for the better.

Capital Markets: Support capacity building activities for African financial regulators, exchanges, and financial market participants through training programs, partnerships, and knowledge sharing.

For example, this could be enhanced through funding of the existing US Securities and Exchange Commission technical assistant program.

Institutional Investment: Mobilize more capital from institutional investors by launching an investor roadshow and creating an investor toolkit.

Trade Facilitation: Provide assistance to African countries during implementation of the World Trade Organization Trade Facilitation Agreement. Emphasize automation, global best practices and harmonization through interagency coordination and partnership with the private sector.

Cold Chain Development: Optimize the perishable supply chain through analysis and training programs that enable technological improvements to cold chain, storage, and packaging facilities, thereby reducing post-harvest food loss.

US-Africa Infrastructure Center: Enhance the ability of U.S. companies to compete for major infrastructure projects with a dedicated US-Africa Infrastructure Center.

Use the Center to compile a database of forthcoming infrastructure projects in Africa and provide a focal point for US interagency coordination to enhance US competitiveness in African infrastructure projects.

Healthcare Infrastructure: Allow more flexibility in existing U.S. Government healthcare assistance for Africa for broader healthcare infrastructure needs in Africa; expand the use of healthcare public-private partnerships; and focus efforts to help US small- and medium-sized businesses pursue opportunities in this sector.

Manufacturing and Services: Initiate government-to-government dialogues, including with Regional Economic Communities (such as the East African Community), to address US manufacturing and services companies in Africa and industrialization in African countries.

Perception of Doing Business: Improve the perception of doing business in Africa and highlight trade opportunities by publicizing success stories and best practices, developing unique marketing partnerhips and platforms, and creating an online Doing Business in Africa toolkit.

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