Increasing U.S. Exports to Sub-Saharan Africa Holds Huge Potential, Huge Challenges

“The U.S. is losing Africa because it will not invest in Africa,” said Peter Hansen, a D.C.-based lawyer who specializes in African investment law. “The U.S. wants to sell to Africa but does not want to buy or invest there.” Hansen called the African Growth and Opportunity Act an “economic irrelevance and strategic distraction.” The U.S. applied an Asian model to Sub-Saharan Africa, a region without the economy of Asia, he said. “We did not take any steps to turn them into South Korea. We just said be South Korea.” Hansen still advocated for a renewal of AGOA, however, which is set to expire in 2015.

Stephen Lande, president of international business advisory group Manchester Trade Limited, said an enhanced AGOA should be one part of the U.S. strategy to increase exports to Africa, the topic of the subcommittee hearing. AGOA will compliment HR-1777, introduced last month by subcommittee Chairman Chris Smith, R-N.J., which aims to boost exports to Africa by 200 percent in 10 years; and last year’s African Investment and Diaspora Act (here), Lande said. He also recommended creation of a Transatlantic South Partnership, something beyond a trade agreement, a “whole of government approach” that would incorporate investment and development goals for Africa. This will require work across Congressional committees and federal agencies: Financial Services will have input on investments, for example, while the U.S. Agency for International Development will have input on development. Even other countries should be involved -- the U.S. could leverage upcoming trade talks with Europe to boost African exports: “We’re doing a transatlantic pact with you, let’s make sure it extends to Africa,” said Lande, who spent 12 years in the U.S. Trade Representative’s office and was instrumental in creating the Generalized System of Preferences program.

The U.S. should look at its African export strategy and ask “are we doing it the best way possible,” Lande said. “We cannot have eight different committees all setting up what we’re going to do in Africa.” The confusion extends to business attempting to export to Africa, said Barbara Keating, president of technology company Computer Frontiers, which has worked in 34 African countries and has offices in four. The U.S. government is providing plenty of resources to improve Africa, she said. “But where to go and what is really available is a hit or miss affair.” Programs and initiatives end up being an “amorphous resource pool” with so many bureaucratic hoops to jump through companies don’t even try to access what’s available, she said.

Keating too recommended increasing investment in Sub-Saharan Africa, especially in light of China’s ramped up investment in the region; a warning echoed by every witness at the hearing. American investment and export policy has to be taken “outside the framework of how we feel about Africa,” said Sharon Freeman, president of the All American Small Business Exporters Association. “China doesn’t care how it feels about Africa.”

Instead of cash flowing into select pockets of the region through a “byzantine aid system,” the U.S. should create investment and tax treaties across Africa: treaties that would make it easier for U.S. companies to begin laying export roots in the region, Hansen said. It is ultimately investment that will drive Africa’s development, Hansen said. Corruption and issues like child labor or poor working conditions will continue to arise, but that should not stymie U.S. investment. “We should not let concern for these inevitable tragedies prevent us from investing in Africa,” he said. “Because that’s the greater tragedy.”