Opinion - 'President Biden needs to 'Build Back Better' on Africa'

Opinion  -  'President Biden needs to 'Build Back Better' on Africa'
Rosa Whitaker
Tuesday, 25 May 2021 ~ ROSA WHITAKER

In his first major foreign policy address, Secretary of State Antony Blinken declared the key priority of the Biden agenda—"a more stable, inclusive global economy" that "delivers security and opportunity for as many Americans as possible in the long term."

In an irreversibly interdependent world, Africa is central to achieving this vision. Over the past decade, Africa has accounted for a third of world population growth and is now home to 15 percent of the global workforce—this will likely rise to a quarter by 2050.

Estimates put African consumer spending in 2019 at $3.6 trillion. Africa's share of the world's strategic mineral resources hovers around 30 percent, rendering the continent consequential for everything from nuclear fuel and tech devices to global industrialization and innovation.

As China fully appreciates, Africa's 54 nations have a major say in how multilateral rules are written, including those that will be critical for addressing climate change, nuclear proliferation, global health, trade and sanctions. African countries represent the swing votes in international fora from the WTO to the WHO and the U.N.

It will be challenging to advance President Joe Biden's multilateral agenda given China's economic hegemony and unprecedented sway over Africa's leaders.

A stable and prosperous Africa well-disposed to the U.S. will deliver long-term security and opportunity for Americans.

blinken foreign policy agenda speech900

Secretary Blinken during his first major foreign policy address |  Also see: 2021 Trade Policy Agenda and 2020 Annual Report


The Biden administration inherits from its predecessors, Democratic and Republican, an antiquated policy model for Africa that favors aid over trade—much needed U.S. tax-payer's dollars on a long-failed USAID experiment. By my count, USAID has conservatively spent around $89 billion in the last 10 years alone on aid for Africa.

This has contributed to a bloated and growing aid industrial complex of former USAID employees. They have set up outfits around Washington as NGOs and consulting firms consuming huge sums authorized for Africa in opaque processes. Even the Congressional Research Service, in a May 2020 report, noted that "comprehensive estimates of U.S. aid to Africa and amounts dedicated to specific focus areas are difficult to determine ... raising challenges for Congressional oversight."

American taxpayers deserve to know precisely how much of America's bilateral aid money actually hits the ground in Africa and the return-on-investment ratio. They also need to know the amount and percentage of development assistance, designated for Africa, which remains in the coffers of USAID contractors.

No country in the world has developed economically with an aid-based model—why would African countries be any different? Afghanistan has been among the largest recipients of USAID—$10 billion, as of 2020, yet 47.3 percent of its people live below the poverty line. Vietnam on the other hand, has had a more commercial approach to its economic development model—5.8 percent of its people now live below the poverty line.

Our economic policy toward Africa is faltering primarily because we continue to welcome and build a dysfunctional network of aid peddlers instead of properly incentivizing trade and investment—proven catalysts for job creation and income expansion on the ground where it is needed most.

We need to build on what works. This month marks the 21st anniversary of the historic African Growth and Opportunity Act (AGOA). For a nominal cost to the U.S., AGOA has helped to integrate Africa into the global economy by opening our markets unilaterally to almost everything Africans make, grow or mine in eligible African countries.

Since its enactment in 2000, AGOA countries have delivered nearly $75 billion in non-oil products to the U.S. duty-free. Conservatively, AGOA is credited with generating 1.3 million jobs, largely for women, in Africa's garment sector alone while supporting around 100,000 jobs in the U.S. AGOA is a solid trade and investment-based component of U.S.-Africa policy as are key initiatives under the Millennium Challenge and U.S. International Development Finance Corporation.

We must now marry these sound commercial policy components with tangible incentives that encourage U.S. private investments into Africa. Today, albeit with the best of intentions, we are often doing precisely the opposite, officially telling companies that they risk running afoul of our government's efforts to combat child labor, human trafficking and illicit trade in minerals linked to conflict.

China, on the other hand, has incentivized its private sector and aligned its aid and commercial interests in the region. Consequently, its trade with Africa has multiplied 20 times over the past decade reaching nearly $200 billion in 2019—over three times that of the U.S. China recently outpaced America in foreign direct investment across the continent.

For post-COVID reconstruction, we must reimagine what is possible in U.S.-Africa trade and investment policy. We must disrupt the antiquated aid model and build a bold new approach. We must incentivize the U.S. private sector to invest in Africa in ways that are transformative and mutually beneficial.

To that end, I propose a new, three-pillar, policy approach:

One, boost U.S.-Africa trade. Two, incentivize U.S. companies to invest in Africa. Three, leverage U.S. capital markets to fund the infrastructure needed to knit the continent into the thriving single market envisaged under the African Comprehensive Free Trade Agreement (AfCFTA) that went into effect last year.

There is no appetite in Washington for AGOA's unilateral trade benefits. In preparation for its 2025 expiration, AGOA needs to be renewed with smart trade reciprocity—pillar one. Some sectors have matured in specific countries thanks to AGOA and should, therefore, be considered for graduation from duty-free treatment.

Under this arrangement, the U.S. would graduate mature sectors rather than eliminate AGOA entirely, threatening jobs and livelihoods. Sector reciprocity could be the basis for U.S. bilateral negotiations—"FTA Lite"—with African governments in ways that complement implementation of AfCFTA.

It is also time to include key African products, notably cotton and sugar, excluded from AGOA and subject to outdated tariff-rate-quotas. Agriculture still accounts for more than 60 percent of employment in Africa and is how the vast majority of Africa's poorest make their living.

To connect a continent fragmented by its colonial past, realize the productivity gains promised by its burgeoning cities and make the most of its extraordinary natural endowments below and above ground—Africa needs massive investments in transport, communications and power infrastructure, and in the health and education of its people.

This cannot be left to China. Accordingly—pillar two—I propose that the U.S., as host of the world's largest capital market, lead an international program to raise low-cost financing for African infrastructure projects through bonds to be issued by the pan-continental African Export–Import Bank (AFREXIM). In return for the U.S. de-risking the bonds, each project funded would include a "Buy American" component.

The U.S. tax code was effectively used to lure U.S. companies out of apartheid South Africa. Now—pillar three—we should use the tax code to encourage American companies to invest in Africa. We could work with African countries on enterprise zones—providing tax breaks and/or credits for U.S. private investments in strategic, job-creating sectors in Africa.

Finally, USAID needs to be refocused on humanitarian assistance and disaster relief where it can make a real contribution, rather than development assistance and nation-building. For too long, our Africa policy has been plagued by paternalism and Beltway cronyism. The Biden administration can "Build Forward Better!"

  • Rosa Whitaker, president and CEO of The Whitaker Group, served as the first-ever assistant U.S. trade representative for Africa under the administrations of Presidents Bill Clinton and George W. Bush.

 agoa business connector

View related news articles

US-Africa trade policy faces future uncertainties

US trade policy toward Africa is facing a conundrum. Much has changed in the two decades since the African Growth and Opportunity Act (AGOA) set the framework for trade between the world's largest economy and its poorest continent. Many observers advocate new policies to increase U.S.-Africa trade and investment, especially with Agoa expiring in 2025. Yet the policy path is less clear than when Agoa became law, and the prospects for a...

21 September 2021

Biden eyes up Africa as new trade market, reboots Trump-era initiative

The Joe Biden administration has announced plans to revamp the Trump-era Prosper Africa initiative, as it works to “substantially increase” two-way trade and investment between the US and Africa. With a focus on infrastructure, clean energy and healthcare, the White House said in recent weeks that it would kickstart a new Prosper Africa Build Together Campaign, having also requested US$80m from Congress in additional funding...

01 September 2021

'Rich countries want to strike trade deals in Africa'

“We will be the guinea pig,” said Uhuru Kenyatta, Kenya’s president, before trade talks with America opened last year. A deal would make Kenya only the second African country after Morocco to sign a free-trade agreement with the United States. Officials in the Trump administration called the proposed deal “a model” for future ones. But such bilateral talks jar with Africa’s push for regional integration and with President Joe...

21 August 2021

Biden Administration launches initiative to build US-Africa trade

The Biden administration on Tuesday announced a new push to expand business ties between U.S. companies and Africa, with a focus on clean energy, health, agribusiness and transportation infrastructure on the continent. U.S. industry executives welcomed the interest, but said dollar flows will lag until the administration wraps up its lengthy review of Trump administration trade measures and sets a clear policy on investments in liquefied...

28 July 2021

Biden’s fast-track Trade Authority (TPA) is set to expire this week

President Joe Biden is about to lose one of his main tools for getting trade agreements passed in Congress, dimming the outlook for deals already in the works with the U.K. and Kenya [See trade data below this article]. Trade Promotion Authority, or TPA, fast-track negotiating ability delegated to the U.S. president by Congress, is set to expire on Thursday. [See a FAQ guide here] That power, which was granted under the Trade Act of 1974,...

29 June 2021

Charting a new course in US-Africa relations: The importance of learning from others’ mistakes

This is an exciting time for Africa. In early January 2021, the first shipments traded under Africa Continental Free Trade Area (AfCFTA) preferences left Ghana bound for Guinea and South Africa. Since its signing in March 2018, the rapid implementation of the agreement raises hopes of a more inclusive and prosperous future for the continent. How global trading partners support this project could set the tone of relationships for decades to...

22 June 2021

'The renewal: US-Africa relationship'

In his first allocution to African leaders at the virtual African Union Summit in February, recently elected United States President, Joe Biden, reiterated his administration’s commitment to rebuilding partnerships with Africa and re-engaging with international institutions such as the African Union. Biden set out his foreign policy priorities, pointing towards multilateralism and a healthier US-Africa relationship. Within days of his...

13 April 2021

'Biden Administration dampens Kenya's hopes for bilateral trade deal'

The Biden administration's plans to review foreign trade policy and refocus it on America's economic recovery have thrown long-running free trade negotiations with Kenya into disarray. In a development that casts doubts on the future of a bilateral free trade agreement (FTA) with Kenya, United States Trade Representative Katherine Tai has informed Kenyan Minister of Industrialization, Trade and Enterprise Development Betty Maina of...

05 April 2021

2021 trade policy agenda and 2020 annual report

The 2021 Trade Policy Agenda and 2020 Annual Report of the President of the United States on the Trade Agreements Program are submitted to the Congress pursuant to Section 163 of the Trade Act of 1974, as amended (19 U.S.C. § 2213). Chapter IV and Annex III of this document meet the requirements of Sections 122 and 124 of the Uruguay Round Agreements Act with respect to the World Trade Organization. The discussion on the Generalized System...

26 February 2021

Top US lawmaker vows to reverse previous administration's Africa policy

The new chairman of the US House Foreign Affairs Committee has pledged to put sub-Saharan Africa “on the front burner” of United States foreign policy, including through an expansion of diplomatic, humanitarian and commercial activities in the region. Congressman Gregory Meeks, who was elected as head of the influential committee in December, said on Monday that the US Foreign Service must be bolstered during President Joe...

01 February 2021