US and Africa: increased engagement regarding trade creating opportunities in the African free trade area
There was more good news for the successful implementation of the African Continental Free Trade Area (AfCFTA) agreement in December 2022, when a Memorandum of Understanding (MoU) was signed between the United States (US) Trade Representative and the AfCFTA Secretariat at the US-Africa Leaders’ Summit (Summit) in Washington DC.
The MoU covers expanded engagement between the two regions and intends to “promote equitable, sustainable, and inclusive trade; boost competitiveness; and attract investment to the continent.”
It was also announced at the Summit that US intended to invest USD 55 billion in Africa over the next three years, and that USD 15 billion would be deployed in “two-way trade and investment commitments, deals, and partnerships that advance key priorities, including sustainable energy, health systems, agribusiness, digital connectivity, infrastructure, and finance.”
The trade partnership between the US and Africa has been strengthening for some time. In July 2021, the Biden Administration announced that it would renew the US Prosper Africa initiative, started in 2019, with a focus on increasing reciprocal trade and investment between the US and African countries.
At the time, the US said that the initiative would focus on improving trade and investment in sectors such as infrastructure, energy and climate solutions, healthcare and technology. Seventeen US government agencies working as part of this initiative were given a mandate to, among other things, empower African businesses, offer deal support and connect investors from the US with those in Africa.
The renewed Prosper Africa initiative also focuses on projects that support women, and small and medium enterprises in Africa. It was further announced at the December 2022 Summit that, through the Prosper Africa initiative, plans were being made to boost African exports to the US by USD 1 billion through investments and partnerships, and to mobilise an additional USD 1 billion in US investment in Africa.
The US has often expressed its support for AfCFTA, stating that it wants to see the growth of Africa’s economic power in the world. All future trade agreements signed between the US and African countries will have to align with AfCFTA’s trade stipulations and, considering the Biden Administration’s environmental stance, new agreements will likely also include climate change provisions and tariffs on high-carbon imports.
The Administration has also been focusing on trade agreements that don’t disadvantage US businesses and consumers. In July 2022, the US-Kenya Strategic Trade and Investment Partnership (STIP) was signed, outlining the enhanced engagement and high standard of commitment between the two countries, and focusing on increased investment and sustainable and inclusive growth that will be of benefit to both countries’ citizens and businesses.
The agreement also included the intention to support regional economic integration in East Africa. Further reciprocal bilateral and regional trade agreements between the US and African countries are expected to be signed in the near future. Such agreements are expected to eventually replace the non-reciprocal African Growth and Opportunity Act (AGOA), which allows duty- and quota-free exports from eligible African countries into the US, and which is due to expire in 2025.
Trade between the two regions is steadily rising. At the Summit, the Biden Administration noted that since 2021, the US has assisted in closing more than 800 two-way trade and investment deals worth around USD 18 billion across 47 African countries. In addition, the value of private investment deals from the US into Africa since 2021 is valued at USD 8.6 billion. The US focus on increased engagement and continued, trade and investment in Africa has clearly already led to an increase in trade and investment opportunities in both regions.
Read related news articles
Exploring synergies between AGOA and AfCFTA: The case for African exports
Africa is often characterised as a continent poised for economic growth and development. Often, prosperity and development in Africa can be linked back to exports and the benefits that they generate. This brings to the forefront the African Growth and Opportunity Act (AGOA) and its role in opening American markets to 35 African countries, as well as the African Continental Free Trade Area (AfCFTA), which aims to increase socio-economic...
09 November 2023
AGOA: US vows to support regional integration
The United States says it is committed to supporting regional integration in Africa, seeing it as essential for the continent's economic development and prosperity. At a conference on the African Growth and Opportunity Act (Agoa) in Johannesburg, US officials said they were backing the African Continental Free Trade Area (AfCFTA), even though there will be variations on country specific trading arrangements. Agoa is a trade agreement...
04 November 2023
United States and Africa: increased engagement regarding trade creating opportunities in the AfCFTA
There was more good news for the successful implementation of the African Continental Free Trade Area (AfCFTA) agreement in December 2022, when a Memorandum of Understanding (MoU) was signed between the United States (US) Trade Representative and the AfCFTA Secretariat at the US-Africa Leaders’ Summit (Summit) in Washington DC. The MoU covers expanded engagement between the two regions and intends to “promote equitable, sustainable, and...
04 September 2023
The US-Africa Leaders Summit marks a seismic shift in relations with the continent
The second edition of the U.S.-Africa Leaders Summit (ALS) took place in Washington last week. Much has changed since former president Barack Obama held the inaugural summit in 2014, halfway through his second term. At that time, the geopolitical environment for strengthening ties was less fraught: global economic integration was accelerating, and Africa was “rising” from sluggish growth and persistent poverty. The initial summit was...
28 December 2022
Key to Africa’s growth is within the continent
The outcome of the US-Africa Leaders Summit once again shows why the continent is better off looking inwards for solutions. As the dust settles, the deals unveiled at the summit are coming under closer scrutiny. The $15 billion and the headline commitment by President Joe Biden to inject $55 billion into the continent over a three-year period have particularly attracted animated debate. On social media platforms, many commentators suggested...
17 December 2022
'Poor relatives always show up, rich ones don't', Biden says as he plans Africa trip
U.S. President Joe Biden capped a summit of 50 African leaders by stressing his administration's deep commitment to Africa, urging the continent's leaders to respect the will of their people, and saying he may come visit. The U.S.-Africa Leaders Summit concluded Thursday with bonhomie, $55 billion (Sh6.8 trillion) in U.S. commitments, and this from Biden: "As I told some of you — you invited me to your countries," he said. "I said, "Be...
16 December 2022
US and AfCFTA members sign MOU on trade cooperation
On December 14, 2022, the United States and African Continental Free Trade Area Secretariat (AfCFTA) signed a Memorandum of Understanding on Cooperation for Trade and Investment between the United States and the African Continental Free Trade Area (MOU) see document alongside. The MOU was signed by U.S. Trade Representative (USTR) Katherine Tai and AfCFTA Secretary General Wamkele Mene during the 2022 U.S.-Africa...
15 December 2022
US apparel and footwear association calls for prioritising AGOA renewal at US-Africa Leaders Summit
The American Apparel & Footwear Association (AAFA) and more than 20 organisations have appealed for long-term renewal of the African Growth and Opportunity Act (AGOA). The apparel industry of US, in a letter to President Joe Biden, urged the government to prioritise this request at the ongoing US-Africa Leaders Summit that will end on December 15, 2022. The organisations emphasised on the timely renewal of AGOA for a 10-year period, so...
15 December 2022
White House Statement on US-Africa Leaders Summit: Strengthening partnerships to meet shared priorities
The U.S.-Africa Leaders Summit, from December 13-15 in Washington DC, highlighted the U.S. commitment to expanding and deepening our partnership with African countries, institutions, and people. Our world is quickly changing, and U.S. engagement in Africa must evolve accordingly. African leadership and contributions are essential to addressing today’s pressing challenges and achieving shared priorities. The Biden-Harris...
14 December 2022
Fact sheet: US- Africa partnership in promoting two-way trade and investment in Africa
Africa’s integration into global markets, demographic boom, and continent-wide spirit of entrepreneurship and innovation present an extraordinary opportunity for the United States to invest in Africa’s future. The United States will support and facilitate mobilizing private capital to fuel economic growth, job creation, and greater U.S. participation in Africa’s future. Together, business and government leaders will...
14 December 2022