Doing Business in Africa: A Second Term Priority
Africa policy in the first Obama Administration was the brightest missed opportunity of the four years. The Administration carried on the Bush Africa programs-PEPFAR and the Millennium Challenge Corporation but new, innovative approaches that drive development in Africa and enhance U.S. companies competitiveness were lacking.
The “whole of government approach of Feed the Future and the Global Health Initiative resulted in endless interagency meetings and programmatic inertia. While the Chinese continued to roll out high-level, high-visibility, and heavily-funded engagement initiatives, Africa remained the neglected step-child of the U.S. foreign policy front, despite being home to six of the world’s fastest growing economies.
Understandably, the financial crisis, the cascading Arab Spring and the Iranian nuclear conundrum commanded serious time and attention. These issues will continue to dominate the policy agenda in Obama’s second term. However, much can be achieved in U.S.-Africa policy with a relatively low-cost sustained effort.
The Whitaker Group has been leading advocacy efforts for a strategic partnership with African nations since the drafting of the African Growth and Opportunity Act (AGOA) in the late 1990s. For the past four years, we have been driving a bipartisan agenda called Enterprise for Development (EnDev), aiming to unleash and incentivize the U.S. private sector to seize mutually-beneficial opportunities in African markets. EnDev calls for:
Extending AGOA and expanding the product range to include key agricultural products;
Utilizing the tax code to incentivize businesses to invest in Africa through double taxation treaties and the tax-free repatriation of profits made in non-extractive industry operations; and,
Removing some of the constraints to the Overseas Private Investment Corporation (OPIC) in lending to “sensitive sectors such as agriculture and textiles.
EnDev also emphasizes the opportunity to help address African nations critical need infrastructure and power. Lacking transport infrastructure and electricity are the largest contributors to the high cost of doing business in Africa, and electricity access averages less than 30 percent across the continent. Unlike when infrastructure investments were prioritized in the 1970s, African countries have developed the capacity to manage large projects, and transparency mechanisms have been accepted widely. As U.S. companies are innovators in power generation and renewable energy, the Administration should adopt the proposal put forth by Todd Moss at the Center for Global Development and launch a flagship initiative to combat energy poverty in Africa.
There are other seeds of potential within government agencies that could grow into impactful programs if nurtured in a second administration. The Private Capital Group for Africa (PCGA) at USAID recognizes that, historically, the right business and finance leaders were not at the development policy table; and they have created a partner forum that leverages key expertise. Paul Hinks of Symbion Power and Tony Elumelu of Heirs Holdings are all-star additions, and will help the program to be catalytic in unlocking new sectors to investment. With more resources and freedom from USAID bureaucracy, PCGA could redefine how business is included in the development dialogue.
While vaguely defined, the Doing Business in Africa Campaign, launched by the Acting Secretary of Commerce in November, may provide a platform to bring together key minds set to shaping a new Africa policy in the second term. The imperative for a more robust policy is clear. Trade with Africa was up 16 percent in 2011 and is growing at an even faster clip in 2012. Beyond trade, the U.S. needs deeper relationships with African nations to coordinate counterterrorism efforts, enhance U.S. energy security, and address global issues whether they are climate change or nuclear proliferation in international fora.
With new resource discoveries and demographic trends, Africa will be a source of growth and high returns for decades to come, and African countries already have a wide choice of partners. From Brazil to Turkey, countries are waking up to the opportunities presented by a continent rising. It will be our loss if the Obama Administration continues to relegate Africa to the very bottom of the foreign policy agenda.