By Chris Harmse
US deputy Secretary of Commerce Karen on Wednesday announced at the opening ceremony of the U.S.-Africa Business Summit on Wednesday in Maputo, that the Trump administration message to Africa is simple and blunt:”
Choose the United States over China and Russia.”
One can clearly see this as another chapter of President Trump to isolate the Russians and China from trading and investing globally. One must see this latest attempt to impress Africa in order to get its foot in the door to claim the Continent’s resources and growing markets.
The previous efforts of the US to support Africa towards growth and development was embodied amongst other in its “African Growth and Opportunity Act” during the beginning of the 2 000’s.
The AGOA was signed into law by the Clinton administration in 2000. Its objective was “to stimulate economic growth, through trade and investment in Sub Sharan Africa and to encourage and facilitate Africa’s economic integration into the global economy”. The AGOA is mostly based on a “General System of Preferences (GSP).
Under this system African countries can export a wide range of product to the US duty free. Trade in goods between the United States and sub-Saharan Africa increased nearly six percent to $39 billion between 2015 and 2017, according to a report delivered to Congress on 29 June 2018 by the Office of the United States Trade Representative (USTR)
The AGOA expires in 5 years and Africans are rightly concerned about the future of AGOA and its associated benefits. Some expect it will be difficult to continue justifying the one-way trade preference post-Agoa. The Trump administration now wants to introduce a new approach namely “Prosper Africa,” that shifts American focus on the continent from aid to industry.
The new $50 million program will offer technical help to companies looking to enter or grow in Africa. Africa is urbanising more rapidly than anywhere else on earth. The US clearly wants to get its cut in the projected spending of 1.52 billion consumers by 2025 — nearly five times the size of the U.S. population. It is also clear that the US now wants to enter the race against China and Russia to get access to these African markets and its resources.
The US however seems to be a bit late. Russia is already on track to build nuclear plants in Egypt, Nigeria and Algeria. These investments are a means to becoming an integral part of Africa’s energy sector. Anos Besenyő an Associate Professor at Óbuda University argues that “from the African point of view, Russia offers a strategic alternative to America’s global hegemony, China’s economic diplomacy, and the lingering influence of Africa’s former colonial masters”.
She stresses that Russia is now seeking to exploit conventional gas and oil fields in Africa and elsewhere. Part of its long-term energy strategy is to use Russian companies to create new streams of energy supply. China has become Africa’s largest trade partner and has greatly expanded its economic ties to the continent, but its growing activities there have raised questions about its noninterference policy.
Therefore it seems that the US-China-Russia race for Africa well and alive and will heat up over the next few weeks .
Chris Harmse: Chief economist Rebalance Fund Managers.