The US-Africa Summit

Hopes were high in our part of the world when President Barack Obama’s first term began in January 2009. We in Mauritius looked forward to a higher consideration henceforth on the part of the US, for having been a staunch advocate of democracy and the rule of law. We have also unstintingly aligned ourselves with the defence and perpetuation of the values of the free-thinking world at the centre of American policy.

Unfortunately, for Mauritius and other African countries in general, no sustaining or path-breaking new tie-up has been achieved under the new presidency so far. Africa as a whole did not fare better in its relations with America than what had been the case by way of favourable treatment for our exports since President Clinton’s Africa Growth and Opportunity Act (AGOA) of 2000.

This week’s US-Africa Summit has, however, raised fresh hopes that mighty America could finally join hands to strengthen the regeneration of a whole continent which, in the past, was reputed to be in the doldrums more often than not. The continent looks much better poised now, and others have been paying serious attention to the continent’s potential as we try to efface that poor image.

The first US-Africa Summit was held at the invitation of President Barack Obama in Washington DC from Monday 4th August (his birthday) to Wednesday 6th August. Fifty heads of states and of governments of African countries, including Mauritius, were represented at the Summit which focussed on trade and investment between the two blocs but also on security and developmental issues.

The general feeling had usually been that Africa was not a principal concern of America, which had other geopolitical interests to look after. On the other hand, China has been busy for quite some time building ties with several African countries, building road and infrastructure as well as intensifying its trade links with them. China is currently Africa’s biggest trading partner. The contrasting attitude of the two countries towards Africa has long been seen by many as a clear difference in approach in the matter of building up ties and partnerships. The Summit in Washington DC may however help to change this perception.

It is stated that upwards of $30 billion of trade and investment deals are in the making following the Summit, a lot of it driven by private American investors. Leaving aside some dictatorial regimes on the continent, certain individual African countries have been doing quite well recently in terms of economic growth. The majority of the world’s fastest growing economies are currently from Africa, on the back of prevailing high oil, gas and raw material prices. The IMF predicts that Africa will grow by 5.8% in 2014. Prospects for further growth remain bright, fuelled by enormous oil and gas reserves and supported by a billion consumers spending $ 600 billion a year as well as a growing young population and plenty of arable land available for cultivation and other purposes. All this puts Africa as an interlocutor of substance vis-à-vis America. You have to be strong to receive attention at the global level.

While America has been the largest investor in Africa in the past, most of its investment has gone into the petroleum sector. With the current US-Africa Summit, a substantive diversification of American investment into Africa is expected. The statement made by American Secretary of State John Kerry that Africa “could be the marketplace of the future” and that it “is facing an amazing opportunity” shows where the focus of the Summit actually was, notably reinforcing and re-launching mutual economic interests by prompting additional investments.

There are already big department stores like Wal-Mart that have invested in some of the forward-looking African countries. There are chances that, after the Summit, significant American investments spanning several industries from construction to energy, to banking and information technology sectors will materialize shortly in those countries which have created the level of governance and the space to accommodate the renewed American interest in Africa. General Electric (GE), an American multinational conglomerate, alone booked a $2 billion investment to raise African infrastructure and skills in the course of the Summit. Like GE, 90 other American corporations discussed deals with the African leaders. The spin-off is expected to be promising for countries which came prepared to clinch such deals, something that might set Africa on an altogether different course from its past characterisation as a place of instability, poor governance and erratic growth.

In fact, a good part of the Summit was arranged for facilitating investment deals between American firms and African countries with a view to setting America-Africa relations on the durable path of sustainable mutual growth. African leaders reckon that economic success based on favourable raw material prices alone is rarely successful in the long run. Looking forward to creating sustainable jobs for their growing populations, they want to turn increasingly to manufacturing for local consumption and exports. Ethiopia and Kenya have therefore chalked out plans for more industrialization in their respective countries. Others are following suit, on the understanding that sustained growth can only be founded on manufacturing. This is where the jobs will come from. And America, as the world’s foremost economy, could help achieve the objective.

In 2000, America signed up the Africa Growth and Opportunity Act (AGOA) to facilitate access of African products to American markets, exempting industrial products made in Africa from US Customs duties. The AGOA comes to an end in 2015 and it is expected to be extended by the American legislators which, hopefully, might give a fresh vigour and new lease of life to our own manufacturing activities here in Mauritius just as on the continent.

Given that the US government is centred upon private enterprise, the best the US government could have done to support our economic agenda was to put us across interested US corporations for their potential investment in our country. The US government makes policies like the AGOA which become a launching pad for companies to advance their economic agenda in collaboration with the US. Much will depend for us on how much we, as an African nation, can take advantage of the Summit to get American enterprises to strengthen us as a communications, logistics, trade and investment hub in this part of the world and, more so, vis-à-vis the continent of which we are a part. The more convincing the homework we do to this effect, the more we will restore the primacy of our economic quest and rhyme together with other African countries which will successfully take advantage of the Summit.

* Published in print edition on 8 August 2014

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