Opinion:

The timely case for a newUS - Africa Trade PolicyBy Dennis Matanda Princeton, NJ . November 17, 2012

Most people do not know who Jim DeMint is.

With his ruggedly handsome face, pensive demeanor and non-combative tone of voice, even those familiar with the Republican senator from South Carolina don’t play up his charm or approachability.

Instead, a majority in and outside the beltway relate to him as the lightening rod of a group which stridently op-posed Barack Obama’s efforts at buttressing a battered economy. And for playing this role in the Party of No, he was recently bequeathed with the title Senator Tea Party.

But the 2012 General Election allowed America’s first black president to serve a second term and, so in a reversal of fortune, DeMint’s Party finds that with only a majority in the lower House of Congress, an even smaller minority in the Senate and sans the White House, it has to start the painstaking process of constructive criticism, leadership

and legislation to prevent a three-time consecutive loss of the White House in 2016 - a proposition which is well within reach.

And yet, somehow, between now and 2016, even the most cantankerously reliable conservative in Congress could emerge as first among the few to open a door to the most mutually beneficial phase of US and African trade policy.

Bipartisanship, anybody?Starting January 2013, the lawmaker who once urged Americans to rise up against government spending and mounting debt, will serve the 113th Congress as Ranking Member, Senate Committee on Commerce, Science and Transportation. And if DeMint should choose obduracy over cooperating with Democrats to promote commerce and international trade, Obama’s latent agenda to spur trade and investment with Africa is royally screwed! Also dashed will be hopes that AGOA, America’s most porten-tous Africa policy since 2000, could effectively build upon its successes and shore up limitations when the program comes up for revitalization or basic renewal in 2015. Those familiar with the US Senate are right to worry: Without a super majority of 60, a DeMint can, single-handedly kill legislation just by indicating that he is against a bill provision even when 59 senators fully support it. Imagine the damage 46 rambunctious men and women can do, especially if they have an ideological bone to pick with the president!

Nonetheless, those pining for an AGOA 2.0 upgrade find solace and cautious optimism in recent Republican and private sector support for Free Trade Agreements [FTA’s] and international trade. Premised on Congress’ recent unanimous consent for the timely renewal of AGOA’s 3rd Country Fabric provision, a global coalition of analysts,

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academics, promoters and entrepreneurs believe that an even more ambitious US - Africa trade policy could, under the aegis of bipartisanship sail through Congress.

In a Nov. 2012 column, Rosa Whitaker, pioneer of the African Affairs bureau in U.S. Trade Representative’s office [USTR] and leading Africa trade proponent at The Whita-ker Group, assuages anxiety by affirming that both parties – even in the midst of ideological warfare - consistently put politics aside when it comes to Africa.

More pro Africa action may be forthcoming if you take into consideration what The Brookings Institution notes: All 50 American states in the US grew their 2011 exports to Africa up to more than $ 32 bn. Projections for 2012 show they may even stay the course. South Carolina emerged as one of South Africa’s largest trade partners - garnering more some $ 270 million from exporting lawn mowers and tractor-trailers to Africa, and West Virginia even exported more to Africa than to Taiwan and Spain.

Apropos MilieuContextually, this $ 32 bn is as unbelievably measly as it is unfairly imbalanced to the US. Since the passage of AGOA in 2000, the trade deficit between Africa and the U.S. has, over the past 10 years, ranged between $ 11 bn [Adv. Africa - in 2002] and $ 85 bn [Adv. Africa, again in 2008]!

Given that all S&P 500 companies have balance sheets greater than the sum of entire African economies – with most producing more than the 6,400 or so products allowed into America under AGOA - we know that the private sector does less with Africa than annual Diaspora remittance to the continent. It is painfully obvious that Americans are, even indolently, not taking their trade deficit seriously or considering the natural synergies that

already exist between the world’s largest economy and the largely untapped consumers everywhere in Africa.

The Perfect StormBut this could change in a heartbeat: Stephen Lande, a former USTR senior trade negotiator and President of Manchester Trade, a Washington based trade policy outfit, strongly believes that the advent of an Obama second term, a new Congress and resurgent American economy present precisely the perfect storm for a vigorous policy regime that could immediately emulate the way China facilitates entrepreneurs in Africa. While they have no con-crete plan yet, sub Saharan Africa trade doyens like Brook-ings’ Mwangi Kimenyi agree with Lande and reckon that a new plan ought to not only deepen current trade prefer-ences but include direct logistical support for American investors.

Both Dr. Kimenyi and Lande - plus a host of exemplars including Ms. Whitaker, Paul Ryberg, John Mutenyo, Witney Schneidman and Stephen Hayes of the Corporate Coun-cil on Africa – optimistically predict that if the federal government gave a resourceful private sector impetus – a nudge, even - the supply chains and distribution networks established between the regions would not only grow the number of jobs in the US but especially begin to level the trade war with China – a war the U.S. is penultimately losing for no good reason. An infusion of policy attributes could also expressly increase market share for American goods and services in a region where nothing has saturated the markets there yet.

Regionalism, Peace and ProsperitySteve McDonald, Director of the Africa Program at the Woodrow Wilson Center wholeheartedly agrees with the push for a new policy and urges exigent consideration and passage of an all encompassing intervention which could, on top of all those things fellow notables suggest also promote regional integration, which starts the process of staving the oft cited small markets, few economies of scale barrier to investment.

McDonald and Lande are currently soliciting ideas to include in a legislative proposal that would appeal to both American and African stakeholders.

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Fitting the US, China & Europe into Africa

Alive with possibilitiesWhile the crop of those who champion Africa seem like an exclusive club of the brave keen to show off scars and regale with tales of exotic adventure, this is, as of recent, far from the reality. Citing 8 African countries with higher GDP-per-capita than China, Scott Harvey Wines out of California recently introduced 6 wine varieties to Kenya and Tanzania.

Then, on an impressive website* dedicated to sub Saharan Africa stock markets, Ryan Hoover, an equity analyst and fund manager says Medtronic, a medical device maker estimates that 2 million Africans will use their devices and its revenue in a recent quarter increased 16%. Portugal Telecom, currently in Cape Verde, Sao Tome & Principe, Namibia and Angola now generates the majority of its rev-enue overseas, and Syngenta, the world’s largest agricultur-al chemical manufacturer derives a modest sum of $ 500 million in African sales with analysts believing that African demand for herbicide could quadruple to $4 billion in ten years. * www.investinginafrica.net

Surprising Consumption TrendsThe pudding to Africa, as The Atlantic reports, is in how the continent’s overall growth rates have ‘quietly’ caught

up with Asia’s. Africa will, in International Monetary Fund estimates, be the fastest growing continent over the next five years. To this, while the Charleston Regional Business Journal - like many a traditional American media entity - gently admonishes these sanguine projections as held back by low disposable income, The Economist makes the case that this less-than-optimal income essentially belies incredible change in Africa consumption: A recent study shows Kenyans skipping luxuries like meat or opting to walk over paying bus fare just to have phone credit so they can make calls or send texts that will put food on the table tomorrow.

Though induced by technology, this cost benefit scenario represents the microcosm of what might be a portentous paradigm shift in disposable income: Africans with mobile phones have an annual disposable income of between $ 1,460 and $ 7,300. They currently effectively demand goods and services at rates unheard of less than a decade ago. Paltry as even $ 7,300 a year may seem in American middle class terms, this is huge in African terms! It is even more impressive when one considers that this growth is mostly the result of better economic policy and gover-nance. Botswana and Ghana, for example, have astutely used their diamond and oil resources in tandem with in-frastructure spending to shore up middle class disposable incomes. A CATO Institute column celebrates these suc-cesses and urges African leaders to continue tough reforms already in place.

More businesses continue to see good trends: H.J. Heinz, a ketchup-maker sees consumer spending in Africa and the Middle East grow from $ 900 billion to $ 1.4 trillion over the next eight years. VeriFone Systems rides an information technology wave by doing ‘phenomenally well’ in influencing African electronic payment systems. The company will set up 100,000 point of sale terminals in Nigeria alone and looks to Ghana and Kenya.

But China is more corrupt and Chinese are poorer! Though there’s progress galore in Africa, internal strife and instability continue to infest the largest African economies of South Africa and Nigeria just as much as it does in Mali, Egypt and Libya. And yes: corruption, poverty and disease persistently rob opportunity from millions.

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But these negative elements have not deterred US inves-tors from China. The vast majority of Chinese face, much less, the same biting circumstances in Africa. Comparison between African vice and China’s ‘red nobility’ would not be farfetched.

As The New York Times, The Washington Post and The Economist find, the 80 million or so members of Commu-nist Party act like an aristocracy of princelings, dominating the market as influence peddlers, often trumping the rule of law. It might even be safe to state that if China were to implode anytime soon, it would be because of Party mem-ber shenanigans. China’s Qing Dynasty collapsed at the end of the 19th century from similar issues: Ordinary Han Chinese had no loyalty to their rulers and the Opium Wars gave ordinary Chinese impetus for revolt.

Capitalism Trumps CorruptionNegative consequences of China’s vice notwithstanding, a preoccupation with morality misses how private sector economic activity ultimately defeats ingrained political machinery or even organized crime syndicates. This is how the American private sector could overcome ingrained culture if they were to invest in Africa. Japan is classic example of how an empire emerged from WWII ashes as a phoenix. Besides, while Transparency International points to China and Columbia as exceedingly corrupt, these two countries are also the most dynamic economies in their respective regions.

In many ways Africa is, as a whole, more fortunate than China. If one added the infrastructure spending plus the Chinese government’s direct spending to shore up its internal economy and foreign policy, China rightfully deserves her place amongst the world’s developed nations. But when valued for population density, environmental degradation and basic human rights freedoms, there’s even a chance that China’s people are worse off than those in Africa as billions of poor, sick and hungry are oftentimes disenfranchised by the very leaders that sell the land upon which they toil from under their feet!

On top of having the world’s biggest population under the heavy handed thumb of Beijing, African is made up or 53 countries - each at varying degrees of economic progress

but bearing more investor friend business policy encapsu-lated by mostly liberal economies. Coupled with a better-than-projected effective demand, those in favor of African business optimistically predict that anything less than an enthusiastic African investment strategy could translate into an insurmountable loss of opportunity.

The Decade Old NarrativeRegrettably, the majority of US multinational corporations have, to date, failed to shake a decade-old narrative that still demotes Africa to a basket case of conflict, poverty and developmental challenges.

Also, the American aversion to risk induced by a lack of up to date information and now fueled by the recent financial crisis is blind to the myriad of lucrative opportunities that lie in wait as evidenced by China’s ravenous appetite and tenacity in seeking to marshal resources in Africa.

More recently, if the Brazilian foray into Angolan oil and Mozambican coal deposits does not give the U.S. govern-ment immediate incentive to consider a private sector driven path into Africa, then, perchance, nothing else will.

‘You guys will not believe what I just bought!’

Foreign Affairs magazine acknowledges that the U.S. lacks even the semblance of strategy for competing with China in emerging markets. This is, for the most part, true but not from paucity of agency. Conversely, there are just too many bodies working on trade policy, trade promotion, trade advocacy and those primed to prevent the federal government from curtailing the freedoms of traditional capitalists!

As a consequence, American companies are out competed not only by the Chinese but by Malaysian, Turkish and even Vietnamese businesses in Africa, Asia, the Middle East and in nearby Latin America. But Africa is especially a sore point: Just a few short years ago; the U.S. was Africa’s biggest single trading partner. Today, that special place has been taken over by a red-hot China that expects to do up to $ 220 bn worth of business with Africa in 2012.

Africa Economic Outlook says of the US quandary in Africa:

‘Before, there was walk of how many billions of dollars Africa needs. Now, leaders speak equally of Chinese yuan,

Indian rupees, Brazilian reals, Korean won and Turkish lira ...’

The Deal SweetenerIn a video message to the 2009 AGOA Forum in Nairobi, President Obama declared that the US - Africa partner-ship was yet to realize its full potential. Four years later, on the eve of a second term, profound as ‘full potential’ may sound, it rings hollow if it is not backed up by real action.

Harvard University’s Calestous Juma relays that as they patiently waited for Obama to deal with illegitimacy and other domestic pressures of his novel presidency, African countries quickly learned to ‘chart their own future’ in the light that even when one of their own led the free world, they are, essentially, on their own. Hence, they looked to find friends elsewhere and China was right there. Countries like Uganda even halfheartedly attempted the spectral nonalignment by endearing themselves to Iran.

For its part, China responded by pouring vast amounts of their foreign direct investment on infrastructure. And yet even as successful as China has been in asserting itself as Africa’s best friend, there seem to be, pun intended, cracks in this infrastructural partnership: The Chinese have a bad reputation in what is their forte.

The Economist calls their construction process and finished product sloppy and ‘slapdash.’ An Angolan hospital built and opened with great Chinese fanfare closed within a few months as cracks appeared in the walls. The Christian Science Monitor says photographs of a leaking ceiling in the new African Union headquarters in Addis Ababa lately made rounds on social media contemptuous of Chinese construction.

In a May 2012 article, The Los Angeles Times reported a GlobeScan poll showing China as more popular than the US. However, they also noted that China’s influence, the way it treated its own people and its economic plus foreign policy also harmed the world. In relativity, while US receives a special kind of obloquy, its favorability is up over the 8 years between 2000 and 2008 when George W. Bush saw the world as allies or axes of evil. Paradoxically, Bush’s recent investments in African welfare, health and democratic institutions purchased immeasurable amounts of goodwill. On top of not being viewed as corrupt or as exploitative as the Chinese are, there’s a chance that if America made an aggressive bid for African trade, the continent would root for Team USA with Obama, as Juma insinuates, thrown in as deal sweetener!

The right noises from Washington, DCFor the moment, some U.S. government entities are making the right international trade overtures. At a George Washington University event on Nov. 14, 2012, Fred Hochberg, President of the US EXIM Bank outlined an aggressive ‘anything goes’ approach to level the com-petitive playing field for exporters to Africa. Alongside doing what China does for Chinese businesses, trade agency realignment in line with Obama’s ‘Secretary of Busi-ness’ comment was mentioned, as key to the role the U.S. government must play to promote what is in its national interest.

But Jim DeMint and other Republicans may take issue with this intervention. In fact, the party itself, conservatives in the numerous think tanks, and on influential talk radio, newspapers, online rags and Fox News could even doom an ambitious Africa agenda simply because it comes from Obama and his allies. But maybe, the headwinds of Lande’s perfect storm may sway the influential Chamber of Com-merce and other trade groups by directly linking new trade policy to American jobs. Or perhaps, the enemy of my en-emy is my friend dictum will make fair weather friends out of Democrats and Republicans against China because each party loves the country as much as the other does.

This is the reason a comprehensive approach to level the playing in field in Africa must include a number of parties.

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With the many stakeholders that want to see the country progress into a position of strength, both parties along the philosophical divide will have to be consulted as much as both new and existing initiatives.

The Foundation for a New InitiativeIn the first place, stakeholders must find consensus on what to do with AGOA. Aside from new proposals and initiatives, AGOA’s successor programs or its enhancement needs to be set in motion starting as early as January 2013. Considering how US Congress works, if one waits until 2015 to start tinkering with a multifaceted program like this, AGOA itself will continue to under perform simply because sufficient time is not taken to consider each and every attribute in tandem with the various stakeholders who keep its zeitgeist alive.

In March 2012, identical bipartisan bills - The Increasing American Jobs Through Greater Exports to Africa Act of 2012 were introduced in both the House and Senate. Both sought to increase America’s competitiveness in Africa; both hoped to marshal private investments to improve American and African trade and both looked to get passed at the end of 2012. Both are, however, doomed since this lame duck session of Congress is only a transitioning an extreme conservative party into a severe one and a liberal one into a rejuvenated progressive one.

If this were to happen, these proposals should be adopted by groups such as that are set up by Ms. McDonald and Lande. If these new pieces of legislation were combined with the original AGOA bill, this is an excellent baseline from which to start an overarching trade initiative.

The DeMint EssenceWhile he opposed big government, DeMint once said he’d never rule anything out in his life. He is also cognisant that Congress, as part of government, has facilitated American corporations and marshaled resources abroad in the mold of the post WWII Marshall Aid Plan.

With the US economy needing to create more jobs, new policy would not be too outside legislative endeavor. DeMint has urged that Congress do more trade agree-ments to open new markets for American products

Does this man look like he’d hurt good ole African legislation?

It comes down to politicsThe GOP lost the 2012 General Election by a 2% margin brought about by a Democratic minority coalition that partly included a section of the 40 million or so foreign-born immigrants. Thus, a Republican pivot to the upwards of 3,200,000 black immigrants through collaboration on Africa trade policy may make for expedient strategy.

But especially for the Republicans now acting as the loyal opposition, it is also smart business leverage the African immigrants as the cultural brokers to facilitate trade in the home countries more than 50% left after 1990 - keep-ing through billion dollar annual remittances from their newfoundland. As representative of a party judged out of sync with modern America, DeMint has the chance to, like The Week recommends, bring compassion back into an economic debate - a compassion that does not belittle a federal government minorities and liberals believe in.

An epilogueAs late as June 2012, DeMint’s official website did not contain any real reference to Africa - with only a criticism of the Obama administration placed under a clever-by-half title: ‘Denial: Not Just a River in Africa.’ Just as glaringly ab-sent were the words ‘compromise’ or ‘bipartisanship.’ But in another reversal, DeMint ends a recent post election press release with a nascent hope to cooperate with Sen. Rockefeller of West Virginia, Democratic Committee Chair under who he will serve less than 60 days from now. This is incredible progress. Perhaps, Africa’s prospects will go up the DeMint scale as well. But in reality, knowing how deep still partisan waters run, we are not holding our breath.

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