The tail end of 2018 was inundated with news cycles, domestic and international, which overshadowed a major policy pronouncement, the United States (US) Africa strategy. After two years without much clarity from the Trump administration’s stance on Africa, it seemed ironic that the Africa Strategy went almost unnoticed. Unsurprising really, since it was announced well into the festive season, when many businesses and institutions were wrapping up or had closed for the holidays. Given the significance of the US strategy on Africa, it seems wise to unpack it and discuss its implications for the continent.
What does the US Africa strategy actually say?
From a policy perspective not much has changed. The US still puts the emphasis on conditional support for Africa. This support is propped up by phrases such as “aid with effect”, “assistance with accountability” and “relief with reform”. The US maintains its vision of reciprocity, underlined by a desire to terminate preference programmes such as the Africa Growth Opportunity Act (AGOA) and the Generalized System of Preferences (GSP) towards what it calls “modern and comprehensive bilateral trade agreements”.
Our interpretation of America’s take on “modern and comprehensive bilateral trade agreements” includes a number of “new generation” issues such as Trade in Services, Trade in Environmental Goods, aspects of the Agreement on Government Procurement, and immediate (tariff) liberalisation on almost all forms of trade.
While the Obama administration pushed these issues through mega-regional and plurilateral trade agreements, the Trump administration has adopted a more selective approach, opting for bilateral agreements with specific countries.
We foresee the Trump administration’s stance on the Africa Strategy being implemented with the US dealing with specific African countries, rather than at a continental level or through Regional Economic Communities (RECs) or through the African Continental Free Trade Agreement (Af-DFTA).
The differences between the Obama and Trump administrations are nuanced; not so much in policy content but rather in approach. The Trump administration adopts a more overtly aggressive approach, while Obama’s team pursued more diplomatic methods of conveying US interests in the continent. The aggressive approach is clear in the [pre-Christmas] speech by Ambassador John R. Bolton, Trump’s national security advisor, in which he laments the Chinese and the Russian approach in Africa. For instance, Ambassador Bolton noted that “predatory practices pursued by China and Russia stunt economic growth in Africa; [which] threaten the financial independence of African nations; inhibit opportunities for US investment; interfere with US military operations and pose a significant threat to US national security interests”.
A new addition to the US Africa strategy is the Prosper Africa initiative whose objectives are “to support open markets for American businesses, grow Africa’s middle class, promote youth employment opportunities and improve the business climate”. Prosper Africa is almost an extension of AGOA in terms of its goals and ambitions, seeking to support sound and transparent governance and to improving “the ease of doing business environments” across the continent.
What are the implications of the US Africa Strategy for the continent? Will the change in approach, while using the same foreign policy strategy, in Africa shift the status quo in the US-Africa trade and investment relationship?
One thing is clear. The US Africa Strategy seeks to reposition the US in Africa and to bring it on a par with China and Russia. What seems to set the US apart from its friends in the east is the aspect of “conditional support”. The question then is, will a more aggressive US approach change the balance of power or even its influence on the African continent?
It will be interesting to see how the Africa Strategy translates into policy action, and how the US uses its leverage (through AGOA) to implement the vision of the Trump Administration for Africa. This ties in with the pursuit of “modern and comprehensive bilateral trade agreements” which the US might seek with specific African countries. Our view is that the US could potentially target key markets like Kenya, South Africa, Nigeria and Egypt (and some others), which are core economic and socio-political power hubs in eastern, western, southern and northern Africa.
There are three key issues that arise from Trump’s Africa strategy
Firstly, bilateral agreements with specific countries, rather than with RECs could be seen to run counter to the regional integration agenda. In other words, the US runs the risk of being seen to favour larger economies at the expense of smaller ones. Working outside the RECs could thus be seen to be disruptive to the functioning of regional trade agreements. The counter-narrative to this argument is that working with specific economic hubs (i.e. country markets) will promote sourcing of raw materials from neighbouring smaller economies, which ideally, could lead to deeper regional integration. However, there remains little evidence to suggest that this would actually happen. Alternative efforts to integrate trade outside existing trade agreements might be worth testing, given that the power and influence (political and economic) of RECs has been arguably limited.
Secondly, the notion of a modern and comprehensive trade agreement (assuming these will be with specific strong African economies) needs to be interrogated from the standpoint of whether these African economies are actually ready to liberalise domestic markets to the same standards as the US.
Lastly, and more importantly, it seems that the Africa Strategy, through the Prosper Africa programme, reflects a shift in emphasis from trade to an investment-led approach, which will position US firms on the African continent as key drivers of economic integration. Prosper Africa is at the centre of the US Africa Strategy because it is a signature Trump initiative, unlike legacy programmes inherited from the previous administration such as Power Africa and Trade Africa. And because of the view that the penetration of US technology and expertise in Africa can create the most profound impact on policy and shift the balance of power away from Russian and Chinese hegemony in the continent. Powerful US multinationals have a clear comparative advantage from a technology standpoint, and can unlock more business opportunities on a much larger scale. Their influence on broad and sweeping policy reforms in Africa could become a gamechanger in placing the US at the forefront of investment on the continent. – Wandile Sihlobo, Agbiz