Secretary of State Pompeo’s visit to Senegal makes clear that the Trump administration’s New Africa Strategy is not only lame but, by now, also incoherent. Pompeo’s words about Chinese investment feeding corruption and undermining the rule of law sounded empty – sorry, but the U.S. is not a leading example of countering either right now - are more an expression of Trump’s obsession with misplaced power politics that hark back to past back than an expression of a sincere commitment to restoring stability in the Sahel region and facilitating constructive trade and investment.
A laggard’s fit of pique
Frankly, Pompeo’s visit seems more of a fit of pique over the U.S. having been a laggard while China and others have actually defined and implemented a clear strategy to engage with Africa. In a previous article (“What’s Wrong with U.S. Economic Engagement in Africa?”) I explained why America is paying for the economic opportunity costs of others wooing Africa. It’s high time to stop reaching for low hanging fruits and instead focus on better aligning U.S. and African business genius and capacity through collaborative and mutually profitable investments.
U.S. policy in Africa is doomed to fail if it is all about catching up to China. It should be about Africa and how American business innovation can, in partnership with African businesses, build appropriate (versus implanted) solutions to African challenges. It’s a good thing Africa didn’t stand still waiting for Mr. America First! Because the continent would certainly be in worse shape than it is.
Whistle-stops need a rethink
In light of exploitative types of big U.S. private investment (unfortunately nobody talks about the small U.S. businesses present in Africa that provide big solutions) and recent indications by the administration that it intends to exponentially reduce security and aid to what, at the outset of his administration, Trump referred to as s***hole countries (this unfortunate racist slur will forever be etched in the minds of those who value Africa), Pompeo’s whistle-stop tour to Senegal, Angola and Ethiopia – his first official trip to the African continent since taking office almost two years ago – sends a clear signal that the U.S. needs to rethink U.S. policy for sub-Saharan Africa.
The Trump administration wants to “win” so badly at anything and everything, that it confounds America First with Africa last. This is not to say that Prosper Africa – the administration’s signature program to support U.S. businesses who want to invest in and expand their market reach into Africa - isn’t based on a good idea. But, as I wrote in a previous article ("Prosper Africa needs a Paradigm Shift"), it is imperative for the U.S. to step out of traditional trade and investment patterns and start engaging through both greenfield and brownfield foreign direct investment.
Embolden U.S. business
Prosper Africa needs to embolden U.S. business – both big and small - to reach out and identify business opportunities in Africa, instead of simply piggy-backing on the traditional infrastructure and energy type of investments made by big multinationals. For sure, African countries, in this case Senegal, need additional investments for roads and energy. Without them, the potential rate and sustainability of Africa’s potential for growth and development will be limited. But focusing exclusively on projects that can counter Chinese investment and play catch-up is misguided. In order to decrease the opportunity costs of America’s weak engagement, “investment efforts need to be built on an in-depth, contextualized, grounded understanding of the drivers and amplifiers of the dynamic transformations playing out on the continent” (“What’s Wrong with U.S. Economic Engagement in Africa?”).
In the context of Africa’s cooperation with new and emerging partners – including, in addition to China, Russia, India, Japan, Turkey, Saudi Arabia, South Korea, Brazil and more recently Poland and Bulgaria – the U.S. needs to overcome its knowledge vacuum of Africa. Investment in African economic and social infrastructure should be based on evidenced-based investment strategies to promote appropriate endogenous growth and development not just of the continent’s infrastructure sectors, but of all sectors of economic and social activity.
Don’t copy the “Angola mode”
Prosper Africa belies its reason for being if it focuses primarily on oil and gas, roads, and expansion of the power grid as a way to gain business for American infrastructure firms, to foster their supplier industries and to gain access to Africa’s abundant resources. Such an emphasis is no different than China’s “Angola mode” of resource-for-infrastructure model of participation in infrastructure projects, which involve involves a complex combination of aid, commercial finance, foreign investment and use of many inputs from China, frequently repaid through the receipts of commodity exports.
In the context of a global economy disrupted by terrorism and pandemics, Africa represents a rapidly growing market. However, supporting U.S. investment based on policies that are insufficiently informed or thought out, or are not mutually supportive or are unlikely to be implemented effectively, will increase missed opportunity costs for American companies. Infrastructure and energy investments are not just about economic stimulus and bringing home the bacon. In addition to providing investors with high-quality, defensible income with cash flow supported by long-term contracts or government backstops, infrastructure and energy projects need to produce differentiated results and contribute to unlocking further investment potential.
Prosper Africa has the responsibility of ensuring the U.S. investments it promotes and supports are purposeful: they must contribute to both growth processes and development outcomes. This can be achieved by taking a holistic approach to infrastructure and energy investing, one that combines support for both hard (physical) and soft (institutional) infrastructure. Economic and social infrastructure are not separate domains; they interact. Broadening the universe of infrastructure and energy investing will provide a notable competitive advantage because it will result in greater diversification, facilitates better financial discipline, and enables U.S. businesses to pursue impactful value opportunities with a much better yield.
Look beyond the hype
U.S. policy for Africa needs to look beyond the current hype about infrastructure needs on the continent. New thinking is needed to ensure sustainable, inclusive delivery of the benefits of U.S. investment and business development in infrastructure and energy. For example, one of the five projects announced by Pompeo in Senegal involves a new 100-mile highway. It is vital that Prosper Africa work with the investing company to thoroughly assess the potential consequences of this large-scale road project, in order to effectively balance complexity and opportunity.
A new road from Thiès to St. Louis can certainly promote sizeable economic and social benefits. But if it is poorly planned or implemented, it can provoke serious cost overruns and environmental impacts, while generating sparse economic benefits, intense social and political conflict and gender inequities. The goal, of course, is to promote economic prosperity and alleviate poverty. But
- How will the project actually achieve these aims?
- How will it minimize and mitigate the impact of infrastructure expansion on biodiversity, critical habitats and local communities?
- Will it be innovative in road design and surface products and techniques?
- How will it minimize unintended consequences (for example, loss of livestock by hit-and-run accidents) and build resilience be built into the project?
- How will it factor in productivity impacts?
- What approach will it include for road maintenance?
The project also has to benefit men and women equally. Infrastructure is not gender neutral. It actually affects women disproportionately. Women in Africa are the main market agents, so roads affect them directly. But too often new roads affect them negatively because they disrupt existing market locations and introduce new security concerns and child safety issues. Safety and security concerns need to be paramount in the planning stages if the project is to be gender-inclusive and child-sensitive. It is therefore essential that women have a voice in setting priorities in the design and operation of the new road if it is to have the desired developmental impact.
Be proactive rather than reactive
It’s time for the U.S. to build constructive engagement with the region. Instead of promoting power politics, passing the buck on security and travel bans, and stopping in a few countries where select big U.S. companies have a profit-without-purpose interest, the Trump administration needs to formulate policies that are proactive rather than reactive and based on a poor understanding and pre-conceived notions of Africa as a problem to be solved. Lacking or poor infrastructure may be Africa’s underbelly. But if Prosper Africa truly intends to step up America’s game in Africa, it needs to shift thinking from the “but they need better roads, better power networks, better whatever” into “we can provide profitable development solutions that deliver shared value”.