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America's Misplaced Obsession with China in Africa

It's time for SMART policy

· Africa

The Trump Administration’s message to Africa (Washington Post, June 20, 2019) underlines how the obsession with “beating” China is clouding U.S. policy. Africa is neither a Strategor board game nor the stage for a popularity contest.

The promotion of the “unrivaled value” of big U.S. firms reveals the insular nature of American foreign trade and aid and ignorance of the African continent. It disregards African history and culture, as well as American history of entrepreneurship and private enterprise. It is oblivious to African regional trade potential. It forgets that African countries and economic regions are geopolitical actors and trade partners in their own right and have become leading investment destinations for companies worldwide.

Developments across the continent must necessarily change how the U.S. deals with the region. U.S. financial support cannot afford to focus only on health, humanitarian relief and big infrastructure. Nor is it “SMART” policy to preserve America’s relations with what were once deemed to be “predictable” partners in pursuit of stability, inclusive and impactful development be damned. And it is certainly defeatist to keep treating Africa as an afterthought or as not important enough for top administration officials, i.e. the Commerce Secretary. As Judd Devermont and Jon Temin point out in their article “Africa’s Democratic Moment?” in the July/August issue of Foreign Affairs, “Optics and invitations matter”. So does walking the talk.

It’s time to actively embrace change, and not just mouth it insipidly with statements like: “We know that the U.S. government can and must do more to capitalize on…the entrepreneurial spirit of the African people”. True interest is not demonstrated by increasing diplomatic, financial and technical support posited on forcing a choice between the U.S. and China. If the U.S. is serious about shifting focus from aid to industry, the administration needs to start focusing on the true Africa story being written, one driven by a new generation of ambitious, tech-savvy, politically and socially conscious young, and not so young, men and women who are developing solutions for a twenty-first century Africa that offers them, and others around the world, more opportunities than can be found anywhere else…including China.

Like it or not, as economist Carlos Lopes (Africa in Transformation, 2019) points out, China is a well-regarded partner because it 1) has a comprehensive approach to engagement; 2) offers its partners the potential to move up the value chain in their trade; and 3) is actively supportive of regional integration, because it understands that to maximize dividends from investments requires balancing inevitable tensions between values and interests, yours and your partner’s. Chinese investors are willing to defy risk perceptions that frighten Americans. They have the ability and emotional intelligence to adjust to the local context. They add value through a “can do” attitude that purposefully supports local African entrepreneurs.

What is the U.S. Prosper Africa initiative offering that’s better? America First? The search for business opportunities is not a question of looking for them through export-oriented trade of U.S. goods to Africa. Nor is it a question of capitalizing on the “entrepreneurial spirit of the African people” by investing in African products that are exportable to the U.S. or in traditionally-focused extractive projects in the mining, oil or gas sectors, which mainly benefit the U.S. investor and those Africans privileged enough to participate in it.

The focus of Prosper Africa should be on supporting Africa’s drive for economic diversification through the development of manufacturing assembly and other production capabilities with an emphasis on import substitution and export growth orientation towards other African markets. This necessarily entails increasing the amount of money available, through the U.S. International Development Finance Corporation, for micro and small U.S. businesses that can partner with micro and small African businesses for impactful investment projects that are scalable in the African context and are able to contribute to economic growth and job creation. The goal: do business well by doing good, that is, pursuing profit through a moral compass, instead of an extractive one.

In view of the newly established African Free Trade Area, which is a result of the enormous progress made in coordinating regional economic markets within and across the continent, Leyland Hazlewood’s argument in Doing Business in Africa (2016) takes on its full purport: that African markets require

1) investment in higher value added midstream and downstream production activities, with appropriate technologies;

2) investment in the local manufacturing of products that that solve local problems more effectively; and

3) investment in business support services.

All three require:

1) localizing and contextualizing products, services and processes,

2) nurturing brand building and market extension, with a focus not on the number of countries the business can operate in but on the growing number of customers that can be served; and

3) understanding the priorities of national development and those of the local governments.

Appropriately meeting the above requirements is the basis for current business opportunities for U.S. companies. U.S. investment cannot compete head-on with China in Africa. But U.S. investment can provide the technical know-how, managerial competency training and capital resources to install domestic capacity that will enable African nations to produce local substitutes for goods that are currently imported, a growing majority from China.

In the face of “America First”, it is evident that African nations will choose the partners that can best support Africa for Africa First. Now is the perfect opportunity for the U.S. to engage with Africa through the transformative power of the American private sector to constructively enable what Tony Elumelu, a Nigerian economist, entrepreneur, and philanthropist, has called “Africapitalism”: a commitment to long-term investment and the creation of both economic prosperity and social wealth.

Astrid Ruiz Thierry, Principal, Upboost LLC

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