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How the US can help Africa fulfill the promise of the CFTA

How the US can help Africa fulfill the promise of the CFTA

Africa has been low on the list of US foreign policy priorities, but its new Prosper Africa policy seeks to accelerate two-way investment and trade. Gyude Moore reflects on what the US can do to help Africa deliver prosperity for its citizens.

At the time of writing, US commerce secretary Wilbur Ross was set to provide the details of the new US-Africa policy, Prosper Africa, on the sidelines of the US-Africa Business Council 2019.

This new initiative seeks to accelerate two-way investment and trade with Africa as a way to advance the US’s competitive advantage.

In the following article, I detail my thoughts on what the policy needs to include in order to fulfil the promise of the African Continental Free Trade Area (CFTA).

The place and timing of this announcement, on June 19-21 in Maputo, Mozambique, could not be more propitious.

In March this year, Cyclone Idai made landfall in Mozambique, levelling a city of 400,000 and – along with Cyclone Kenneth – leaving in its wake $3.2bn worth of destruction. This was a foreshadowing of Africa’s acute vulnerability to the increasing intensity of extreme weather events and limited ability to adapt. Climate change compounds existing challenges of state fragility, infrastructure deficit, and high unemployment.

Meanwhile, the CFTA went into force on 30 May. It carries the continent’s hopes and ambitions for connectivity, industrial development, job creation, and improved quality of life.

The CFTA will be of mutual benefit to both the US and Africa. It will open new markets for American goods and services.

When Ross takes the stage in Maputo, his speech will be the first substantive response by a major development partner to the latest vehicle on which Africans have pinned their hopes.

This mix of challenge and promise forces Africa to pursue a variety of partnerships, since every partner deploys unique competences. For the CFTA to be successful, the US must restrain its inclination to make Africa a theatre of great power conflict with China.

Both China and the US are indispensable partners in pursuit of the CFTA’s goals. American or Chinese Africa policies that are contingent on Africans choosing one partner over the other will consistently yield sub-optimal outcomes for all parties.

Changing tack

Africa’s position on the continuum of US foreign policy priorities could use improvement, and Prosper Africa presents a chance to do that. Every budget submission from the Trump administration has proposed deep cuts to programmes that predominantly benefit Africa.

The administration’s immigration policy has been particularly adversarial toward the continent, with an avalanche of visa denials across all economic and social strata in Africa.

In truth, however, Africa’s low rank in US foreign policymaking is not unique to the Trump administration. US-Africa relations lack any institutional anchors such as treaties and alliances and have always been primarily shaped by the occupant of the White House.

By contrast, Japan has TICAD (Tokyo International Conference on African Development), China has FOCAC (Forum on China Africa Cooperation), there are multiple substantive layers of EU-Africa engagement, and Russia will host its first Russia-Africa Summit in Sochi in October.

There is no institutional American equivalent to these arrangements. In Prosper Africa we have an opening to alter this narrative.

Fifty-two years ago, in response to the Soviet threat – much like the threat the Chinese governance model poses today – the US ran an experiment that was essentially a progenitor of today’s Chinese lending policies.

The Development Loan Fund (DLF) was a US policy lending institution that extended credit to both developing country governments and private sector actors in the way Chinese policy banks do today.

DLF supported national road building programmes, dam construction for power and irrigation, and more. The DLF also argued for, and supported, supplementary activities like building housing for workers, reducing instability, and providing financing for small enterprises. It was an innovative pioneer. Prosper Africa presents an opportunity to reach back into this past – creatively using a combination of existing tools like the US Development Finance Corporation and the Millennium Challenge Corporation (MCC), and newly created instruments. The US, among all other development partners, is uniquely positioned to do this.

Prosper Africa must be the American response to Africa’s ambitious CFTA, and its aims should reflect that. Rather than mimicking the very limited framework of Power Africa, the US should design Prosper Africa to match the ambition demonstrated in the creation, in less than two years, of the largest single market in the world.

Africa will look for a statement of American belief in the promise of Africa – an investment in Africa for its inherent value, not as a prize to be won in a competition with China.

Africa has made a huge bet on its future and seeks partners, especially the US, to join one last push at delivering to its people the quality of life they deserve. In support of this, here are a few initiatives that could be included as part of Prosper Africa:

Institutionalise the US-Africa Leaders Summit or an event like it as a framework for high-level engagement with the continent. Host the event every three to five years.

Introduce aid instruments that reward transnational integration, similar to how MCC Compacts are designed to reward good governance based on externally generated indicators.

MCC provides a ready-made platform that could be used to award larger regional compacts for neighbours and countries scoring high on an integration scale.

Influence international financial institutions (IFIs) to support favourable projects submitted jointly by two or more African nations and either establish or increase lending resources at regional integration windows at IFIs, thereby guiding CFTA member states to gravitate toward integration more quickly.

Make grant and technical assistance available to African states making the most progress on metrics related to trade efficiency, including harmonisation and predictability of rates and tariffs, speed of customs clearing, and the rate at which goods clearance is accomplished at ports.

Increase resources for transaction advisory services like the Africa Legal Support Facility and the International Senior Lawyers Project to increase the supply of technical support to African governments as they negotiate loans, public-private partnership agreements, production sharing contracts, and mineral development agreements with both bilateral and private sector partners. Many African governments are outgunned in these negotiations.

Encourage US private and public lending and investment in places that have made the most progress along these lines and lead a coalition of other partners, including China, to act in concert on these initiatives.

President Paul Kagame of Rwanda captured the hope of the continent during his remarks at the CFTA signing ceremony: “The promise of free trade and free movement is prosperity for all Africans.”

Prosper Africa can and should help deliver that promise. 

Gyude Moore is a visiting fellow at the Center for Global Development. He previously served as Liberia’s minister of public works with oversight over the construction and maintenance of public infrastructure

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