Friday, June 21, 2024

The USA should understand why trade partnership with Africa has failed in favor of China and change its coercive ways.

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By Edward Chisanga

In 2000, USA President Bill Clinton created the Africa Growth Opportunities Act (AGOA) as a tool for his country’s trade partnership with Africa. According to Brookings, “Until then, U.S. relations with Africa had been defined largely by Cold War calculations, donor-recipient relations, aid for poverty alleviation and emergency relief. But AGOA moved the U.S. away from a singular reliance on development assistance as a strategy for engaging African countries and introduced trade between these countries and the U.S. and investment by the United States as stimuli for economic development and poverty reduction.”

While most Africans thought this new partnership was for the US to help African countries boost their trade and development portfolio, and the US government preached so, Brookings states, “During the last 12 years, moreover, AGOA has both contributed to and benefited from the many transformative trends in Africa. One of the most significant of these trends has been the increase in democratic governance. The liberation of the states of the Soviet Union and Central and Eastern Europe from communism after the fall of the Berlin Wall in 1989 also created a demand for greater accountability and governance in many African nations. As Steve Radelet notes in Emerging Africa, the number of democracies in Sub-Saharan Africa has increased from 3 to 23 within the last 25 years.”

In return, what has Africa gained since good governance is not its priority but that of the US, literally speaking?

Some, in particular the US argue that AGOA has brought transformation in Africa’s trade partnership with the US. Exports have grown remarkably and have contributed to economic development in the continent. I vigorously dissent that view. Yes, some African countries experienced rise in exports to the US but these were mainly rentier states exporting largely primary commodities instead of manufactured goods, the reason d’etre for AGOA.

Although AGOA provides free market access to the largest export market in the world, it’s Asian countries like Bangladesh, Viet Nam and Cambodia that are barred from these free market access opportunities that export massive amount of manufactured goods to the US. Africa doesn’t. Manufactured exports by South Africa, Lesotho and Madagascar, etc to the US are simply too low to write home about. For example, in 2021, Bangladesh’s exports of manufactured goods to the US totaled $7.4 billion in comparison with Africa’s $9.9 billion, or almost the same. The three African countries that are being visited by US Vice President this month together exported less than $70 million, a deplorable state of affairs.

In terms of total exports of all products, the US market is no longer Africa’s significant place. The place is China to which the continent has diversified market, but, without corresponding diversification of export products. As Figure 1 below shows, Africa has divested exports from the US to China. Remember that in 2008, Africa’s exports to the US reached unprecedented level of $112 billion shown in Figure 1. But today, this has fallen to less than $40 billion while rising to about $100 billion to China.

At country level, Figures 2, 3 and 4 below show that the three African countries being visited by Vice President Harris of US this month follow the trade trajectory shaped by Africa in terms of forsaking the US as their main export markets in favor of China. Among them, in terms of absolute values, Zambia champions the exodus from the US partnership in favor of China.

Implications for the future

Africa must tell the US that trade as tool for building robust partnership with Africa has failed lamentably and only perpetuated Africa’s marginalization as exporter of primary commodities and importer of manufactured goods. This must change and replaced by a tool that will enable Africa to integrate in the global economy and strengthen partnership between the two on long term. If the US economy is built on exports of manufactured goods, enabling Africa to follow even in a small way is not asking for too much. Now the US has another chance to show the world that it can be Africa’s main friend. Let that be shown in simply helping Africa to industrialize, not to give more money for democracy. Just as man cannot eat bread alone, Africans and Zambians cannot eat democracy alone. They need more important tools.

One is foreign direct investment from the US, using the US-Viet Nam model. Support in investment in productive sectors, namely manufacturing, human capital, infrastructure, technology, the services sector, etc, not democracy per se is likely to entice African countries to shift back to the US. Equally, these factors will help Africa to export manufactured goods to the US and the world and integrate the continent in the global economy. The traditional US model of exchanging aid, market access and related things to force Africa to follow democratic path defined by the former is unlikely to be accepted. Africa left the US to go to China largely because of this traditional model.

To win Africa back sustainably, the US should not repeat the mistake made earlier. Just as democracy’s success in the US was based on economic development, so will Africa’s. Not on coercion or tricks. Africa goes to China because China does not impose democracy. That’s why tying IMF’s aid support, US’s aid support to democracy in Africa may be wasted opportunity, once again. Beating China means doing better than China. Sticking to old ways won’t beat China. Africans have a penchant to agree to everything on the table. But they also have a penchant not to implement agreed commitments. They will simply shift back to China quietly.

2 COMMENTS

  1. This is like asking someone to stop eating Nshima when it’s the only thing they’ve known in their life. USA will never change its interests. We are the ones who need to change and focus on our own interests and ourselves by first separating from our oppress0rs.

  2. The Americans can’t win Africa back…………

    They don’t have enough money any more……..

    Their only ace card was to shower africa with money. But they don’t have money now.

    The Chinese win because of work ethic. They work like ants. They come to do the building work for you. Americans cant come and do labour work for the lazy African………..

    where as the Chinese get stuck in………..

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