Recent US trade mission to Africa, ‘hopes’ for development

AFRICA— While United States trade wars with a number of countries ramped up earlier this month, a delegation of U.S. government agencies and business leaders toured several African nations, looking to build trade relationships and foster investment on the continent.

The delegation was organized by the U.S. Department of Commerce and the President’s Advisory Council on Doing Business in Africa, or PAC-DBIA, and included more than a dozen chief executive officers and representatives from 11 U.S. government agencies. The group traveled to Ethiopia, Kenya, Côte d’Ivoire, and Ghana, meeting with local governments and businesses.

It was a “fact-finding and fact-making mission,” U.S. Under Secretary of Commerce for International Trade Gilbert Kaplan said.

While trade can be an important tool in boosting economic development, increased trade does not necessarily improve local livelihoods, and that issue was not lost on the group.

Companies on the trip, including large multinationals such as Caterpillar and Bechtel, talked about not only having a social license to operate but also about trying to build local capacity and talent.

The U.S. strategy is to co-create solutions, and is often a longer term proposition. Other countries and investors, however, can offer financing that fixes current problems and create quick wins, said  C.D. Glin, the president and CEO of the U.S. African Development Foundation, a U.S. government agency that provides grant funding to African enterprises in need of seed capital and technical support, and supported the organization of part of the trip.

“It is a direct affront to other international, non-U.S. development, business development models,” Glin said.

This was the first trip organized by PAC-DBIA during the Trump administration, and part of the intent seems to be trying to bolster U.S. relationships with African nations as competitors such as China grow their investments on the continent.

Bitange Ndemo, a Kenyan scholar and former assistant minister for ICT who attended the summit in Nairobi, was optimistic about the efforts.

“Trade relations between Kenya and the U.S. are good and are getting better even after this visit,” he told Devex.

The trip was an opportunity for business leaders to get some on-the-ground experience, raise concerns about what barriers they face, and explore new opportunities. Different aid agencies working on trade-related issues were also able to glean different ways to collaborate and support countries achieve their objectives.

A shifting paradigm

A common theme in conversations with government leaders was a desired change in their relationships with the U.S. government — to move away from a focus on aid — several trip participants told Devex.

In Ghana particularly, leaders said they wanted less aid and more trade, said Jonathan Nash, the Millennium Challenge Corporation’s chief operating officer. A focus on trade is not new to MCC, as in fact much of its portfolio — $7 billion of the $13 billion it has invested — focuses on trade-related assistance, from ports to roads and logistics.

I think the PAC-DBIA is a good forum for the U.S. government to hear the challenges firsthand that the America business community is facing [when trading in Africa] and for us to try and craft solutions, or at least engage our African colleagues to figure out ways to minimize disruptions to trade,” said Thomas Hardy, the acting director of the U.S. Trade and Development Agency.

While it is still unclear how this trip might contribute to future U.S. engagement on the continent, or if new programs will emerge as a result, Nash pointed out that it sent a clear signal to African partners, as Commerce Secretary Wilbur Ross participated in some of the trip and Kaplan was there for the entire trip.

“This trip was unique in that respect: A number of agencies, not all of which have a field presence, talk[ing] about the suite of tools the government offers to country partners,” Nash said.

Agencies always have opportunities to improve communication to country partners about how the various agencies and departments work together to form U.S. policy, and what tools are out there — and visits like this are a way to have those conversations, he added.

The trip was a “good forcing function” to get USTDA, the Overseas Private Investment Corporation, USADF, and other agencies to see themselves as part of a continuum of supporting businesses as they grow, with the U.S. Agency for International Development also playing a critical role in scaling and through regional trade hubs, said Glin.

“We keep our heads down and do work, we don’t make a point of collaborating as much as we need to,” Glin said.

Business challenges

Many of the corporate leaders on the trip saw opportunities for increased business, though some challenges still remain in improving trade relationships.

The problem is often not money, but concern about risk and the quality of a potential investment, explained Lida Fitts, USTDA’s regional manager for sub-Saharan Africa. During the trip, USTDA announced it would provide a grant to the Kenya Tea Development Agency to undertake a feasibility study on the viability of solar power at tea factories.

“There is actually no shortage of financiers for this type of projects, but they won’t come into action and put money in until there is a clear and objective analysis,” Fitts told Devex.

Corruption both broadly and at ports or customs continues to pose a problem for U.S. businesses, an issue that came up on several of the trade mission’s stops, including in Kenya.

Corruption is “undermining the country’s future, slowing growth, and hurting citizens,” said U.S. Ambassador to Kenya Robert Godec. “The United States welcomes President Kenyatta’s strong commitment to address this issue head on, and we are providing assistance in the fight. The battle against corruption can be won — but it will require hard work and a sustained commitment by all Kenyans.”

Kenyan President Uhuru Kenyatta told the PAC-DBIA delegates that his government was undertaking measures to address corruption and insecurity, including increasing funding for security services and efforts to make the country more conducive for business.

“I invite these companies to work with us in the transformation agenda,” he said, adding that his “administration will ensure that we create an open and transparent business environment.”

A lack of efficient borders is another problem, particularly for U.S. businesses that cannot pay the bribes non-U.S. companies might be able to use to speed the process, Nash said.

He added he would not be surprised if the U.S., through various partners, offers assistance to countries to improve port and customs operations efficiency, maybe helping them move from paper-based to digitized systems.

Nash went to the port in Abidjan, Côte d’Ivoire, to see the situation firsthand and understand how MCC investments could reduce congestion, improve timing, and get goods moving more quickly, he told Devex.

In Côte d’Ivoire, the U.S. would also like to see more transparency, efficiency, and fairness in the government’s procurement systems, Kaplan said, adding that the U.S. would work with the country to achieve its goals and improve customs and government procurement processes.

The U.S. government will also help to organize reverse trade missions where senior business executives and government officials from Côte d’Ivoire would come to the U.S. to learn how to carry out more food processing and mining exploration, which are key priorities for the country, he said.

The path ahead

The U.S. already has a number of tools in place to help boost trade relationships and work toward inclusive growth, but some are underutilized, trip participants pointed out.

“We have the tools, AGOA [African Growth Opportunity Act] exists, why are we not maximizing it?” Glin asked.

He called the trip a “crescendo moment” with U.S. agencies coming together to discuss better implementation. New ideas were floated, but there was also a sense of needing to maximize existing tools and commitments, he said.

The trip helped break down barriers for some investors. Spending time in-country helps people understand the market and risks — and forging those relationships is valuable to African countries as well, said Laura Lane, the president of global public affairs for UPS and vice chair of PAC-DBIA.

“Some companies are present in the [African] market, but not enough, and we bring a huge value to the marketplace, not just because of the way we do business but the values and the local training aspect on project sustainability. These sustainable practices are at the core of our businesses,” she said.

By Devex News

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