The Trump administration has announced its strategy for increasing trade with Africa during the 12th U.S-Africa Business Summit, hosted in Maputo this week. Speaking on the opening day Deputy Secretary of Commerce Karen Dunn Kelley emphasized the value U.S. companies can bring while highlighting the “increasingly sophisticated – but too often opaque – business practices of foreign competitors.”
Over the past forty years, the U.S has maintained a strong foreign aid relationship with the continent spending almost $120 billion from 1980 – 2012 in sub-Saharan Africa alone, however it has seen its trade diminish significantly with exports dropping by almost a third since 2014 and imports falling by 66% from 2006 – 2016. At the same time the U.S. has faced a surge in competition from the European Union and China, who’ve both significantly ramped up their partnerships with the continent, particularly the latter who now almost matches U.S. aid donations while providing low interest loans and barter deals in return for carbon fuel, minerals and other natural resources.
During the budget announcement for 2020, President Trump announced a 50% cut in aid to health programmes in Africa with the aim of fundamentally transforming the nature of its bilateral relationship from “aid-based focus to a true trade partnership.”
As part of the transformation, the U.S administration has announced two key initiatives. The first, which was signed into law last year is the United States International Development Finance Corporation (USIDFC or DFC), which was mandated by the Better Utilization of Investments Leading to Development (BUILD) Act of 2018. Once launched, the DFC will be a consolidation of the Development Credit Authority (DCA) and the United States Agency for International Development (USAID) with the Overseas Private Investment Corporation which will provide $60 billion (the same amount Chinese President Xi Jinping pledged in September) in loans, loan guarantees and insurance for U.S. companies that invest or operate in development nations.
The second is Prosper Africa; an inter-agency initiative that aims to double US trade and investment with Africa over the next five years. Speaking at the Corporate Council on Africa Conference, USAID Administrator Mark Green commented, “It’s not a program it’s a new approach. A new framework. A framework that seeks to liberate and mobilize private enterprise. I believe it gives us an opportunity to double two-way trade and investment in the years ahead. Prosper Africa pulls together, harmonizes and harnesses our foreign assistance tools in ways that will promote stability and good governance and an enterprise-friendly enabling environment. Prosper Africa is different because it is demand-drive and private sector lead. It aligns the tools of our public sector to leverage the innovation, resources, knowledge and networks of our private sector.”
While both strategies appear to have been well received, notable criticism was drawn between the interpersonal efforts of the Chinese administration and the sheer absence of any prominent U.S representatives. A former minister of public works, Gyude Moore was quoted in The Washington Post stating, “The U.S. does not have the decency, the courtesy, to send a cabinet-level official to this event.”