During his recent trip to Africa, President Obama launched “Trade Africa”. This new partnership between the US and sub-Saharan Africa aims to increase internal and regional trade within Africa, and expand trade and economic ties between Africa, the United States, and other global markets.
In its initial phase, Trade Africa will focus on the East Africa Community (EAC) – Burundi, Kenya, Rwanda, Tanzania and Uganda. The EAC is already an intra-African trade success story; intra-EAC trade doubling in the past 5 years, and the region’s GDP has risen to more than $80 billion, quadrupling in only 10 years. Obama’s new scheme aims to double intra-regional trade in the EAC, reduce the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to land-locked Burundi and Rwanda in the EAC’s interior by 15%, and decrease the average time a truck takes to cross selected borders by 30%.
The launch of Trade Africa, and a sister project “Power Africa”, formed what the President described as a “shift in paradigm” in his approach to the continent. Africa should no longer be viewed as simply a recipient of aid, but as a destination for trade and investment. But, while Obama should be commended for abandoning his aid-centric approach to the continent, this policy is hardly new – according to Rosa Whitaker, Trade Africa is little more than repackaging of policies established by Clinton and expanded by George W. Bush.
Ms Whitaker argues that Obama should be incentivising US companies to invest in all sectors in Africa by offering tax benefits to those willing to invest, and pushing for a stronger and more permanent African Growth and Opportunity Act as its temporary nature is a disincentive to potential investors. Businesses hesitate to invest in Africa even when they are aware of the opportunities it affords; they need to know that the US government has confidence in Africa’s future.
The launch of “Trade Africa” came hot on the heels of another American effort to boost trade with the African continent. The Africa Sub-Committee of the Senate Foreign Relations Committee passed the “Increasing American Jobs Through Exports to Africa Act”, which includes the strategic goal of aligning American commercial interests with development priorities in Africa.
Trade also became the centre of development policy on this side of the pond this week, with the announcement by DFID Secretary of State Justine Greening that the UK would be focussing more development assistance on trade to help developing countries move away from aid. Speaking at the Commonwealth Secretariat yesterday, Ms Greening announced a raft of new policies including a new £7.2m investment in the Geneva-based International Trade Centre, and a £57.4m investment to improve trading in Uganda and Kenya.
“Ultimately trade is the most important driver of growth” said Ms Greening. “Trade between nations creates jobs and prosperity….It is in all our interests, from the fisherman in Kenya to the financier in Kent, for the world’s poorest countries to reap the benefits of free and fair trade.”
Trade is being pushed up the international development agenda on both sides of the Atlantic, marking a “shift in paradigm” in approach to the continent. Africa should no longer be viewed as simply a recipient of aid, but as a destination for trade and investment. Obama used his recent visit to the continent to launch “Trade Africa”, and UK International Development Secretary Justine Greening announced yesterday that the UK would be focusing more development assistance on trade to help developing countries move away from aid, saying, “Ultimately trade is the most important driver of growth. Trade between nations creates jobs and prosperity….It is in all our interests, from the fisherman in Kenya to the financier in Kent, for the world’s poorest countries to reap the benefits of free and fair trade.”