The United States and Africa: the Force of Great Programs

In Africa, American development aid has risen considerably. Between 2006 and 2009, it went from $2.1 billion to $8.2 billion (€1.6 billion to € 5.7 billion). However, due to the world financial crisis, there was a downturn in 2010, registering $8.1 billion in aid, and then a sharp fall in 2011, registering $6.9 billion. This situation complicates the achievement of broad American objectives on the continent, namely the fight against epidemics (malaria and the AIDS virus) —which represents approximately 50 percent of total American assistance — as well as the fight against climatic change and efforts for food safety in relation to the Obama administration’s new Feed the Future initiative.

One strategic domain has nonetheless been spared by the budget cuts, and that is economic cooperation and aid to the African private sector. Stemming from the “Trade not aid” principle, this policy has undergone a remarkable evolution in the last ten years.

The first step was the launch of the African Growth and Opportunity Act (AGOA) in 2000. As the cornerstone of economic relations between the United States and the continent, it eliminates customs duties on more than 6,400 products coming from eligible African countries, i.e., those adhering to rules of good governance.

With the Obama administration having restored the eligibility of Niger, Guinea and the Ivory Coast in October 2011, 40 sub-Saharan countries benefit from the act today. AGOA is a relative success. A positive point is that the overall exchanges between the United States and sub-Saharan Africa went from $27 billion in 2001 to $95 billion in 2011 ($91 billion for AGOA countries).

However, petroleum products represented more than 90 percent of the $74.2 billion worth of African imports to the United States in 2011, a rather consistent proportion throughout the decade. As for the $21 billion worth of American exports to Africa (machine tools, vehicles, etc.), they are concentrated in four markets: South Africa, Nigeria, Ghana and Angola. In fact, AGOA did not slow down the rise of China, which became Africa’s number one trading partner in 2008.

Squabbles

In the opinion of all the parties involved, today’s urgency is to reinforce the African productive sector in order to diversify exports from the continent to the United States. This will be an important theme at the 11th AGOA forum to be held on June 14 and 15 in Washington. There is one unsettled urgent issue — the provision for the American market’s openness to African clothing manufacturers using raw materials coming from other countries. Due to squabbles between Republicans and Democrats, Congress’s extension of this provision, expiring on Sept. 30, 2012, is far from certain.

According to estimations, some 300,000 jobs in Africa are threatened. The African Coalition for Trade —which represents the exporters from nine AGOA countries— claims that African textile manufacturers have already lost 35 percent of their orders to the benefit of Asian competitors. But there is another hovering threat and that is the extension of the very principle of AGOA — expiring in 2015 — to all of the least developed countries including those in Asia which are very competitive in the textile market.

An equally essential item in the economic cooperation policy between the United States and Africa is the Millennium Challenge Corporation (MCC), which has been in place since 2004. This agency has an annual budget of around $1 billion. Its mission is to reduce poverty in the world through the promotion of economic growth. For this purpose, the MCC makes large-scale grants available to specially selected countries for a period of five years depending on 17 indicators that range from liberty to good political and economic governance as well as scope of corruption. The MCC has recently suspended its operations with Mali and Malawi.

Efficiency

Another characteristic is that states must present their own investment projects that are rigorously evaluated by the MCC. Today, eleven sub-Saharan nations benefit from these programs (known as compacts) which are generally used for the reinforcement of their infrastructures (Bamako airport, the Port of Cotonou, etc.). Ghana, for example, is receiving $547 million over a period of five years, a part of which will be used for the restoration of its motorway network.

According to Todd Moss, of the Center for Total Development, a think-tank based in Washington, the creation of the MCC, “deeply renovated debates on the effectiveness of development aid. It became a model.” But “it cooperates only with the countries which have the best indicators,” he adds.* Based on the MCC’s approach — selectivity, transparency, national appropriation — the Obama administration recently launched Partnership for Growth, an initiative which increases economic co-operation with four countries, including two in Africa: Ghana and Tanzania, the usual “model students.”

*Editor’s Note: The original quotations, though accurately translated, could not be verified