U.S. Secretary of State Hillary Clinton said last week that new 21st century technologies are creating new opportunities and unlocking untapped potential in Africa. Addressing a conference of African women entrepreneurs and young leaders at the State Department, Clinton said that more than 315 million people in Africa were using mobile phones, more people have gained access to clean water and fewer have died in violent conflicts.
She said that even after the global financial crisis, Africa’s economy is expected to grow at a rate of 4.5 percent next year, faster than Latin America’s, Central Asia’s, Europe’s, or the United States’. And last year alone, two-thirds of sub-Saharan African nations implemented reforms to improve their business climates.
“All of these numbers tell the story of a continent on the rise,” she said, and added, “More responsible fiscal policies coupled with increased political stability and rising productivity has both spurred growth and attracted investment.”
The partnerships between African and U.S. businesses that came about as a result of the African Growth and Opportunity Act, or AGOA, has helped a growing number of African businesses build on this success at home and reach new markets abroad. AGOA is a 2001 law meant to open up U.S. markets for African products. It was initiated on the premise that export-driven growth would provide Africa with sustainable economic development and wider prosperity. As a result of that law, major international corporations are opening new offices in African capitals and opening their eyes to the continent’s investment potential, Clinton added. “But we all know, despite the best of intentions, AGOA has achieved only modest results and has not lived up to the highest hopes of a decade ago,” she said.
The U.S. under President Obama is working to increase trade with Africa in nonpetroleum goods, and on that front, there is still a lot to be done. Petroleum products still account for the vast majority of exports to the United States, and there has not been the diversification of growth of exports that AGOA was expected to spur. And while sub-Saharan Africa comprises 12 percent of the world’s population, it accounts for less than two percent of global Gross Domestic Product.
That’s why despite Africa’s recent progress, there are still challenges that have to be confronted. Indeed on some millennium development goal targets, such as combating disease, Africa has actually lost ground in recent years. Clinton said these challenges are real and they must be addressed if Africa’s vast potential is to be unlocked, adding that the United States is committed to being a friend and a partner in doing just that.
“We believe in Africa’s promise and we are committed to Africa’s future,” she said. “Under President Obama’s leadership, the United States is taking a new approach in Africa, rooted in partnership, not patronage. That means we are looking for sustainable strategies that help nations build capacity and take responsibility. This gives people the tools they need to help themselves and their communities, to empower problem-solvers at the local and regional levels, be they entrepreneurs, NGOs, or governments themselves.”
She said the State Department is also working to integrate its trade and development strategies with greater emphasis on bottom-up, locally-driven solutions – fostering regional markets within Africa, boosting trade and aid effectiveness, and working with partner governments to promote structural reforms and gradual market liberalization. “The Feed the Future Initiative” is one of the Obama administration’s new focuses on local solutions and greater regional integration. It is a comprehensive effort to address the root causes of hunger and poverty by investing in country-led plans such as those in Rwanda and Ghana that are completing the African Union’s comprehensive agricultural development program process.
The initiative involves expansion of regional integration, which makes it easier to shift food from areas that have a surplus to those with shortages, increasing availability and reducing volatility of prices. And greater regional market access for things like seeds, fertilizers, and crops also increases producers’ incentives to make sustained investments in agricultural technologies. As part of the initiative, the U.S. is supporting efforts such as the Economic Community of West African States, a regional agricultural development and food security investment plan, while working to streamline trade corridors in Western Africa. She promised additional investments in other country and regional plans that prioritize the expansion of intra-regional trade so these benefits can be more widely-shared.
Also, through mobile banking and other innovative initiatives, many of them pioneered by African entrepreneurs and activists, the U.S. Agency for International Development is working to help more people in more places participate in the formal economy.
“We’ve taken new steps to support African entrepreneurs, a number of whom attended President Obama’s Entrepreneurship Summit this spring in Washington,” Clinton said. “I personally believe that the old debate between trade versus aid is out of date. We need both trade and aid, and particularly we need aid that supports trade. And the expansion of this conference demonstrates the broadening of our approach. The State Department is sponsoring the AGOA’s Women’s Entrepreneurship Program. These are talented, creative women who are leading businesses, making jobs available, and seizing economic opportunities.”
She said women can drive social and economic progress, lift up themselves, their families, and their communities if they have the opportunity and the tools to participate. Yet women, too often, still confront barriers that limit their participation in the economy and, therefore, deny their families and their countries of the benefits of those contributions. That’s why the U.S. is working to help more women entrepreneurs participate in international markets and take advantage of AGOA’s benefits. There’s a lot of value in export-oriented growth, but there’s also a better understanding that the development of domestic and regional markets is a necessary prerequisite to taking full advantage of global opportunities. Today, the nations of Africa trade with each other less than any region of the world.
The lack of regional economic integration compounds the weaknesses of individual African markets instead of consolidating their strengths. It prevents African businesses from building the foundations they need to fully and effectively participate in global trade. And for all countries, integration offers a chance to share the cost of developing new infrastructure and achieving economies of scale.
She cited the benefits of greater regional integration in the progress and potential of the East African Community, which brings together the 127 million people of Kenya, Tanzania, Uganda, Rwanda and Burundi and their combined GDP of $73 billion. In 2005, these nations launched a customs union and last month they declared a common market. The East African Community eliminated or reduced tariffs on goods traded within the community, made it easier for workers and companies to do business in any of their countries, and created institutions to implement policies uniformly across the region. Investment and foreign trade has followed. Between 2008 and 2009, trade between the East African Community and America rose by more than 13 percent.
Clinton also urged that Africans maximize what is closest to home: markets that are only going to get bigger if they are nurtured and given the chance to grow.