Executive summary

In view of the upcoming U.S.-Africa Summit in August 5-6, 2014, the position paper conducts an assessment of the US-Africa relations with a specific focus on the Southern Africa Region. The paper aims to provide a concise analysis of the state, evolution, challenges, opportunities and possibilities for mutually beneficial U.S.-Southern Africa relations. More importantly, the position paper identifies key issues to guide policy in fostering sustainable growth enhancing strategic partnerships between the US and Southern Africa and highlights the requisite capacity development priorities that should be integral in the partnership models sought. In line with the scope of analysis as outlined by the African Capacity Building Foundation (ACBF), the recommendations are based on an evidence based assessment of key aspects relating to peace and security; economic (trade, investment, aid, remittances); socio-cultural and governance. The key economic challenges in the region are highlighted with emphasis for an inclusive partnership approach that turns the current challenges in the region into opportunities for strategic developmental partnerships.

The analysis demonstrates that the US has been a major contributor to the economic, social and human progress with development assistance on various fronts in Southern Africa through contributing among others, to education, health and infrastructure development. Countries in the region have significantly benefitted from the aid assistance in the maintenance of peace and security, addressing conflict in their economies and making progress on democracy, governance and accountability. However, although notable progress has been achieved with assistance from the US, sustainable development in the Southern African region given the still prevalent challenges on some sectors such as health, education, agriculture, power and energy, water and the manufacturing sectors requires partnerships between the two regions that would spearhead foreign direct investment flows into these sectors to stimulate direct involvement in the production process and value chain development to create competitive industries in the region.

A major finding in the Southern African region is that the role of the US on trade and investment, considered critical for creating sustainable industrial development and growth remains limited. Partnerships between the Southern Africa region and the U.S. should thus, aim to expand trade with investments into potential export sectors such as manufacturing, services, tourism, textile, agriculture to broaden the export and industrial sector. There is a potential for export expansion in Southern African countries which can also boost regional export performance among regional economic communities of SADC with the US as a potential market. Southern Africa should seek strategic partnerships with the US that will expand trade between the two regions, boost export diversity and enhance industrial development. A number of opportunities exist in Southern Africa in the agricultural, manufacturing, health, education and services sectors where the US can venture into export processing zones and diversify the export base beyond primary exports.

The eminent expiry of AGOA which has contributed to textile sector in the region and major avenue for trade between the US and African countries should be extended and broadened for the US market to offer more market opportunities to other sectors of the region. It is also the position in this paper that the Southern African region should seek a revision of AGOA to ensure more inclusiveness, accessibility and permanence, so that the benefits extend beyond a few countries and products.

Progress on the exploitation of trade benefits by Southern Africa still remains limited despite current support initiatives from the US and other development partners. This is clear from the limited export and trade profile among Southern Africa countries and other trading partners. Capacity constraints and technical expertise have been a major constraint to countries in the region to fully benefit from AGOA and other trade agreements. Trade capacity development should thus be given prominence in US-Southern Africa partnerships and future trade initiatives and form a priority for consideration and continued support in the region. Trade capacity building and technical assistance designed to help the member countries of Southern African Countries in regional economic communities such as SADC, SACU is key to take full advantage of benefits not only under AGOA so that they can effectively participate in the global trading system and the World Trade Organization (WTO).

Overlapping memberships in the region requires capacity building for regional countries. Capacity is requisite in, trade negotiations, implementing commitments and taking advantage of new trade opportunities. Linked closely is the need to increase and facilitate trade in the region. Expanding international exports and intra-regional trade is seen as a key component of increasing sustainable economic growth and reducing poverty in the region.

Trade expansion and investment initiatives which take advantage of current regional integration dimensions are quite critical to foster regional integration in the region. Therefore, more focus should be in partnerships that reinforce the current regional integration objectives of regional economic communities such as SADC in the Southern African region. A number of challenges in the region require a regional approach in policies for example the social, political, democracy and accountability to attain peace and security in the region. Trade and investment policies will be effective if they take a regional approach to broaden the growth and development process in the region especially in addressing the high poverty and unemployment rates among Southern Africa countries.

Further, although the US is a major investor worldwide, investment inflows from the US into the region remains low. Investment inflows in the Southern region from the US also remain limited compared to other investors such as Brazil, Russia, India, China, and South Africa (BRICS). Recommendation is therefore for investment partnerships particularly in major sectors to stimulate further industrial development. This is important for sectors which constrain Southern Africa’s development process where major investments are required. The strategic partnerships between the US and Southern Africa should specifically be focused on infrastructure development, water, sustainable energy generation and power supply. Specific partnerships should also focus on information communication technology (ICT) development, its availability and access to enhance efficiency, productivity and competitiveness which also plays a significant role in creating conducive business environments. ICT features among the major constraints to foreign direct inflows and production efficiency in the region.

Trade and investment are avenues that more mutually beneficial partnerships with the US can be modeled upon to attain sustainable growth in the region. Their expansion is central to addressing current challenges facing many African regions including Southern Africa particularly those of high unemployment, poverty rates and inequality. They also serve as a vehicle for transforming the competitiveness of Southern African countries particularly through gains from productivity. Strategically, trade and investment are pathways to the attainment regional integration objectives, sustainable development and attainment of long term goals such as those of the Millennium Development Goals (MDGs)

The overriding position for the Southern African region partnerships (at various levels, sectors and industries trade and investment, capacity development) emphasises a shift from aid dependence as a mode of developmental intervention to more beneficial sustainable development partnerships as requisite. The existing economic, social and institutional challenges present opportunities for investment partnerships and strategic sector and industry development approaches that can enhance the growth process in the region while also benefitting the US economy with potential returns to investments. The other pertinent partnerships should focus on capacity for institutions and human capital development to support the growth process as well as on infrastructure development which is fundamental to support the investment, trade and business environment which is a limiting factor to private sector development and the competiveness climate in the region.

Capacity to strengthen the local actors and institutions that are ultimately responsible for transforming the Southern Africa region is key. This calls for capacity building partnerships and support in the context of Southern Africa to create stable economic and political environment which is required for investment in the region. Partnerships and supportive initiatives should aim to strengthen state institutions and improving their capacity to provide security and development, based on principles of good governance and the rule of law to entrench lasting peace and improve living standards of citizens. This is an area that requires capacity building support for institutions in Southern Africa and this should be emphasised in partnerships for institutional capacity building for good governance, democracy and accountability.

Partnerships should be inclusive to address current economic, social and institutional capacity development gaps which constrain the development process in the Southern African region. An inclusive approach to successfully attain broad based growth and transformation in the region should integrate and embrace job creation, poverty reduction, human skills, rural development, institutional capacity development as imperatives. Consideration of existing challenges and turning them into opportunities for investment and other partnerships provides for an inclusive approach to unlocking the growth potential in Southern Africa which would be beneficial to the US as well.

Partnerships for investment and industrial development should embrace employment creation elements to address the current challenges of high and persistent unemployment, poverty, inequality in the region. The development of the private sector, entrepreneurship and the SMME sector are key in job creation and should be given prominence among priority potential opportunities which can directly contribute to addressing poverty, inequality and rural development. Other capacity building support should be focused on capacity building of institutions to promoting business environment and competitiveness which offer the supportive environment for investment and trade strategies.

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Background

Emanating from the Addis validation workshop on regional Position papers on US-Africa relations

Recognized as the fastest growing region in the world with enormous natural resource potential, Africa offers vast opportunities in terms of new technologies, investments, access to potential markets, and new types of consumers. This explains the growing interest of countries such as China, India, Malaysia, Turkey, Brazil, etc. which have recently increased their presence and investments in the continent. The U.S has been relatively slower to react to the potentialities and new developments happening in Africa. However, recently, there has been a change in the dynamics: Africa now plays an increasingly significant role in supplying energy, preventing the spread of terrorism, etc. and is recognized as a strategic partner. The Africa Growth Opportunity Act (AGOA) and the various Bilateral Investment Treaties (BIT) are a witness of the growing interest and willingness to partner with Africa.

The US-Africa Leaders’ Summit will offer Africa’s leadership an opportunity to engage with President Obama, his Cabinet, and other key leaders, including business executives from across the U.S., members of Congress, and members of civil society. For a beneficial, effective and well-thought engagement, African leaders need to have up-to-date information and sound knowledge on the state of the relationship, the priority areas that need special attention and the way forward for mutually beneficial US-Africa relations.

It is in recognition of the strategic importance of the Summit and the potentialities offered by a mutually beneficial US-Africa relation Africa relation that the African Capacity Building Foundation collaborated with six of its supported think tanks to draft position papers on US-Africa relations. The main rationale for the position papers was to interrogate US-Africa relations from a regional perspective in order to provide a nuanced analysis of the state, evolution, challenges, opportunities and possibilities of US-Africa relations in Francophone West Africa (French); Anglophone West Africa; East Africa and the Horn; Southern Africa; North Africa (French); and Central Africa (French). Click here to download the regional Position Papers.

Download the Southern Africa Position Paper and the Framework for a Common African Position below.