Competing smarter: Assessing the report from the President’s Advisory Council on Doing Business in Africa
One positive outcome of last year’s U.S.-African Leaders Summit was the creation of the President’s Advisory Council on Doing Business in Africa (DBIA), whose purpose is to make recommendations on how to strengthen U.S. commercial engagement on the continent.
The council, a group of 15 seasoned business leaders with a genuine understanding of Africa’s business environment, recently issued its first report and set of recommendations.
Important proposals are put forward, such as strengthening healthcare infrastructure as well as the perishable supply chain in order to reduce post-harvest food losses. Another critical recommendation is for strong advocacy for African governments to seize global leadership in bringing the World Trade Organization’s (WTO) Trade Facilitation Agreement into force prior to the December 2015 WTO ministerial in Kenya, the first such session to be held in Africa.
The entire report deserves careful consideration and is a welcome addition to the increasingly useful policy debate on how to increase economic ties between the U.S. and Africa. However, several key aspects of the U.S.-African commercial equation were neglected within the report and should be essential parts of any conversation about how to make American companies more competitive across the continent.
Lingering questions and important omissions
Notably, there is only one reference to the African Growth and Opportunity Act (AGOA), the cornerstone of the U.S. commercial relationship with Africa, and it is an easily missed expression of “trust” that Congress will renew the legislation this year.
A full-throated endorsement by the council of AGOA’s renewal for 15 years, as the Obama administration has called for, would have been important not only as a strong signal of support from these respected business leaders and companies, but also in setting a clear context for the group’s recommendations.
In fact, this omission, as well as the report’s equally passive call for Congress to fund the Export-Import Bank, reflects a more fundamental dilemma of the document: Is this a Commerce Department report or a document whose recommendations aim to strengthen a “whole of government” approach to doing business in Africa, inclusive of the nearly 12 federal agencies involved in the DBIA campaign? On this, the lines are blurry.
A key recommendation of the council is the creation of a “forward-deployed” and “business-driven” U.S.-Africa Infrastructure Center. The purpose of the center would be to “align business resources with government resources to identify, vet, prioritize, and develop a unified approach to compete for critical projects.”
This is a timely and creative proposal. Given the caution of U.S. companies, the complexity of Africa’s investment environment, and China’s dominance in this sector, there is a compelling need for coordinated support from all relevant U.S. agencies to help American companies win African infrastructure projects.
What is not clear is who would “own” the U.S.-Africa Infrastructure Center. Would it be State, Commerce, USAID, the private sector, or a hybrid of agencies? Moreover, how would this center align with the efforts of the administration’s new Trade and Investment Hubs whose mission was also recast at last year’s summit to help U.S. companies capture market share on the continent?
The report addresses the critical issue of access to “reliable” capital and makes the important recommendation that the Commerce Department develop a public-private partnership with institutional investors in an effort to reduce risk and increase investor confidence. It would have been helpful to have mentioned the Overseas Private Investment Corporation (OPIC) in this context given the influential role the agency plays in risk-mitigation across the continent. Despite its successes and indeed the net revenue it generates for the U.S. Treasury, OPIC remains understaffed and subject to key regulatory constraints.
There is also useful discussion of an “Investor Toolkit” in the report, building on the knowledge of the U.S. Foreign Commercial Service (FCS), to help U.S. companies identify and vet local partners and gain local market intelligence. The FCS, under Secretary Prizker’s leadership, has only recently increased its presence in Africa after more than a decade of downsizing. Partnerships with dynamic local organizations such as the Kenya Private Sector Alliance in Nairobi, the American Chamber of Commerce in Johannesburg, and LCF Advogados in Luanda would add significant value to the development and maintenance of these FCS-led toolkits.
Going further to reinforce U.S. government coordination
Perhaps the most salient recommendation that the council makes is to encourage the administration to establish an interagency committee to coordinate U.S. trade facilitation and to engage recommendations from private sector organizations. This is consistent with bipartisan legislation, first introduced in 2013 and again in February 2015, that calls for a special coordinator in the White House to “ensure government agencies are working in tandem,” maximize support for U.S. businesses entering African markets, and increase U.S. exports to Africa.
A special coordinator could also help to guide the “Steering Group on Africa Trade and Investment Capacity Building,” which was established at last year’s summit and tasked with making recommendations on a “comprehensive approach” to expanding the region’s capacity for trade and investment. The Steering Group was supposed to have issued its report to the president through National Security Advisor Susan Rice in January; however, the group has yet to impact the dialogue on these issues.
With the administration preparing for President Obama’s participation in the Global Entrepreneurship Summit in Kenya in July, it is essential for the White House to clarify who in the administration is in charge of the U.S. commercial engagement in Africa. Clearly, there is growing recognition that the White House needs to enhance its leadership in this area.
Finally, the report acknowledges the Commerce Department’s role in leading the U.S.-East African Community (EAC) Commercial Dialogue, which is the “central platform” for public-private sector engagement under the Trade Africa initiative.
This is true.
What is not mentioned is that the U.S. also has a pdf U.S.-EAC Trade and Investment Framework Agreement (TIFA) (110 KB) led by the U.S. Trade Representative that has as the goal, “to strengthen the United States-EAC trade and investment relationship.” The optimal recommendation would be to integrate the Commercial Dialogue and the TIFA, to be co-chaired by the Secretary of Commerce and the U.S. Trade Representative, and joined by a robust private sector delegation. In short, there is a compelling need for a genuine Team USA approach that lessens the time and resource demands on all sides while enhancing the priority and urgency of deepening trade relations with Africa.
As far as advisory council reports on Africa are concerned, it is one of the most relevant and thoughtful reports ever released – and in a relatively short period of time. However, the report is also notable for what it omits, and significant work remains to be done to fully realize the potential of a robust U.S.-African commercial relationship.
Witney Schneidman is a non-resident fellow at the Africa Growth Initiative in the Global Economy and Development program. Andrew Westbury is Associate Director, Africa Growth Initiative.