How “Prosper Africa” Can Help Fulfill the Promise of the Africa Continental Free Trade Area

On sidelines of the annual summit of the US Corporate Council on Africa in Maputo, Mozambique, US Commerce Secretary Wilbur Ross is set to provide the details of the new US-Africa policy, Prosper Africa. This new initiative seeks to accelerate two-way investment and trade with Africa as a way to advance the United States’ competitive advantage. The place and timing of this announcement, while coincidental, could not be any more propitious.

The place: In March this year, Cyclone Idai made landfall in Mozambique, leveling a city of 400,000 and—along with Cyclone Kenneth—leaving in its wake $3.2 billion worth of destruction. This was a foreshadowing of Africa’s acute vulnerability to the increasing intensity of extreme weather events and limited ability to adapt. Climate change compounds existing challenges of state fragility, infrastructure deficit, and high unemployment.

The timing: The Africa Continental Free Trade Agreement (AfCFTA) went into force on May 30^th. It carries the continent’s hopes and ambitions for connectivity, industrial development, job creation, and improved quality of life. The AfCFTA will be of mutual benefit to both the United States and Africa. It will open new markets for American goods and services, outside established markets in Asia and Europe. By 2030 estimates suggest the single market will include 1.7 billion people with over $6.7 trillion of cumulative consumer and business spending. When Secretary Ross takes the stage in Maputo, his speech will be the first substantive response by a major development partner to the latest vehicle on which Africans have pinned their hopes.

This mix of challenge and promise forces Africa to pursue a variety of partnerships, since every partner deploys unique competences. For the AfCFTA to be successful, the United States must restrain its inclination to make Africa a theater of great power conflict with China. It will be a missed opportunity if that forms the basis of Prosper Africa—and unnecessarily so, since both China and the United States are indispensable partners in pursuit of AfCFTA’s goals. American or Chinese Africa policies that are contingent on Africans choosing one partner over the other—essentially acting against our own interests—will consistently yield sub-optimal outcomes for all parties.

Prosper Africa as an Opportunity

Africa’s position on the continuum of US foreign policy priorities could use improvement, and Prosper Africa presents a chance to do that. Every budget submission from the Trump administration has proposed deep cuts to programs that predominantly benefit Africa. The administration’s immigration policy, while hostile overall, has been particularly adversarial toward the continent, with an avalanche of visa denials across all economic and social strata in Africa. In truth, however, Africa’s low rank in US foreign policymaking is not unique to the Trump administration. US-Africa relations, unlike America’s relationship with Europe, Asia, the Middle East, or the Western hemisphere, lack any institutional anchors such as treaties and alliances and have always been primarily shaped by the occupant of the White House. By contrast, Japan has TICAD (Tokyo International Conference on African Development), China has FOCAC (Forum on China Africa Cooperation), there are multiple substantive layers of EU-Africa engagement, and Russia will host its first Russia-Africa Summit in Sochi in October. There is no institutional American equivalent to these arrangements. In Prosper Africa we have an opening to alter this narrative.

The Past as a Guide  

Fifty-two years ago, in response to the Soviet threat—much like the threat the Chinese governance model poses today—the United States ran an experiment that was essentially a progenitor of today’s Chinese lending policies. The Development Loan Fund (DLF) was a US policy lending institution that extended credit to both developing country governments and private sector actors in the way Chinese policy banks do today. DLF supported national road building programs, dam construction for power and irrigation, and more across the developing world. The DLF also argued for, and supported, supplementary activities like building housing for workers, reducing instability, and providing financing for small enterprises as essential to building a modern economy. Spurred by necessity, it was an innovative pioneer, with programs that defined the frontier of development lending. Prosper Africa presents an opportunity to reach back into this past—creatively using a combination of existing tools like the US Development Finance Corporation and the Millennium Challenge Corporation (MCC), and newly created instruments. The US, among all other development partners, is uniquely positioned to do this.

Prosper Africa must be the American response to Africa’s ambitious AfCFTA, and its aims should reflect that. Rather than mimicking the very limited framework of Power Africa, the US should design Prosper Africa to match the ambition demonstrated in the creation, in less than two years, of the largest single market in the world.

Recommendations

As Secretary Ross unveils more details about Prosper Africa, Africa will look for a statement of American belief in the promise of Africa—an investment in Africa for its inherent value, not as a prize to be won in a competition with China. Africa has made a huge bet on its future and seeks partners, especially the United States, to join one last push at delivering to its people the quality of life they deserve. In support of this, here are a few initiatives that could be included as part of Prosper Africa:

1. Institutionalize the US-Africa Leaders Summit or an event like it as a framework for high-level engagement with the continent. Host the event every three to five years.

2. Introduce aid instruments that reward transnational integration, similar to how MCC Compacts are designed to reward good governance based on externally generated indicators. MCC provides a readymade platform that could be used to award larger regional compacts for neighbors and countries scoring high on an integration scale.

3. Influence international financial institutions (IFIs) to favorably weight projects submitted jointly by two or more African nations and either establish or increase lending resources at regional integration windows at IFIs, thereby guiding AfCFTA member states to gravitate toward integration more quickly.

4. Make grant and technical assistance available to African states making the most progress on metrics related to trade efficiency, including harmonization and predictability of rates and tariffs, speed of customs clearing, and the rate at which ship to shore, shore to ship goods clearance is accomplished at ports. The US Coast Guard already has programs assisting ports in becoming International Port and Ship Security (ISPS) compliant. These services could be integrated in Prosper Africa, decoupling them from purely security justifications.

5. Increase resources for transaction advisory services like the Africa Legal Support Facility and the International Senior Lawyers Project to increase the supply of technical support to African governments as they negotiate loans, public-private partnership agreements, production sharing contracts, and mineral development agreements with both bilateral and private sector partners. Many African governments are outgunned in these negotiations, skewing the outcomes toward the other party and prompting subsequent governments to cancel or attempt to renegotiate the deals.

6. Encourage US private and public lending and investment in places that have made the most progress along these lines and lead a coalition of other partners, including China, to act in concert on these initiatives.

President Paul Kagame of Rwanda captured the hope of the continent during his remarks at the signing ceremony, “The promise of free trade and free movement is prosperity for all Africans.” Prosper Africa can and should help deliver that promise.