Real talk

Africans challenge Biden policies at US business summit

By Julian Pecquet, in Gaborone, Botswana

Premium badge Reserved for subscribers

Posted on July 19, 2023 10:26

Joe Biden, US-Africa Leaders Summit
File photo of US President Joe Biden attending the previous US-Africa Leaders Summit.(REUTERS/Ken Cedeno)

From industrial policy to AGOA, attendees at the US-Africa Business Summit in Botswana pressed the US to rethink its approach to the continent.

The recent US-Africa Business Summit in Botswana created an opportunity to celebrate the relationship and advance trade and investment.

It also gave African officials and executives a chance to tell their US counterparts everything they feel is hurting rather than helping the continent’s economies.

From federal subsidies for domestic industry to uncertainty around the African Growth and Opportunity Act (AGOA), from automobile dumping to Zimbabwe sanctions, US policies took flak from multiple angles. At invitation-only roundtables and open sessions alike, African leaders shared how US choices at times inadvertently undermine the summit’s theme of “enhancing Africa’s value” in global supply chains.

“When we hear, read the Biden administration’s take, it sounds good. It’s people-centred, it’s making sure that the value created [is] rolled out for the wealth of the people,” Namibia’s agriculture minister Calle Schlettwein told The Africa Report.

“But whether it’s true for the African people we are not so sure, because, at the moment, it’s still a matter where African countries are kind of forced into a spiral to the bottom when it comes to attracting investments. It’s the best terms for the investor, and the worst terms for Africa,” said Schlettwein.

One of the tragedies of the African continent is that, in many instances, Africans have not negotiated the best bargains for themselves

US officials said they were attending the Corporate Council on Africa’s summit to listen, and that they would share the reactions they heard with policymakers back in Washington.

“I have heard a little bit about concerns on the continent, about maybe the perception that we may be seeking to invest more in the United States than on the continent,” said Cynthia Griffin, the US Department of Commerce’s regional commercial officer for sub-Saharan Africa.

“We talk about diversifying supply chains on the continent. Does our policy or legislation in the United States support that? So I think there are opportunities maybe to discuss that, explore that with the United States, with our legislature, to understand what the implications might be or the perceptions that are here on the continent,” she said.

US Subsidy Act

Schlettwein offered his comments following a roundtable on minerals, in which Biden’s 2022 Inflation Reduction Act (IRA), a $891bn investment in domestic energy production and other priorities, came under fire and was called a massive subsidy scheme.

Upset African attendees even toyed with the idea of imitating Indonesia and Zimbabwe in banning the export of certain critical raw minerals so they can instead be refined domestically.

The IRA “makes us completely uncompetitive”, the Namibian minister said. “We will struggle to match that if we want to make investors come here. Investment wants to go where it is the best subsidised, not where it is the most needed.”

[The IRA] is an inherent contradiction, and self-defeating for a US president who has put himself on the line to redefine our partnership with Africa

Riva Levinson, a US-based consultant and lobbyist representing various African interests at the summit, called the IRA “anathema to what we’re trying to do in Africa”.

“It picks winners and losers based upon established free-trade agreements and fails to grasp that Africa’s critical minerals surplus holds the key to the continent’s industrialisation, to the planet’s green energy transition, and to US access to a supply chain now almost entirely owned by China,” she told The Africa Report.

“It is an inherent contradiction, and self-defeating for a US president who has put himself on the line to redefine our partnership with Africa,” she said.

Others at the summit took issue with certain statements from the administration, notably national security adviser Jake Sullivan’s 27 April speech at the Brookings Institution on ‘Renewing American Economic Leadership’, in which he vowed that the US would “unapologetically pursue our industrial strategy at home”.

In his speech, however, Sullivan also highlighted the need to share the wealth with US allies.

“We are unambiguously committed to not leaving our friends behind,” he said. “We want them to join us. In fact, we need them to join us.”

AGOA now

The AGOA trade pact garnered considerable attention at the summit.

At multiple panels throughout the four-day event, business leaders and African officials urged rapid renewal of the 23-year-old scheme granting duty-free access to the US market before it expires in 2025.

While some advocated for specific revisions – the Atlantic Council previewed a report at the summit urging fewer short-term eligibility reviews to boost investor confidence – others placed a premium on speed.

“It’s a very dangerous direction” to consider revisions that can drag on far longer than anticipated, Lesotho trade minister Mokhethi Shelile said at a panel on manufacturing moderated by The Africa Report. “We are saying we need to renew it today.”

While several Southern African leaders gathered in Gaborone for the summit, South Africa’s trade minister Ebrahim Patel instead rushed to Washington last week for urgent meetings with US officials amid congressional pressure to pull the AGOA forum later this year from the country over Pretoria’s ties to Moscow.

In both venues, the importance of the programme to Africa’s industrialisation was highlighted.

“Quite simply, AGOA enables trade between the United States and the African Union, and with that trade comes foreign investment,” Greg Poole, chief sourcing officer at US clothing retailer The Children’s Place, said on the panel.

“We put a lot of effort in transferring our knowledge, our standards to our vendor partners in Africa and so we’re helping this industry evolve, and helping this industry compete globally,” he said.

Sour points

More specific points of contention also came up at the summit.

Continued dumping of used cars that are no longer road-worthy in the US and the EU onto the African market is hobbling the continent’s domestic auto industry, said Dave Coffey, CEO of the African Association of Automotive Manufacturers (AAAM).

When electrification ramps up in the developed world, more [fossil fuel-powered] vehicles are going to come into Africa

“We made a pitch as AAAM to implement a standard for exporting countries to please ensure when you export your vehicle that it actually conforms to the roadworthiness requirements of your own country,” he said.

“Let’s start there and get that right, because this is going to get worse. When electrification ramps up in the developed world, more [fossil fuel-powered] vehicles are going to come into Africa and we need to stop that,” he said.

Likewise, some leaders said US sanctions on individuals and entities in Zimbabwe hurt the whole region.

“If economic integration and a larger market size to be competitive is the name of the game, for improving your possibilities of getting value out of the value chain and trade, then we pay collateral damage,” Namibia’s Schlettwein said.

Opportunity knocks

US officials, however, said Africans also need to step up their game.

The Department of Commerce’s Griffin said African countries are free to pass their own laws banning imports of used cars. She said that, compared to Asia, Africa sometimes displays a “lack of urgency” when it comes to policy making.

“I was at DRC Mining Week a little while back,” she said. “And I just didn’t sense a sense of urgency from some of the governments […] on the governance issues, the regulatory issues, things that companies need to see in order to come into some of these markets.”

Zambia, she said, was a positive exception with “very proactive, very aggressive” leadership under President Hakainde Hichilema.

“Yes, the resources are here, the critical minerals are here,” she said. “But in terms of the manufacturing or processing or value adding, there’s a lot of catching up that needs to be done.”

Many Africans agree the time is ripe.

“One of the tragedies of the African continent is that, in many instances, Africans have not negotiated the best bargains for themselves,” Sim Tshabalala, the chief executive of Standard Bank in South Africa, told The Africa Report.

“The current era, on the one hand, is very worrying because of global conflict or potential global conflict, but it’s also an incredible opportunity, ranging from trade to the climate, to the green economy. Africa’s got the wind, solar, geothermal, hydro, and it’s got the rare earths necessary for the green economy,” he said.

Sanjeev Gupta, executive director for financial services at the Nigeria-based Africa Finance Corporation, argued that trying to shame the US and other rich countries into doing the right thing is a losing proposition.

Better to appeal to their “fear and greed” and show them that investment in Africa is to their benefit – whether it is in reducing carbon emissions by reducing global shipping of raw materials or diversifying global supply chains by developing alternatives to China, he said.

He said he was “delighted” with the current state of US interest.

“I’ve operated in Africa for 30 years,” Gupta told The Africa Report. “I’ve never had so many engagements with American businesspeople and American government people as I’ve had over the past year and a half.”

There's more to this story

Get unlimited access to our exclusive journalism and features today. Our award-winning team of correspondents and editors report from over 54 African countries, from Cape Town to Cairo, from Abidjan to Abuja to Addis Ababa. Africa. Unlocked.

Subscribe Now

cancel anytime