JOHANNESBURG – US Deputy Secretary of Commerce Karen Dunn Kelley last week announced at the opening ceremony of the US-Africa Business Summit held in Maputo that the Trump administration message to Africa was simple and blunt: “Choose the US over China and Russia.”
One can clearly see this as another chapter of President Donald Trump to isolate the Russians and China from trading and investing globally.
One must see this latest attempt to impress Africa in order to get its foot in the door to claim the continent’s resources and growing markets.
Previous efforts of the US to support Africa towards growth and development were embodied, among others, in its African Growth and Opportunity Act (Agoa) during the beginning years of the 2 000s.
Agoa was signed into law by the Clinton administration in 2000. Its objective was “to stimulate economic growth, through trade and investment in sub-Saharan Africa and to encourage and facilitate Africa’s economic integration into the global economy”.
Agoa is mostly based on a General System of Preferences. Under this system African countries can export a wide range of product to the US duty free.
Trade in goods between the US and sub-Saharan Africa increased nearly 6percent to $39billion (R547.74bn) between 2015 and 2017, according to a report delivered to Congress on June 29, 2018, by the Office of the US Trade Representative.
The Agoa expires in five years and Africans are rightly concerned about the future of Agoa and its associated benefits.
Some expect it will be difficult to continue justifying the one-way trade preference post-Agoa.
The Trump administration now wants to introduce a new approach, namely “Prosper Africa,” that shifts US focus on the continent from aid to industry.
The new $50million programme will offer technical help to companies looking to enter or grow in Africa. Africa is urbanising more rapidly than anywhere else on earth.
The US clearly wants to get its cut in the projected spending of 1.52billion consumers by 2025 – nearly five times the size of the US population.
It is also clear that the US now wants to enter the race against China and Russia to get access to these African markets and its resources.
The US, however, seems to be a bit late. Russia is already on track to build nuclear plants in Egypt, Nigeria and Algeria.
These investments are a means to becoming an integral part of Africa’s energy sector.
Anos Beseny, an associate professor at Óbuda University, argues that “from the African point of view, Russia offers a strategic alternative to the US’s global hegemony, China’s economic diplomacy and the lingering influence of Africa’s former colonial masters”.
She stresses that Russia is now seeking to exploit conventional gas and oil fields in Africa and elsewhere. Part of its long-term energy strategy is to use Russian companies to create new streams of energy supply.
China has become Africa’s largest trade partner and has greatly expanded its economic ties to the continent, but its growing activities there have raised questions about its non-interference policy.
Therefore it seems that the US-China-Russia race for Africa is well and alive and will heat up over the next few weeks
Chris Harmse is the chief economist Rebalance Fund Managers.