Just days after taking office, President Biden signaled to African leaders that they should look to the United States for renewed engagement. Addressing the 2021 African Union Summit, his first address to an international forum as President Biden highlighted a shared vision for a better future that includes “growing trade and investment that drives prosperity” for the United States and African nations , stressing that the US was ready to be a “partner for solidarity, support and mutual respect”.
While President Biden’s remarks were a positive sign, Africa was absent from his first keynote address on America’s place in the world. That may not come as a surprise – the new government certainly has no shortage of global challenges to face. However, early engagement in Africa’s political and business leadership is vital and should be incorporated into the government’s vision of how to invest in economic development, create new markets for US products, and address common challenges. An important first step is an action plan that focuses on growth-enhancing trade, investment and regulatory policies. Here’s why:
The US Chamber recently issued a list of recommendations to the Biden Harris Administration and Congress for Africa.
Reciprocal trade between the United States and Africa exceeded $ 45 billion in 2020, with the global pandemic causing a decline in an otherwise dynamic trading partnership. However, the opportunities for partnership go well beyond the trading numbers. Working with African countries, which will be home to over 2.5 billion people by 2050, is vital as the United States addresses global issues such as climate change and global health. Africa will also play an important role in US efforts to fight terrorism and manage the complex dynamics of an emerging China.
State involvement can create space for US businesses and support growth and job creation in the US and across the continent. While US firms are often the “partner of choice” for African governments and the private sector, they routinely lose out to competitors who offer cheaper and cheaper deals or who link their investments to development aid. With the COVID-19 pandemic forcing many state-owned corporations (SOEs) and corporations to halt or stop investing, the United States has a unique – and fast-closing – opportunity to rebalance its trade and investment ties on the continent bring to.
As African countries emerge from the COVID-19 crisis, they are likely to face economic shocks that could reverse their gains over the past few decades. Regularly meeting with African leaders and participating in multilateral forums to set standards can help circumvent policies that could adversely affect investors. These measures include regressive and unpredictable tax measures (most worryingly a widespread move to adopt or account for digital service taxes), enforced cross-sectoral localization, and protectionist and patchwork digital policies that threaten business continuity.
Digital transformation – and comprehensive digital strategies to support it – will be especially important as African governments seek to align with the internet economy and encourage production growth. Africa has significant scope for growth on issues fundamental to the digital economy, including intellectual property protection, data protection, cybersecurity and regulatory practices. Indeed, in markets across the continent of Africa, the U.S. business community has seen emerging regulatory frameworks serve as non-tariff barriers to digital commerce and investment. Regular forums convening the US government, US businesses and senior African officials to discuss the digital economy and ICT / telecommunications can help fill this gap.
Additionally, by including high-standard digital commerce disciplines in a future U.S.-Kenya trade agreement – a bilateral deal that we hope the administration will prioritize – will allow the Biden government to create a model that is others upon imitate the African continent.
Our competitors in Asia, the Middle East, and Europe regularly engage African leaders using corporate summits, tied aid, and other measures that undermine the U.S. strategic and competitive advantage. While these countries have a head start, it is not too late for the United States to demonstrate our leadership and influence economic outcomes in Africa. If we are late, we will miss an important opportunity to open new doors for US and African workers – and improve democratic development, improve security, and fuel economic recovery.