Multi Industry Letter Regarding Opportunities for Growth In Africa

October 17, 2011

TO THE MEMBERS OF THE UNITED STATES CONGRESS:

The U.S. Chamber of Commerce and the American Chambers of Commerce in Africa believe it is important for the U.S. to strengthen the competitiveness of U.S. goods and services in Africa. While the African Growth and Opportunity Act (AGOA) continues to provide tangible benefits for both Africa and the United States through improved trade flows and investment opportunities for the U.S. private sector, current U.S. economic policy toward Africa will fall short of its potential, and the state-sponsored export initiatives from other economic powers now focusing on Africa are quickly rendering AGOA an insufficient strategy.

Africa represents many of the world’s most rapidly growing emerging markets. Last year China surpassed the United States and assumed America’s long-running status as Africa’s singlelargest trading partner. Without enhanced engagement by the U.S. government, the U.S. will lose even more market share on the continent. Companies based in other countries are beginning to capitalize on Africa’s opportunities, backed by governments with the strategic foresight to aggressively pursue economic inroads throughout the continent. Simply put, the U.S. must develop more effective strategies and mechanisms to promote U.S. commercial engagement in Africa, or risk being left behind.

We present several recommendations for your consideration:

• Ensure continued support for the Foreign Commercial Service across Africa. As Congress works to put America’s fiscal house in order, we urge you to continue supporting the lifelines for American private sector involvement in Africa, particularly with regard to the U.S. Foreign Commercial Service offices in U.S. embassies across the continent. Africa’s economies are growing at an average rate of 6%, and some countries, like Ghana, are growing at over 20%. In order to tap into this growth, small- and medium-sized U.S. businesses are in need of the assistance that the Foreign Commercial Service has provided in the past. The Foreign Commercial Service presence has a direct impact on U.S. exports to the region and associated jobs in the United States. Important aspects of the U.S. economic recovery will be undermined and potentially lost to foreign competitors if the U.S. Foreign Commercial Service is not sustained.
  In short, the shrinking presence of the Foreign Commercial Service in one of the fastest growing regions of the world runs counter to the bipartisan goal of doubling U.S. exports by 2014, and it should be strengthened.
• Enhance U.S.-Africa investment and trade finance. In addition to private sector-led efforts to promote commerce with Africa, there are several practical ways in which the U.S. government is helping to incentivize commercial engagement through the continent. Indeed, it is the role of institutions such as the Overseas Private Investment Corporation, the U.S. Export-Import Bank, and the U.S. Trade and Development Agency to encourage exports by providing a point of entry with tools for risk-mitigation. The innovation that the Ex-Im Bank recently displayed in financing the sale of U.S.-built locomotives to Pakistan on concessional terms — essentially matching the terms of an international competitor— can and should be accelerated across Africa, where these international competitive pressures on U.S. companies are equally strong. We urge you to increase support for these and other business-promotion agencies, and consider expanding their mandate for regional initiatives to provide a wider avenue for U.S. companies investing in Africa.
• Begin process of negotiating free trade agreements with regional economic communities (REC). Regional integration, the reduction of non-tariff barriers, and the elimination of unworkable customs regimes are the keys to making Africa an attractive U.S. business partner and to spurring export-driven job creation on both sides of the Atlantic. The U.S. should begin working to outline what a trade accord with the more integrated RECs in Africa could look like, which would be a positive step toward ensuring that the United States is not eclipsed by competitors from Europe and Asia that are actively tying up resources and market access points.
• Move to a streamlined “whole of government” approach for aid management that encourages the move from aid to trade. The current approach of the U.S. government to aid delivery is fragmented, compartmentalized, and often ineffective. The United States should develop an integrated economic strategy which encompasses foreign assistance, commercial interests, and initiatives like the Millennium Challenge Corporation (MCC) and the African Growth and Opportunity Act (AGOA). Capacity building endeavors undertaken by the U.S. government should help to create an environment that is attractive to foreign investment. Programs that support local governments in the areas of banking reform, customs efficiency, intellectual property protection, and vocational training, for instance, would serve to strengthen vital institutions in African nations as well as U.S. interests.
• Extend and expand AGOA. Tangible economic benefits for U.S. companies in Africa have been realized over the past decade since the inception of AGOA. More importantly, AGOA is the first and only comprehensive policy for U.S.-Africa economic engagement, and as such represents an overwhelmingly positive tool of soft power on the continent. This goodwill is felt on a daily basis by U.S. companies on the ground. We strongly urge Congress to not let these advances in U.S. economic commitment to Africa be shortlived.
  In order to enhance and expand AGOA for the benefit of U.S. companies, Congress should first either extend or make AGOA permanent in order to rationalize the time horizons necessary for meaningful investment. Additionally, Congress should expand the tariff lines eligible for duty-free/quota-free access to U.S. markets, thereby creating greater incentives for U.S. firms to do business in Africa.

If the United States is to continue to play a leadership role in the global economy, it is imperative that it dedicate significant attention to making inroads in frontier markets. We trust that the U.S. government will continue to provide U.S. companies with a competitive edge by enacting policies that support American businesses abroad. U.S. companies are presently at risk in Africa, and without these supporting policies America’s standing in the continent will surely lag.

Thank you for your consideration of this important matter. We look forward to continued dialogue with you in the future.

Sincerely,

American Business Council, Nigeria
American Chamber of Commerce, Ghana
American Chamber of Commerce, Kenya
American Chamber of Commerce, South Africa
American Chamber of Commerce, Tanzania
American Chamber of Commerce, Uganda
American Chamber of Commerce, Zambia
U.S. Chamber of Commerce