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Just days after taking office, President Biden signaled to African leaders that they should expect renewed engagement from the United States. In remarks at the 2021 African Union Summit – his first speech to an international forum as President Biden highlighted a shared vision for a better future that includes “growing trade and investment that advances the prosperity” of the United States and African nations, and emphasized that the U.S. was ready to be a “partner in solidarity, support and mutual respect.”
While President Biden’s remarks were a positive sign, Africa was missing from his first cornerstone speech on America’s Place in the World. That may not be a surprise – the new administration is certainly not lacking global challenges to tackle. Still, early engagement with Africa's political and business leadership is critical and should be included in the administration’s vision for how we invest in economic development, create new markets for U.S. products, and address shared challenges. An action-plan centered on pro-growth trade, investment, and regulatory policies is an important first step. Here’s why:
Two-way trade between the United States and Africa exceeded $45 billion in 2020, with the global pandemic causing a decline in an otherwise vibrant commercial partnership. But the opportunities for partnership go well beyond the trade numbers. Cooperation with African countries, which will be home to over 2.5 billion people by 2050, is critical as the United States tackles global issues like climate change and global health. Africa will also play an important role in U.S. efforts to combat terrorism and manage the complex dynamics of a rising China.
Whole-of-government engagement can create space for U.S. businesses and support growth and job creation in the United States and across the continent. While U.S. firms are often the ‘partners of choice’ for African governments and the private sector, they routinely lose out to competitors that offer lower-cost and lower-value offerings or couple their investments to development aid. With the COVID-19 pandemic forcing many state-owned enterprises (SOEs) and businesses to pause or halt their investments, the United States has a unique – and rapidly closing – opportunity to rebalance its trade and investment relationships on the continent.
As African countries emerge from the COVID-19 crisis, they are likely to face economic shocks that could reverse their gains in recent decades. Regular meetings with African leaders and participation in multilateral standard-setting forums can help to head off policies that could negatively impact investors. These actions include regressive and unpredictable taxation measures (most concerningly a widespread move to adopt or consider digital service taxes), forced localization across sectors, and protectionist and patchwork digital policies that threaten business continuity.
Digital transformation – and comprehensive digital policies to support it – will be particularly key as African governments seek to align with the Internet economy and foster manufacturing growth. Africa has significant room for growth on issues foundational to the digital economy, including intellectual property protection, data privacy, cybersecurity, and regulatory practices. In fact, in markets across the African continent, the U.S. business community has seen emerging regulatory frameworks serve as non-tariff barriers to digital trade and investment. Regular forums to convene the U.S. government, U.S. businesses and senior African officials to discuss the digital economy and ICT/telecommunications can help to bridge the gap.
Moreover, by including high standard digital trade disciplines within a future U.S.-Kenya Trade Agreement – a bilateral deal we hope to see the administration prioritize – the Biden administration can establish a model for others on the African continent to emulate.
Our competitors in Asia, the Middle East, and Europe are engaging African leaders with regularity, leveraging business summits, tied aid, and other measures that erode U.S. strategic and competitive advantage. While these countries have a head start, it’s not too late for the United States to demonstrate our leadership and influence economic outcomes in Africa. If we delay, we’ll miss a critical opportunity to open new doors for U.S. and African workers – and improve democratic development, enhance security, and spur economic recovery along the way.