Obama outlines steps to boost US – Africa trade

What you need to know:

  • President Obama told the US-Africa Business Forum that it is in the American interest to have a prosperous Africa because it will mean a “win-win” situation for both Africa and American investors.

  • Obama’s other step to improve life in Africa is to work on extending the Africa Growth Opportunity Act (AGOA) which expires in 2015.

  • In a speech at the US-Africa Business Forum in Washington DC, Mr Biden said last evening African governments must not only be careful to do business with firms that benefit Africans but also create a conducive environment to do business.

President Barrack Obama has outlined a series of steps he believes will take US-Africa trade “to the next level.”

This means African nations including Kenya will benefit from a cumulative investment to improve access to electricity, help American companies do business in Africa, support African entrepreneurs and extend a trade agreement for African exports.

President Obama told the US-Africa Business Forum that it is in the American interest to have a prosperous Africa because it will mean a “win-win” situation for both Africa and American investors.

“We don’t look to Africa simply for its resources. We recognise Africa for its greatest resources and its great people.”

“We want to partner with Africa to build infrastructure that business will need,” Obama told an audience that also included South Africa’s President Jacob Zuma, Rwanda’s Paul Kagame and Tanzania’s Jakaya Kikwete.

These infrastructure projects will also include the Power Africa Programme which he announced last year in June on his Africa tour. At the time, it targeted 20 million Africans. He tripled that number Tuesday night.

So far the US government with support from private investors has mobilized $26 billion.

EXTEND AGOA ACT

For Kenya, it will mean improving the current rural access to electricity which stands at just 5 per cent and boosting the generation which is currently dependent on hydroelectric, geothermal and solar. By 2016, Kenya hopes to increase its electricity generation to 5,000 MW from 1700 in 2012. This is expected to rise to 23,000MW by 2030, the deadline of Vision 2030.

Obama’s other step to improve life in Africa is to work on extending the Africa Growth Opportunity Act (AGOA) which expires in 2015. If it is extended, African manufacturers will have an opportunity to continue exporting their produce to the US under certain privileges given to them. It is not clear whether the new act will give more or reduce the privileges.

But the US President taking advantage of the political leaders present argued, his government will also work on building roads networks and other infrastructure to boost intra-Africa trade.

“It should not be harder to export goods to your neighbor than it is to Amsterdam… We want to get African goods moving faster. People should be able to export their goods without paying a bribe or having to hire someone’s cousin.”

Africa trades less with its self than it does with other continents, yet the entire US-Africa trade is equivalent to trade between Brazil and the US. Last evening, Obama announced a $7 billion programme to improve visibility of American firms in Africa. It will be a direct competition to China, whose political leadership has been common in Africa to market for their companies.

But Obama argued this will be for the benefit of all, rather than being an exploitation venture saying the American motive is to build and not destroy Africa. This programmes will also include African young entrepreneurs who will benefit by accessing affordable loans and training.

“We want to make sure that all that talent is tapped, because if they succeed, the countries in which they live will succeed.”

ADOPT GLOBAL TENETS

Earlier, US Vice-President Joe Biden told a gathering of African corporate chiefs and political leaders that they will have to adopt global tenets of doing business if they are to attract more investors.

In a speech at the US-Africa Business Forum in Washington DC, Mr Biden said last evening African governments must not only be careful to do business with firms that benefit Africans but also create a conducive environment to do business.

“No two countries can do it the same way, but there are general principles,” he said.

“We all know there is a great deal of work to do but we all know how to get it done.
Investments will go where there are minimal restrictions to the ease of doing business.”

These principles include pushing for a more integrated continent, a fair justice system, commitment to involve all communities without discrimination, creating a level-playing field for all investors and softer restrictions in doing business.

The Forum is a segment within the US-Africa Summit organised by President Barrack Obama programmes to boost relations with Africa. More than 45 African heads of state have assembled in Washington, DC for a three day meeting which is to discuss democracy, rule of law, peace and security, investment as well as food security.

But as the corporate leaders, entrepreneurs and political leaders gathered at the issues of corruption, disease, war.