Several weeks ago, President Biden announced that he will host a U.S.-Africa Leaders Summit in Washington in December. It’s about time. This is the first U.S.-Africa Leaders Summit since 2014, and just the second such meeting ever. China, meanwhile, has held its comparable Forum on China-Africa Cooperation (FOCAC) every three years since 2000, and that has provided a leadership and messaging advantage for China in Africa.
The United States should take steps to catch up. Not by copying the failing Belt and Road Initiative, China’s big-ticket lending program to developing countries, but by giving the kind of assistance that the United States is the best at providing. At the Leaders Summit, the administration should announce a new program, which I would call “Process Africa.”
One of the biggest problems in Africa is that the continent does not process much of the food that is grown there. Despite having a large and robust agricultural base, there has been a long history of sending all or much of the produce abroad to be processed. Processing is a very lucrative part of the food value-added chain, usually much larger than the value of the crop itself.
Why has this pattern developed? There are several reasons, but it is partly a remnant of the colonial history of much of Africa. European colonial powers were happy to have raw material such as unprocessed food grown on the continent in their colonies. But they insisted that the food be sent to Europe for processing so they could capture the value-added stage.
You only need to think of the very excellent “Belgian” and “Swiss” chocolate bars to get a quick gastronomic lesson about this swindle of African possibilities. Needless to say, chocolate (or “cocoa”) is a tropical crop, not grown in Belgium or Switzerland. Even after the European powers left Africa politically, they kept strong control of the food value chain.
In Cote D’Ivoire, the world’s largest source of cocoa, only $5 billion goes to the cocoa growers for a chocolate product that ultimately has a value of $105 billion. For cocoa grown in Ghana, the second largest cocoa producer in the world, only about 20 percent of the cocoa is processed there. In Europe, coffee processors take in three times the value recognized by the original country growers.
How would the United States’s Process Africa Program work? I have talked to many start-up food processing companies in Africa (many of them run by women entrepreneurs) trying to break into the lucrative processing side of the business. They all emphasize the same things that they need to be successful. These include technical manufacturing support for food processing; better access to spare parts for equipment; financing at decent rates; training programs for workers; African-made packaging and preservatives; better cold-chain facilities; and basic business and management training.
They also want to see technical assistance to improve the workings of the African Continental Free Trade Area. These are the same program areas Process Africa could focus on. And they are exactly where the United States has deep expertise.
By 2050 Africa is projected to have about 2.4 billion people (up from about 1 billion now), and at some point after that Africa will become the most populous continent on Earth. Africa will need as many as 90 million new jobs. These will not be created without fundamental changes in Africa’s economy, diversifying away from basic agriculture and assisting the SME (small and medium enterprises) economy.
Process Africa would have another major benefit. In 2018, while I was the under secretary of Commerce for international trade, I led the President’s Advisory Council on Doing Business in Africa to Ethiopia, Kenya, Cote D’Ivoire and Ghana. I met with three heads of state and many other African government officials. They all said the same thing. We need manufacturing. With millions of Africans coming of age and needing jobs (half of Africa’s population is under 20 years old), they see the need for a more diverse economy, which would include a job-creating manufacturing sector.
Food processing is manufacturing, albeit sometimes a simple kind, but still a basis for expanding manufacturing knowledge and growth. Many studies (and prior examples) of how to start-up manufacturing in developing countries demonstrate the necessity of beginning with simple manufacturing processes and small companies. Once a country masters that, it can work up and out to more complex manufactured products, such as electronics, steel and auto parts.
The skills and experience individuals and companies absorb in a food processing business – such as how to use manufacturing equipment, how to train workers, how to handle raw materials and how to utilize basic business and trade concepts – can be used in the next, more ambitious stages of manufacturing
One reason to hold a U.S.-Africa Leaders Summit is to enhance U.S. competition against China in Africa. Process Africa will stand in sharp contrast to what the Chinese are doing. Though China has a very visible presence in Africa, the main Chinese idea of assistance is the Belt and Road Initiative. This has consisted of enormous packages of loans for unnecessary projects that often end up being white elephants. The Belt and Road Initiative is in deep trouble, with many of its loans underwater, forcing developing country borrowers and China into difficult financial restructurings. The Belt and Road Initiative also includes almost no person-to-person soft power relationships, something that would be central to Process Africa.
Finally, with the great need to promote more allied- or friend-shoring of manufacturing out of China, Africa could be an ideal location after further development of its manufacturing expertise.
Holding an African Leaders Summit in Washington would be a great opportunity for the United States to define and refine its Africa policy. The creation of Process Africa should be part of that.
Gilbert B. Kaplan is chairman of the advisory board of the Manufacturing Policy Initiative at Indiana University and a senior adviser at Center for Strategic and International Studies. He was formerly under-secretary for international trade at the U.S. Department of Commerce.