Big business eyes African summit

Dozens of corporate titans are attending this week’s U.S.-Africa Leaders Summit, reflecting the opportunity U.S. businesses now see in the continent.

The chief executives of Wal-Mart, the Coca-Cola Company and IBM are among those rubbing elbows with more than 50 African heads of state in Washington during Tuesday’s business forum, a highlight of the three-day event.

{mosads}Africa was once seen more as a destination for U.S. charity than a place to invest, but that is quickly changing.

General Electric on Monday announced a $2 billion investment in the continent, and called Africa its “most promising growth region.”

Business groups say U.S. policies, however, still reflect outdated ideas of Africa’s potential.

For example, the African Growth and Opportunity Act, ushered into law during the Clinton administration, granted free access to the U.S. economy for certain goods from African countries that made progress toward adopting market-based economies.

But the trade pact has often been criticized for being dominated by petroleum projects.

The deal is up for reauthorization, and business groups are pressing for changes that would recognize Africa’s growing clout by including provisions that lower tariffs for U.S. businesses looking to expand into Africa markets.

Business groups argue such changes are critical in that the original AGOA was written when Africa’s economies were much smaller.

Now, six of the fastest-growing global economies last year are on the continent.

China is in many ways ahead of the United States when it comes to investments in Africa, and that’s spurred on the idea of this week’s summit.

“There is no doubt that increased engagement with China… has been a factor triggering U.S. interest in Africa,” said Mwangi Kimenyi, a senior fellow and director of the Africa Growth Initiative at the Brookings Institution in Washington.

Dan O’Flaherty, a vice president at the National Foreign Trade Council, said that while there’s “no scramble” for doing business in Africa, U.S. businesses are looking to make inroads in consumer products and capital goods.

He also sought to contrast U.S. firms with their Chinese competitors. While U.S. businesses want to strike up lasting investments in Africa, many Chinese companies are more interested simply in the continent’s natural resources.

“Chinese investments are in resources and resource extractions,” said O’Flaherty. “Our American companies make a commitment. They employ people and pay wages.”

That’s a point Secretary of State John Kerry also sought to make in comments on Monday.

“Africa has the resources — and the resources are not defined by oil and gold and what’s in the ground,” Kerry in his speech.

“The resources are the people, the know-how, the capacity, the desire — and if that is harnessed properly there is no limit in the rapidity with which growth can take over in Africa and a different set of possibilities and opportunities will be known,” Kerry added.

Lawmakers attending this week’s conference also reflected the changing views.

Sen. Chris Coons (D-Del.), chairman of the Senate Foreign Relations subcommittee on African Affairs, said he wants to get more access for Delaware’s poultry industry in Africa.

“I happen to be from a state that grows more chickens than most, the birthplace of the modern poultry industry, and we are having enormous challenges getting U.S. poultry exported into South Africa, Nigeria, Kenya, Tanzania — yet they are seeking unlimited access to our market,” Coons said. 

“That’s tough for me to explain to my constituents. So I think it’s important that around the AGOA conversation we also talk about trade liberalization being a two-way street,” he added.

Still, countries like South Africa and other AGOA members argue that while they’ve improved, they’ve still got a way to go to meet the U.S.

According to the World Bank, United States per capital GDP in 2013 was $53,143, for example, compared to South Africa’s $6,618. And South Africa’s GDP has tripled since AGOA went into effect.

Tanzania’s GDP in 2013 stood at $695. Uganda’s is $572.

Eliot Pence, director of the Africa Practice at McLarty Associates, said his firm is working to ensure a new AGOA provides more benefits to U.S. businesses. He said taxes that U.S. firms must pay to do business in Africa are too high.

“The taxes some U.S. businesses have to pay make doing business in Africa impossible. And so the business lobby is saying, ‘Look, we’ve got nothing wrong with African companies accessing U.S. markets — we just want their to be reciprocity when we try to access Africa.’”