A Black Diaspora Society News & Opinion Magazine

Nov. 15, 2012 - Nov. 30, 2012 @thehabarinetwork www.thehabarinetwork.com

Opinion Column
moderated in the interest of getting anything done. Bipartisanship, anybody? DeMint has been a thorn to Republican and Democratic Party bosoms, and in January 2013, the lawmaker who has urged Americans to rise up against Obama’s ‘big government’ expenditure and mounting debt will serve in the 113th Congress as Ranking Member - basically a co-chair - of the Senate Committee in whose purview interstate commerce and regulation of commerce falls. Should this more potent DeMint be as antagonistic as before, then Obama’s latent Africa agenda is royally screwed! Also dashed will be all the high hopes that AGOA, the US’ most portentous Africa trade policy, is revitalized into one that, according to Special Presidential Assistant Michael Froman, comprehensively combines trade & investment plus economic development & regional integration into a single plan come 2015. Those intimate with the Senate understand this despair as the arcane procedures of a most complex body prevail in the most powerful of legislative institutions. Only 5 short of a 60 vote super majority, the Democrats serve at the mercy of the few. All it takes is one DeMint to kill legislation - even when 55 other senators fully support it. Nonetheless, post AGOA proponents find solace in GOP support for FTAs, TIFAs and international trade. Also, premised on Congress’ recent, timely unanimous consent to renew AGOA’s 3rd Country Fabric provision, many stakeholders optimistically conclude that a policy a la the Froman-delivered Presidential Directive could sail through the bicameral Congress by Close of Business 2013. But a year in a deeply divided Congress can fast slip away: Practice shows bipartisanship periods are ephemeral; of late, few and far between. Rosa Whitaker isn’t pessimistic. A pioneer of the African Affairs bureau in the US Trade Representative’s office and now president of The Whitaker Group, she, in a recent column, allays some of these fears by affirming that both Democrats and Republicans always, even momentarily, pause their rancor just to do what’s right for Africa.
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Additional research from Politico, Fox News, The New York Times, The Washington Post, The Hill, The Week, Talking Points Memo, National Journal, The Atlantic, The Christian Science Monitor and The Economist.

The Case for a Post AGOA US | Africa Trade Policy
By Dennis Matanda
Author’s Note | November 23, 2012: An 800 word editorial for The Habari Network morphed into longer commentary following comments from economic policy and trade doyens. To Tony Carroll and Stephen Lande of Manchester Trade; to Steve McDonald of the Woodrow Wilson Center; to Paul Ryberg of the African Coalition for Trade; to Nathaniel Adams of The Whitaker Group; to Dr. Mwangi Kimenyi of The Brookings Institution; to Witney Schneidman of Covington & Burling, LLP; and to Harvard University’s Prof. Calestus Juma: Gratias tibi ago!

Most people do not know who Jim DeMint is. And yet, through a tiny window of opportunity - cosmic karma, even - he may be pivotal to the most ambitious and most mutually beneficial phase in US Africa’s trade history. With his ruggedly handsome face, pensive demeanor and non-combative tone of voice, the few familiar with the junior Senator from South Carolina don’t play up his charm or approachability. Instead, to the media, fellow Republicans, Democrats and to some in and outside the beltway, he’s the lightening rod of strident opposition to Barack Obama’s efforts at buttressing a battered US economy. No surprise, then, that the moniker Senator Tea Party was a recently bequeathed upon him! But Nov. 6, 2012 brought disappointment to GOP and such utter dismay to the Tea Party! With unemployment high, the economy in doldrums, markets jittery, and Obamacare still unpopular, this President ought to have handily lost. Still, Obama beat the odds to become only the second Democrat since Harry Truman to win reelection. Somewhat dented, Republicans held on to the Speakership and House, and their Senate Minority shrunk even further as they, for a second time in a row lost the Ultimate Prize. Whether they believe voters rejected conservatism or not, mainstream Republicans urge that to improve White House prospects in 2016, the party of NO can’t just fight everything, and that behavior in the Congress has to be

Paul Ryberg, a Washington-based international trade lawyer and president of the African Coalition for Trade, is more cautious. On a noncontroversial 3rd country fabric, congressional partisan gridlock prevented its enactment for more than a year - until literally weeks before the provision would have expired. In the meantime, US apparel imports from Africa dropped sharply and tens of thousands of African jobs were lost. Ryberg points out that complications arose even though no one in Congress opposed this bill. DeMint et al also played a part in this by proposing un-germane amendments to the bill. The Brookings Institution, points out a nugget that may translate into additional pro Africa sentiment in Congress: In 2011, all 50 states in the union increased their exports to Africa. Worth more than $ 32 bn then, figures for FY 2012 look set to either surpass or stay the course. South Carolina is now one of South Africa’s largest trade partners – garnering some US$279 million from exporting things like lawn mowers and tractor-trailers, and West Virginia exported much more to Africa than to Taiwan and Spain. Apropos Milieu

to Africa trumps all US export revenue tenfold should be an ignominy to this cream of the American capitalist crop! The Perfect Storm But this could all change in a heartbeat: Stephen Lande*, a former chief bilateral trade negotiator at the USTR and now President of Manchester Trade strongly believes that this Obama 2nd term, the 113th Congress and a resurgent US economy are precisely the perfect storm for a vigorous US Africa trade policy initiative – one that emulates European Union and Chinese behavior in Africa. To Brookings’ Mwangi Kimenyi and also to COMESA’s Amini Kajunju, ‘vigor’ must involve deepening current AGOA and other policy preferences while marshaling logistical long term support for American investors. Hoover Institution contributor James Robinson agrees and adds that policy must especially focus on economic development in Africa. In various papers, suggestions and policy review papers, Dr. Kimenyi, Prof. Lande plus other US based Africanists like Ms. Whitaker, John Mutenyo, Witney Schneidman, Scott Eisner at the US Chamber of Commerce, and Stephen Hayes of the Corporate Council on Africa seem to agree on the outlines of the Obama administration’s trade and investment plan floated in the June 2012 U.S. Strategy toward Sub-Saharan Africa. Effectively executed, some suggest that a new legislative policy would go way beyond AGOA and actually result in the supply chains and distribution networks that will effectively insert Africa into today’s global trade system and ultimately grow US jobs. In the same vein, a new policy would rebalance the ‘trade war’ with Chinese and European state-backed entrepreneurs, better positioning the US for a war that the country is, under current circumstances, losing.

A Habari Network Chart, 2012

Just look at this Balance of Trade!

Contextually, USD $32 bn in export revenue is as measly as it is imbalanced. Since 2000, the year AGOA passed, trade deficits with Africa have been between USD $11 bn [Adv. Africa, ‘02] and USD $85 billion [Adv. Africa, again, ‘08]. The Heritage Foundation’s Center for International Trade and Economics says this deficit exists partly because the US undermines African traders through non-tariff barriers including subsidizing its producers. But still, this does not satisfactorily address why most of S&P 500 firms, some with balance sheets greater than entire African economies, do not lift more than a cursory finger to invest in Africa. That the annual Diaspora remittance

Steve McDonald* of the Woodrow Wilson Center’s Africa Program adds the important aspect of regional integration which would eliminate the oft cited small markets, few economies of scale as a barrier to investment in Africa. Miller and Kim at Heritage add that a post AGOA induced path to regionalism must be longer term as preference programs are insufficient to promote the dynamic engagement in the region. *McDonald and Lande are currently soliciting ideas and consulting
various stakeholders on a multifaceted plan.

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The Case for Africa There is a plethora of compelling reasons for America to aggressively grow invests in Africa. First, the continent sits on a land mass which could fit the US, China, India, most of

Fitting the World into Africa

technology and budding list of those engaged in Africa are seeing to it that this is no more. Nowadays, small American traders and larger corporations alike point to the green shoots of progress and huge profit margins from African investments. Citing African countries with higher per capita GDP than China, California’s Scott Harvey Wines recently introduced 6 wine varieties to Kenya and Tanzania. On an impressive website* dedicated to sub Saharan Africa stock markets, Ryan Hoover, an equity analyst and fund manager says US corporations like Medtronic, a medical device maker estimates that 2 million Africans will use their devices over the next few years and recent revenue grew 16%. Another, Portugal Telecom, now gets most revenue from Africa, and Syngenta, largest agricultural chemical manufacturer in the world derives USD 0.5 bn now but analysts see Africa’s herbicide demand jump to USD $ 4 bn in 10 years. The pudding to Africa, as The Atlantic reports, is in how the continent’s overall growth rates have ‘quietly’ caught up with Asia’s. Africa will, in International Monetary Fund estimates, be the fastest growing continent over the next five years and as they made a killing in Asian Tiger investments, perhaps the time for the African Lions is nigh. But like many an American media entity - even with South Carolina’s performance in Africa - the Charleston Regional Business Journal admonishes sunny projections and underscores the low disposable income prevalent in Africa. But The Economist makes the case that this less-than-optimal income belies incredible change in African consumption and is, in fact the key incentive to invest. In a recent study, Kenyans were found to be skipping luxuries like meat or choosing to walk over paying bus fare just so they can have credit to make calls or send texts that will bring tomorrow’s food for their family. This cost benefit scenario represents a microcosm of a remarkable shift in consumption trends. Africans with mobile phones are not only laying the foundation for a communication infrastructure but also doing more business with the world. They have between $ 1,460 to $ 7,300 to spend each year and they now demand goods and services in volumes and varieties unheard of less than 10 years ago. As paltry as a $ 7,300 a year may seem to America’s middle class, this is a new and huge amount of money – even momentous for Africa! A CATO Institute column toasts to the fact that much of this growth is via better economic policy and governance. Botswana and Ghana have astutely used their respective diamond and oil resources in tandem with infrastructure spending to, somehow, put more money in their people’s pockets.
*www.investinginafrica.net

Europe plus the United Kingdom and Japan - with room to spare! A Foreign Policy Association post additionally suggests that USD 24 trillion worth of sheer wealth could be buried in the Congo alone. Secondly, the continent’s close to 1 bn people are neither monolithic nor do the 54 independent polities live under a central authority. At disparate levels of development, much of sub Saharan Africa consists of semi-to-fully liberal democracies that bear much friendlier business climates than many of their Asian or even European rivals. What they lack in infrastructure, they make up for in enthusiastic adaptability like Somalia and Southern Sudan heartily embraced ICT. Thirdly, like McDonald and the experts from Heritage cite, regionalism is alive: Nigeria is harmonizing tariffs to benefit the ECOWAS member states, and in East Africa, PriceWaterhouseCoopers safely projects that the East African Common Markets will see both increased inter-country trade and factors of production mobility across borders. Kenya will continue to have Uganda as her biggest trade partner and the trade volumes between Uganda, Rwanda and Burundi will continue to swell. And yet there’s still no cattle call to get into Africa’s potential and it seems as though US based champions of investment in and trade with Africa are the few brave ones keen to show off scars from Africa excursions and regale with tales of exotic adventure. But an increasingly active African Diaspora, the rapid deployment of information
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Meanwhile, H.J. Heinz, a ketchup-maker foresees Africa’s [and the Middle East consumer] spending grow from $ 900 billion to $ 1.4 trillion over the next eight years. VeriFone Systems is doing ‘phenomenally well’ by influencing African electronic payments’ with 100,000 point of sale terminals installed in Nigeria; and aiming for Ghana + Kenya. Is Africa much worse off than China? Albeit progress galore, internal strife infests Africa’s largest economies - South Africa and Nigeria - just as much as it is in the Maghreb and Zimbabwe. Rwanda or Angola’s rosy trends cannot disguise the unschooled, unskilled and unproductive; and corruption, poverty + disease continue to rob opportunity from the continents people. And yet at the same time, these very things have not deterred US investors from China. Just how impressive is China? Very! But ... With an impressive $ 11.3 trillion supercharged economy, China closely snaps at the heels of the US for the coveted ‘Biggest Economy’ status. It is the world’s largest exporter, has the biggest labor force of between 760 million and slightly over 1 billion and has a tiny budgetary deficit when compared to America’s unsustainable one. And yet there are many unsustainable things about China. Its exchange rate is not determined by market forces but by Beijing. This sleight of hand may keep China’s exports cheap but does not disguise the 2011 purchasing power parity of just $8,400 - lower than Equatorial Guinea’s, Gabon’s, Botswana’s, South Africa’s and other large economies. What is China’s problem? Away from the paved roads and glitzy lights, many Chinese could, actually, face more or less the same biting poverty felt by Africans. Yes - China’s government and private sector expenditure have led to profitable state enterprises, a very important infrastructure backbone and the ‘rampant’ brisk business at the heart of coastal area commercial. Nonetheless, the consumption and average rural incomes under the recently ended Hu Jintao reign are lower than those of both his predecessors’ respective 10 year reigns. Combined with environmental degradation, an apparent heavy handedness to quell civil protest, bitter poverty, disease and hunger, many Chinese may even look at Africans with envy. But here, it is important to underscore that precious little slips from under the blanket of Chinese censorship and much remains unsaid, unreported and also unreachable as not all of China is even under Beijing. Yet according The New York Times, The Washington Post and The Economist, we now know more about the ‘red nobility’- an ostensibly ominous aristocracy of the 80 million or so members of the Communist Party of China. These and their families play the role of influence peddlers;

trumping over law with impunity only heard of in lawless parts of the Congo! So corrupt are just 6% of the country that it is literally felt at the grassroots: Of late, many Chinese in the rural areas are rendered destitute when the land on which they toil and dwell is surreptitiously sold to private developers by the members of the infamous aristocracy. Flatulence a la mode was key to the Qing Dynasty’s 19th century collapse and is exactly the same pall of potential doom hanging over the Middle Kingdom. Capitalism Trumps Corruption Negative consequences of vice aside, there’s that proof that private sector activity can alter societal vice - even as ingrained as China’s current one or the early 20th century crime syndicates in Las Vegas and Chicago. Also, in 1947, Japan’s GDP was Y205 bn. However, the depth and breadth of the country’s Y300 bn black market showed how decrepit the country really was. Short years later, Toyota, Sony, Mitsubishi and other products emerged from this ‘ruin,’ partly due to US private sector money. Perhaps, then, the ‘red nobility’ won’t actually bring China to the ground; and that those not investing yet in Africa will put on their profit seeking hats and venture into the known unknown. Besides, using indices like Transparency International’s Corruption Index may be misleading: First, TI itself admits results are based on perceptions of under hand activity. In naming countries like China, Columbia and Nigeria high on their list, one may miss the fact that each is its region’s most dynamic economy. Who should benefit from US Africa Trade Policy? US Secretary of State Hillary Clinton may want to show that America is ready to invest in Africa by taking Boeing, Walmart, Fedex and General Electric with her on visits to Africa. But this may not necessarily be an effectively strategy. After all, these large companies are already on the continent in one form or another - already taking advantage of the infrastructure investments by African governments, even when these receive help from the Chinese. Besides, if only large corporations are paraded to the Africans as good American capitalism, what one may see is that, perhaps, only the really large companies can do business in Africa since their sheer size can absorb loss. But most American companies are not Walmart or GE. The heart of America’s potential investors in Africa lies in the 10 to 20 people outfits - small enough, lithe enough and hungry enough to move into new territory.

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Unlike the multinational corporations, there may only have between USD $ 50,000 and $ 5,000,000 to invest in a country. Ask any economist or private sector business person from Africa and they will much prefer small investments to the big ones that could saturate markets with unhealthy cash infusions. The smaller firms are exactly the kind that could use an aggressive federal policy and strategy. Foreign Affairs magazine acknowledges that the US lacks even the semblance of strategy for competing in emerging markets against China, the European Union or Brazil. Todd Moss of the Center for Global Development says the US is stuck in a time warp where it is trying to discard an ancient engagement plan but cannot seem to quickly latch onto the next thing. Too many agencies are doing Africa trade policy, Africa trade and tourism promotion, Africa trade advocacy and some are even primed to stop the government from curtailing the freedoms of some capitalists. But US businesses are also implicit from their inchoate hold onto the meme that Africa is hungry kids on TV. How America Lost Africa In a video message to the 2009 AGOA Forum in Nairobi, the still fresh President Obama declared that the US Africa partnership was yet to realize its full potential. Four years later, on the eve of a second term, the formerly profound ‘full potential’ rings hollow to many Africans who are disappointed that the first African American did not make more overtures to the continent. But Obama was always going to disappoint those that had high hopes in his presidency anyway. Besides, according to Richard Joseph of Northwestern University, an ‘ordinary’ president would have received praise. Obama has not even been given credit for support to peaceful transfers of power in Ivory Coast, Nigeria, Senegal and Malawi; for working to counter the Lord’s Resistance Army in East Africa plus the Islamic extremists in Somalia and Mali. Except, Obama was no ordinary president to the Africans. And as for his earlier mentioned AGOA related ‘full potential’ comments, Harvard University’s Calestous Juma noted that the Africans patiently waited for him to make things happen - standing aside to let him deal with the ‘illegitimacy’ and other domestic pressures of his novel presidency. But in not feeling ‘specially’ treated by the White House, they ebbed away like a dejected distant relative, realizing that even when ‘one of their own’ led the free world, they must chart their own path to progress. And so they looked to China. Uganda even sought a more or less spectral nonalignment with Iran.

A Time Magazine Photo

‘You guys will not believe what I just bought!’

For its part, China, which had been building its presence on the continent jumped at the African opportunity by pouring superior amounts of their foreign direct investment on infrastructure. Compared to the US which spent 70% of its foreign assistance on health, the Chinese literally built roads, hospitals, office buildings and stadiums while continuing to cut all manner of deals for commodities like oil and steel and timber to feed their insatiable demand for commodities. Eventually, the Middle Kingdom ended the US’ reign as Africa’s biggest single trading partner less than 4 years ago. In 2012, China is, pun unintended, king of the jungle, and may even do upwards of USD $220 bn worth trade with Africa. Chinks in the armor Even as successful as China has been in asserting itself, there are, pun intended, cracks in this partnership. The Economist says Chinese construction in Africa is ‘sloppy’ and ‘slapdash.’ An Angolan hospital built and opened with great Chinese fanfare closed within a few months as cracks appeared in the walls. The Christian Science Monitor says photographs of a leaking ceiling in the new African Union headquarters in Addis Ababa lately made social media round deriding Chinese construction. This notwithstanding, a May 2012 Los Angeles Times article reported a GlobeScan poll that showed China as more popular than the US. The same report noted that the way China treated its own people, its economic plus foreign policy also harmed the world. While specific obloquy is usually reserved for America around the world - recently fueled by 8 years of an Us vs. Them Bush foreign policy - US favorability under Obama is on the up and up. Paradoxically, Bush’s investments in Africa’s health seem to have purchased lots of African goodwill.

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As for China’s relationship with Africa, on top of being ‘unsustainable’ as per South Africa’s Jacob Zuma, African nations silently root for Team USA because, like Juma insinuates, Obama is such a deal sweetener. A visit to the continent this second term may just seal the deal! The right noises from Washington, DC For the moment, some government entities are starting to awake to the need to change policy and take action on behalf of American investors. At a George Washington University event on Nov. 14, 2012, Fred Hochberg, President of the US EXIM Bank outlined an aggressive ‘anything goes’ approach to level the competitive playing field for US business in Africa. Alongside doing what China does, Hochberg spoke directly to trade agency realignment and then specifically alluded to the need for comprehensive policy to promote international trade like the national interest it is. But Jim DeMint and other Republicans may take issue with this intervention. In fact, even if the party and like-minded think tanks support a more comprehensive strategy than AGOA, the mostly ignorant and overwhelmingly influential conservative talk radio hosts, virulent online websites blogs, and Fox News could doom legislation because it is akin to Obama - someone who, despite higher post election job approval is still loathed by the conservatives who do not believe he has a mandate to do as he wishes with this country. In all this partisan bickering and ideological warfare, there’s a gem of truth: If American firms cannot acquire a bigger stake in what could regenerate the modern global economy, then Adam Smith, John Maynard Keynes and Milton Friedman were wrong. The 9.1% unemployed in South Carolina and the 8.4% in Kentucky - and yes, the millions of Africans and their American kin might as well look to China for bread. The Foundation for a New Initiative AGOA was never supposed to be a gift to Africa. It was meant establish mutually beneficial roots in both the US and Africa private sectors - roots that would eventually unleash Fords, Chryslers and Cadillacs down highways between Congo Brazzaville and Mombasa. Towards a goal as lofty, AGOA has not done as much for the American entrepreneur - even though there are now more Americans clad in outfits arranged by African hands and more African oil in Texan refineries. Paul Ryberg believes that AGOA has been a success, and thus, he urges that care be taken in tinkering with it since proposing amendments might attract controversy which could slow enactment, cause AGOA to lapse and cost hundreds of thousands of African jobs.
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But others want to go much further even if this disrupts the AGOA status quo or resuscitates legislative rivalries. A well executed multi-stakeholder strategy can develop a comprehensive policy that will be well worth the rumpus. It comes down to politics The GOP lost the 2012 General Election by a 2% margin made up of minorities. Here, DeMint & Co. have the golden chance to, as The Week recommends, bring compassion back into an economic debate. Besides, a GOP policy pivot to over 3.2 million African immigrants may make for both expedient strategy and smart business. This Diaspora could play the role of cultural brokers; facilitating trade between America and their respective home countries. After all, more than 50 percent of them came to the US after 1990 and keep ties to Africa through yearly remittances worth more than $ 40 bn. The DeMint Essence

Could this man doom African legislation?

While he opposed big government, DeMint also once said he’d never rule anything out in his life. As a businessman himself, he, no doubt, understands that the Marshall Aid Plan, for instance created jobs in America as much as it created consumers and goodwill in post WWII Europe. In also urging Congress to do more to open new markets for American products, perhaps he and fellow Republicans will take leadership on African policy and in the process, show the world which party is Africa’s true friend. In July 2012, DeMint, in a Politico article, averred that he’d not compromise just to pass something. A few short months later - in a post election press release - DeMint ends it with a nascent hope to work with Jay Rockefeller, the Democratic Chair on the Committee DeMint will join. This trace of moderate behavior may bode well for Africa, vindicating Whitaker, exceeding Ryberg’s expectations and proving the efficacy of Lande’s perfect storm. But knowing how deep still partisan waters may run, we really should not be holding our breath.
Dennis Matanda is an American Politics + Government scholar from Uganda. He serves as The Habari Network’s Editor, works in Manhattan and lives with his wife Rachel in Princeton, New Jersey.
@DennisMatanda