President Obama is in Kenya for the 5th annual U.S. Global Entrepreneurship Summit. While the African continent is not a surprising choice for the Summit, given it is home to some of the most promising economies in the world (the Summit was held in Rabat, Morocco last year), Africa remains one of the most challenging regions in the world to be an entrepreneur. At the Summit, two commitments need to be made and sustained by action: 1) African governments need to get serious about speeding up market-oriented policy reforms. 2) President Obama and the United States should develop a more mature trade and investment relationship with African partners--one that reflects the realities in Africa today rather than decades ago.
Despite the rhetoric, a significant number of African leaders have failed to aggressively embrace market-oriented reforms. As a result the majority of the worst economies globally for investment and entrepreneurship are in Africa. While the environment is changing (when you are the worst, you can only go up) and the potential investment opportunities are robust, the rate of market reform and removal of investment barriers is moving far too slowly. The disconnect between political speeches and the policy reality is real and deep. Despite the African continent's tremendous overall growth rates, the bottom line for many business leaders and investors is that government policies continue to hinder long-term partnerships and investment activity. Ultimately these poor policies drive many entrepreneurs to leave for more hospitable environments.
During the Summit, President Obama will have a unique opportunity to highlight how entrepreneurs can drive forward and advocate for the reforms necessary to ensure their success, and ultimately create more jobs for Africans. In addition President Obama needs to take trade and investment partnerships between African countries, or integrated regional blocs, and the United States seriously because those partnerships form the foundations for greater reform and can realize a significant increase in capital investment into the Continent's bourgeoning entrepreneurial class, as well as improving and expanding energy and infrastructure. This expansion will, ultimately, create a more robust middle class in Africa willing and able to buy American products and services, and vice versa. Yet, given President Obama's track record, it will likely not be at the forefront of the conference. His rhetoric will likely outweigh any actionable commitments--he will tout the recent renewal of the African Growth and Opportunity Act (AGOA) and legacy of the U.S.-Africa Leaders Summit held in Washington last summer.
Secondly, AGOA remains largely unchanged from the original legislation enacted in 2001 yet despite the sluggish policy reforms, significant transformations are, in fact, occurring in a majority of African countries. While the United States continues to focus on preferential trade, the European Union has negotiated reciprocal trade agreements with sub-regional trading blocs to be implemented over a set course of time. African governments are slowly bringing political weight to bear on improving intra-Africa trade and the development of a continental-wide free trading area, but the U.S. has limited itself to an antiquated and imbalanced preferential trade agreement. While AGOA was transformational in the early 2000s, the United States and African countries have moved beyond such an arrangement. Africa in 2001 was a very different place than it is today, yet the Obama Administration and U.S. legislators haven't taken a deeper look at places such as Senegal, Mozambique, or Zambia that are truly changing. Nigeria is now the biggest kid on the bloc, replacing South Africa as the continent's largest economy. AGOA desperately needed an upgrade during the most recent legislative renewal process but neither Congress nor the President was willing to take the necessary steps to bring the U.S. trading relationship with Africa into the 21st century.
Last summer President Obama hosted the first ever U.S.-Africa Leaders Summit, it might have been new to the American people, but to the rest of the world this type of grand conference was old news. Global players in Africa have been hosting such events for more than decade, such as China, the European Union, India and Japan. To say U.S. engagement with African countries has been underwhelming would be an understatement. Regrettably, this Administration's Africa policy has been more about photo-ops than substantive conversations on how to improve and expand existing relationships, and how to develop new ones.
Relationships and mature discussions are what advance not only U.S. interests, but also those of our friends, particularly in Africa. President Obama has a unique opportunity to use the U.S. Global Entrepreneurship Summit as a platform for directly engaging people and businesses in Africa. The governments of many African countries tend to think they know better their own citizens, yet as more Africans become empowered and engaged in the global community, their voices not only matter, they cannot be ignored. Entrepreneurs are demanding streamlined business registration process, e-governance systems to eliminate opportunities for corruption, and the removal of non-tariff barriers to move necessary goods and equipment into the continent easier and faster. President Obama's message during the Summit should support this demand.
President Obama has the opportunity to offer a vision for a more mature trade and investment relationship with Africa to the world's leading investors and entrepreneurs this weekend in Nairobi. However he also needs to act on that vision by making commitments to African leaders who truly want to improve their business and investment climates through sensible market-oriented approaches. The message should be the U.S. is ready to be a true partner with you. Mr. President, don't let lofty rhetoric be the takeaway from the U.S. Global Entrepreneurship Summit....yet again.
Charlotte Florance is a writer and policy advisor based in Amman, Jordan. She previously worked at The Heritage Foundation as a policy analyst studying U.S. policy toward Africa and the Middle East.