Barack Obama, the American president, is currently on an 8-day visit to Africa, with stops expected in three countries: Senegal, South Africa and Tanzania. All three countries were visited by Chinese leaders in the recent past. While this might be a total coincidence, the competition for a stronger footprint in Africa between the United States and China is growing. Africa is the source of a lot of raw materials for many industries, and the U.S. is worried of lagging behind China's inroads in Africa. China's trade with Africa was valued at U.S. $200 billion in 2012, according to Chinese official figures. America's trade with Africa was at U.S. $95 billion in 2011, according to the office of the U.S. Trade Representative.
This has led some Africa experts to dub Obama's visit as 'catch-up' attempt with China. We know what China wants in Africa. We know what America wants in Africa. And we know what Europe and others want in Africa. But, what does Africa wants from its partners? No one seems to bother asking this question, not even in Africa.
Obama's visit this week must go beyond grand schemes of aid injections and long lectures on 'democratic institutions' and 'human rights' that Africa has become accustomed to -- to talk about business and opening up global markets for a wide range of African products. There is a strong case to claim that economic prosperity might well be the basis for democracy. Not the other way around.
Obama's Policy Directive for sub-Saharan Africa intended to spur 'economic growth, trade, and investment' all sound great in theory. But, how it looks in practice is anyone's guess. No wonder the euphoria that greeted his election in 2008 in Africa has ebbed. Here are two ways Mr. Obama could engage with Africa, or rather, trade with Africa:
Help Make Global Markets Fairer
The World Bank estimated a decade ago that a deal to level global markets could generate over $60 billion annually to developing nations, helping to lift many out of extreme poverty and end the food crisis gripping poor countries due to soaring food prices. The study highlights the cost of $300 billion subsidies to farmers in rich countries to be six times the total aid given to developing countries. Current statistics are hard to come by, but must be higher.
This subsidy practice severely undermines Africa's capacity to export any of their products to compete at the world market. In many member countries of Organization for Economic Co-operation and Development (OECD), a club of rich countries, agriculture employs less than 3% of the population, but a European cow subsidy for instance is $2.20 a day, which is more than double the size of $ 1/day the impoverished 1.2 billion people survives on.
Africa is home to over 1 billion people and 70 percent of them earn their income from the agricultural sector. While the continent has several substantial development opportunities, none is close to agriculture which contributes nearly 32 percent of Africa's GDP, according to the World Bank.
Despite the World Trade Organization-Doha round of talks aimed at liberalizing the global markets, rich nations have continuously protected and raised incomes for their home farmers, at the expense of fair prices that would help greatly to eradicate extreme poverty among the world's poorest countries.
Extend AGOA and Establish Free Trade Agreements
The African Growth and Opportunity Act, Bill Clinton's signature initiative for Africa, is expiring in September 2015 and should be renewed. South Africa and Kenya, are already lobbying the U.S. government for its renewal. More importantly, next steps are needed to start possible trade agreements with individual African countries or regional economic blocs.
Since 1985 the United States has been actively engaged in Free Trade Agreements (FTA) with countries across continents from Chile to China, Spain to Singapore. The United States Trade Representative data shows that not only free trading blocs enable countries to prosper and to significantly reduce extreme poverty at home, but also the United States gained new markets for U.S. goods and cheaper products for consumers at home. For instance, Israel, the first country to sign FTA with the United States had exports from U.S. generating $9.3 billion and imports "declining" 18 percent to $18.3 billion.
Free trade agreement established in 2004 between Singapore alone with the United States has generated US $37 billion in U.S. exports and US$ 15.4 billion in imports. Such FTA between two blocs (US-Africa for simplicity) would foster political stability, spread the value of freedom, rule of law, and foster economic development. Africa's current GDP is valued at 2 trillion, on par with Brazil's, and expected to be worth 29 trillion by 2050 -- more than the U.S. and eurozone economies put together today.
If Obama is "committed" to African development, then the effort should be directed to a leveled global trading platform that enriches all of us. In this new globalized world, we are faced with various problems beyond individual country boarders. Global issues such as extreme poverty need a shared responsibility, and fairness.
Today, a deadlocked U.S. congress in Washington has a direct impact across small towns and villages in developing countries. In such interconnected world, both blocs never needed each other more than today, and by establishing a free trade zone with Africa -- or African countries -- tangible benefits are most likely to help both Americans at home and impoverished people in African countries. Removing barriers to trade -- most notably tariffs, quotas and easy entry of African agricultural products in the United States -- would provide American markets with cheap organic farm produce while U.S. exports into Africa will grow and create more jobs back home.
So, if President Obama wants to help those folks who will be beating drums, wearing thick cultural outfits on hot sunny days, to make sure he has a memorable African trip -- making global markets fairer and opening the U.S. market to African products would be a step in a right direction. And, on both sides.
Co-author Joseph Rubagumya graduated from Columbia University, with a Master's in International Affairs. He works with the IFCL Group, an independent international advisory firm.