Africa must up its US exports game
'Not just rocks'
Supply chains across the continent are becoming increasingly intertwined and Africa should pick-up the quality of its exports to the US as it looks to industrialise.
Nick Wilson - Africa needed more industrialisation and beneficiation to take place on the continent so that it doesn't just end up exporting "rocks" to other countries such as the US.South Africa’s trade, industry and competition minister Ebrahim Patel said this at a briefing during the first session of the 20th Africa Growth Opportunity Act (AGOA) forum at Nasrec last week.
Patel said Africa needed to industrialise and produce value-added products, which could be achieved through trading around the world, as well as finding partnerships in terms of US investment and technology.
“And I said to the businesspeople earlier here today, don't let us export rock to you. Let us use those rocks to build factories. Come and produce here, and let us sell finished goods, consumer goods, capital goods to other parts of the world,” Patel said.
AGOA is a US trade law which expires in 2025 and which SA and other African countries are hoping will be extended for at least another 10 to 20 years.
Lobby
The law significantly enhances market access to the US for qualifying sub-Saharan African countries.
The three-day forum was an important platform for African countries to lobby for the extension of the law and for political, business and civil society delegates from the continent and the US unpack challenges and opportunities to encourage trade between the two.
Patel, who was making opening remarks at the first session of AGOA, said that as "US friends" looked to Africa for trade partnerships, he wanted them to see it as "major place of procurement – not just from one country, but across the continent".
He said that Africa had a compelling story to tell, although it had challenges too, and that developing regional value chains was important in realising the continent's industrialisation objectives.
Beneficiation
"And as we focus on African industrialisation, the key story for us has to include regional value chains and what we in South Africa call beneficiation," Patel said.
"Increasingly, Africa and African value chains are becoming integrated, led by the work we’re also now doing through the AfCFTA (African Continental Free Trade Area), and exports to the US draw on those value chains pulling in raw materials components and manufacturing into seamless products that get exported to the US."
Patel said that Botswana, for instance, exports manufactured wire harnesses to South Africa, from where they were fitted into a vehicle, which was then sent to the US market. The wire harness systems hold all the electrical wiring of a vehicle together, enabling signals to be sent to indicators for them to flash or for a boot to open.
Critical extensions
Albert Muchanga, the African Union’s commissioner for economic development, trade, tourism, industry and minerals, said in a keynote address to delegates that it is important that AGOA be extended for at least 10 to 20 years to create more certainty for the investment community.
He said former US senator John Kerry had originally initiated the process of extending AGOA for 20 years and that "process is working through the US corridors right now".
Muchanga said that US President Joe Biden had also indicated in a statement that he supported the extension of AGOA and had called on Congress to facilitate it.
Said Muchanga: “That is in line with our own position ... that we would like an extension of AGOA for 10 years. If the offer is 20 years, I think we, as Africa, should be ready to accept that.”
"Ten to 20 years is very critical to the investment community, it gives them time to put their money in to generate products that can be exported under AGOA. And it gives them time to generate profits out of those investments. Anything lower than that would generate uncertainty, he said, adding: “And obviously, capital is a coward, and its greatest enemy is uncertainty.”
Committed
Biden's statement dated 1 November was that he strongly supported the reauthorisation of AGOA, which had been a "landmark, bipartisan law" which had formed a bedrock for US trade with Sub-Saharan Africa for more than two decades.
"AGOA is facilitating private sector-led economic growth across Sub-Saharan Africa by increasing the competitiveness of African products, diversifying African exports, and enabling the creation of tens of thousands of new, quality jobs in Africa," the statement said.
Biden also said the benefits of it were felt on both sides of the Atlantic, with AGOA fostering a more competitive environment for US businesses operating in Sub-Saharan Africa.
"I am committed to expeditiously working with Congress and our African partners to renew this law beyond 2025 in order to deepen trade relations between our countries, advance regional integration, and realise Africa's immense economic potential for our mutual benefit." – Fin24