US President Donald Trump Hints on Plans for Africa

What next for the African Growth and Opportunities Act (AGOA), a trade agreement between the United States of America and 39 sub-Saharan African nations that focus on trade and security? The United States Agency for International Development (USAID) that provides economic, development and humanitarian assistance around the world in support of the foreign policy goals of the United States?
Donald Trump’s  the 45th US President used his inaugural address on Friday to commit to an “America First” foreign policy.

“From this day forward, it’s going to be only America first,” he said in his speech. “Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families,” said Trump in his address.

The White House website also reiterated the same “The Trump Administration is committed to a foreign policy focused on American interests and American national security.”

We will follow two simple rules: BUY AMERICAN & HIRE AMERICAN!#InaugurationDay #MAGA??

— Donald J. Trump (@realDonaldTrump) January 20, 2017

“Defeating ISIS and other radical Islamic terror groups will be our highest priority,” as foreign policy priority.

“Finally, in pursuing a foreign policy based on American interests, we will embrace diplomacy.”

For Africa, this is likely to be a positive move for the continent which has put in place efforts in preventing and combating terrorism. This will bolster the continent’s counter-terrorism policy.
However,

However, ISIS Africa notes that the policy is not working as regards to incidents on terrorism documented in 2015.

“There was the attack by al-Shabaab gunmen on Garissa University in Kenya in April, which killed 148 people – mostly students. There was the Boko Haram massacre of hundreds of people in Baga, a Nigerian village, in January. There was the siege of the Radisson Blu hotel in Bamako, Mali; the mass shooting in Sousse, Tunisia; the suicide bomber in Mogadishu, Somalia; the downed airliner in Sharm el-Sheikh, Egypt.”

“From small attacks to large, from east to west to north Africa, terrorism is undoubtedly one of the most severe challenges facing the continent. It claims thousands of lives and negatively impacts millions more.”

Trump’s predecessors have in the past leveraged on America’s engagement with Africa’s fast-growing economies by focusing on trade and security.

For the Obama, his  administration focused on strengthening democratic institutions, spurring economic growth, trade, and investment, advancing peace and security; and promoting opportunity and development.

According to the former US President, Obama as regards to Kenya, America partnered with Kenya in areas where it was making progress:building capacity on entrepreneurship, access to power, climate change, food security, health and investing in youth through the Young African Leaders Initiative.

“Nowhere in the world is development such an important part of U.S. engagement efforts as it is in Africa,” the USAID Website states. “As we support the development of Africa’s economic growth, it can generate new export markets and tap into a common market that will one day outpace India or China.” USAID spends approximately $8 billion of U.S. development aid.

For instance, Obama’s fiscal 2016 budget called for 2.4 percent increase in U.S. international affairs and foreign aid spending over current levels.

Africa, besides having major regional trading blocs – the Southern African Development Coordination Conference (SADC), East African Community (EAC), Economic Community of West African states (ECOWAS), Central African Economic and Monetary Community (CEMAC).

In 2016, eight African regional trading blocs begun discussions on the formation of a single continental free trade area in December.

“Africa full potential in trade and investment is however constrained by many challenges that are yet to be addressed which include inadequate infrastructure, existence of tariffs and nontariff barriers, high costs of energy, overlapping regional trading arrangements, perennial conflicts, illicit and counterfeit trade, stringent regulatory environment, tariff escalations, dumping, and inefficient ports,” says Phyllis Wakiaga, CEO of the Kenya Association of Manufacturers.

For Wakiaga, African Governments need to invest more in addressing the challenges that will enhance intra-African trade both in the medium and long term.

The 27th African Union Summit held in Rwanda, deliberated on the African Continental Free Trade Area (CFTA) that would involve the 54 states establishing a single market of more than 1 billion people with a gross domestic product of more than $3 trillion by October this year. Similarly, in June 2015, 27 African states launched the Tripartite Free Trade Area (TFTA) that marked the beginning of a continental agreement.

Read: 

• Africa’s Future Lies in Free Movement of Goods and People Within its Borders
• Harnessing Growth Opportunities in Africa

Intra-African trade is the lowest of any region in the world at 10%. Intra-regional trade in Europe is 60%. Within the association of Southeast Asian Nations it is 30% and in South America 21%. In contrast, trade in Africa  is larger than official statistics show says Mr Carlos Lopes, the former executive secretary of the United Nations Economic Commission for Africa. “There is a lot of informal trade among African countries that is not captured by customs officials. If this is included in the trading statistics, then the trade is actually much higher. If you talk to customs officials, they will tell you how challenging the informal trade is to capture in official statistics.” 

Africa is not trading with Africa ! Do you see an Opportunity to Improve or do you see No Hope?
Depends on the lenses you wear! pic.twitter.com/792uvJ2Wrz

— Vimal Shah CBS (@vimalafrica) December 2, 2016

When it comes to Trump’s administration, “President Trump will ensure that on his watch, trade policies will be implemented by and for the people, and will put America first. By fighting for fair but tough trade deals, we can bring jobs back to America’s shores, increase wages, and support U.S. manufacturing.”

Trump has already has already stated that his strategy will begin by ‘withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers’.

What if the same strategy will have a ripple effect on the  African Growth and Opportunities Act and the USAID?  The AGOA runs until 2025.

Trump administration states,” With tough and fair agreements, international trade can be used to grow our economy, return millions of jobs to America’s shores, and revitalize our nation’s suffering communities.”

The World Bank Global Economic Prospects, January 2017 report projects sub-Saharan Africa will improve with an overall forecast growth rate of 2.9 percent above the global growth rate of 2.7 percent.

“Sub-Saharan African growth is expected to pick up modestly to 2.9 per cent in 2017 as the region continues to adjust to low commodity prices.”

Read: Kenya to Outperform Rest of SSA Economies, Says WB and BMI

Trump’s team have  questioned the use of trade pacts like the AGOA  Act, which gives some products made in Africa duty-free access to the US. “Most of AGOA imports are petroleum products, with the benefits going to national oil companies, why do we support that massive benefit to corrupt regimes?” the team asked in The New York Times.

Kathy Davey, Africa Portfolio Manager at Ashburton Investments says if the benefits under AGOA are reduced, “We believe that this would incentivise increased intra-Africa trade, which would offset the lower trade with the US somewhat, and also be very positive for the future growth of the continent. This underpins our outlook for strong growth on the continent over (at least) the next five years.” 

Rwandan President Paul Kagame concurs with  Devey’s thoughts and  calls for actions and investments that can propel the continent forward.
Speaking at the 47th World Economic Forum in Davos, Switzerland, last week at a CNBC televised session, he said it was time the continent tackled its challenges, “There is little in terms of showing how fast we are moving out of the problems. We keep talking for years, and nothing changes.” 

Further, as the African Continent awaits for clarity from Trump’s administration, it will be looking at how through President Kagame and his team will restructure and reform the African Union into a more independent and self reliant in plan that will be tabled this month during the 28th African Union Summit.