Examining the Potential of US-Africa Bilateral Trade Relations

Recently, the United States President Joe Biden hosted African Presidents from across the continent in Washington, D.C, for the U.S.-Africa Leaders Summit. The 3-day event continued efforts to strengthen ties with Africa ased on principles of mutual respect and shared interests and values. Ugo Aliogo who attended the event reports

The African Continental Free Trade Area, (AfCTA) which would be the world’s largest free trade area, would be expected to connect 1.3 billion people across 55 countries and a consumer market that will be worth over $3 trillion by 2030, and a combined Gross Domestic Product (GDP) valued at $3.4 trillion, when the market comes on stream. It is expected that AfCTA would huge foreign direct investments into the African, and position the continent for greater prosperity.

As one of they key investors in the Africa market, the United States of America, (USA) under the leadership of President Joe Biden in partnership with President of Senegal and Chair of the African Union, (AU) Macky Sall, and African Union Commission Chair Moussa Faki Mahamat, have affirmed their commitment to reinforce longstanding areas of cooperation and expand their partnership to better meet the shared challenges and opportunities of the era. The goal of both parties is to deepen their collaboration to solve global problems and shape the rules of the road for technology, space, cybersecurity, trade, environmental protection, and economics.

The event, according to the US government, “also served as an opportunity to listen to and collaborate with African counterparts on key areas the United States and Africa define as critical for the future of the continent and our global community. Delegations from all 49 invited African countries and the African Union, alongside members of civil society and the private sector attended the Summit.”

The Commitment of US Government

During the event, President Biden announced the U.S. commitment of $350 billion to facilitate digital transformation with Nigeria and other African countries, noting that such a commitment would help more than almost half a billion dollars in financing to make sure more people across Africa can participate in the digital economy.

He stated that the commitment includes partnerships such as a new collaboration between Microsoft and Viasat to bring in Internet access to 5 million Africans, which is part of Microsoft’s commitment to bring access to 100 million people across Africa by the end of the year 2025.

He revealed that the initiative would include programmes to train African entrepreneurs with a focus on women entrepreneurs to code and build skills that need to start their own businesses, to secure good-paying jobs and technol-with technology firms, “and this will include partnerships between Africa, American comp-African and American companies to provide cybersecurity services to make sure Africa’s digital environment is reliable and secure.”

“So, today, I’m announcing a new initiative: the Digital Transformation with Africa. Working with Congress to invest $350 ~~billion~~ [million] to facilitate more than almost half a billion dollars in financing to make sure more people across Africa can participate in the digital economy,” he said.

Speaking during the US-Africa Business Forum, Biden said that Cybastion, a diaspora-owned small business, is jointly announcing $800 million in new contracts to protect African countries from cyber threats.

He disclosed that Visa is committing and putting more than $1 billion into Africa over the next five years to further expand the operations on the continent, including providing mobile payment services for more micro-, small-, and medium-sized businesses across Africa.

According to Biden, “The United States is all in on Africa’s future. And the work we’ve done over the past two years, building on decades of vital investments made under previous American presidents, has helped make possible the critical steps that I’m about to announce.

“First, the United States is signing an historic memorandum of understanding with the new African Continental Free Trade Area Secretariat. This MOU will unlock new opportunities for trade and investment between our countries and bring Africa and the United States even closer than ever. This is an enormous opportunity for Africa’s future, and the United States wants to help make those opportunities real.

“We are finally implementing the African Continental Free Trade Area. It will represent one of the largest free trade areas in the world, 1.3 billion people, and a continent-wide market totalling $3.4 trillion. And with the new MOU, we are doing things correctly: enshrining protections for workers both across Africa and in the United States; looking out for small- and medium-sized entrepreneurs and enterprises to make sure they have a fair shot to compete; lifting up opportunity for women-owned businesses, diaspora-owned businesses, and businesses owned by members of historically underserved communities; and supporting and investing in the continent’s vibrant and growing urban economies. Together, we want to build a future of opportunity where no one no one is left behind.

“Second, we are investing to facilitate greater regional trade within Africa, including by investing in infrastructure. Today, the Millennium Challenge Corporation signed its first-ever regional transport compact with the governments of Benin and Niger. This compact will invest $500 million to build and maintain roads, put in place policies that reduce transportation costs, making it easier and faster for ships to ship goods from the Port of Cot- — excuse me, from the Port of Cotonou to neighbouring landlocked countries.

“General Electric and Standard Bank will together provide $80 million to improve healthcare services and provide access to cutting-edge healthcare equipment. Altogether, the forum has spurred more than $15 billion in new deals, which will turn, lift up, and improve lives of people all across the continent. And that is the biggest deal of all. These are long-term investments that are going to deliver real benefits to people; create new, good-paying jobs, including here in the United States; and expand opportunities for all our countries for the years to come. All of you, the deals you have signed, the investments we have made together, are concrete proof of the enduring commitment we are making to one another, government to government, business to business, people to people.”

G-20 permanent Membership

Biden called on the Africa Union (AU) to join the G20 as a permanent member, stating that it has been a long time in coming.

He also stated that he is upholding and defending the foundational principles of global peace and security enshrined in the U.N. Charter and in the AU seminal documents, while also meeting the challenges that impact every nation.

Biden, recalled that in September, at the United Nations General Assembly, the United States fully supported reforming the U.N. Security Council to include permanent representation for Africa, adding that the continent belongs at the table in every room where global challenges are being discussed and, in every institution, where discussions are taking place.

He further explained that they are leading a global effort to pursue equitable arrangements for global creditors to provide debt relief so nations can prioritize their people, not back-breaking debt payments.

Biden disclosed that he is asking the US Congress for the authority to lend $21 billion to the International Monetary Fund (IMF) to provide access to necessary financing for low and middle-income countries, which he said so difficult to come by now, but would help Africa’s recovery efforts and support projects that build resilience against future crises.

“We are leading a global effort to pursue equitable arrangements for global creditors to provide debt relief so nations can prioritize their people, not back-breaking debt payments. And I’m asking the Congress for the authority to lend $21 billion to the International Monetary Fund to provide access to necessary financing for low and middle-income countries which is so difficult to come by now and to help Africa’s recovery efforts and support projects that build resilience against future crises,” he said.

The US President revealed that one of the new commitments of his administration is the investment in countering democratic backsliding through their new African Democratic and Political Transition initiative, noting that they collaborating closely with African governments, regional institutions, and Civil Society Organisations (CSOs), “my administration will work with the United States Congress to invest $75 million to strengthen transparent, accountable governance, facilitate voter registration, support constitutional reform, and more.”

He hinted that they would also work to support and strengthen the security benefits that flow from good governance, including with a new 21st Century Partnership for African Security, stating that the Department of Defense will work with their African partners to boost reforms that build their security capacity.

According to him, “On Tuesday, I also directed the establishment of the Presidents Advisory Council on African Diaspora Engagement in the United States, so we can tap into the enormous strength of the diaspora communities here in the United States and make sure their insight and experiences are reflected in our work. And finally, I’m grateful that all of you have made the journey to Washington for this summit, and I’m eager to visit your continent.

“The United States fully supports the blueprint you laid out in Agenda 2063 to build an integrated, prosperous, and peaceful Africa that is driven by African people, centered on inclusive and sustainable development where Africa is an indispensable global partner. I’m eager to hear from all of you how can the United States deepen our partnerships with you and better work with African nations and the AU to fulfill the aspirations of Agenda 2063. And I want to thank you all again. And I’m now going to turn it over to Secretary of State Blinken to facilitate our discussion.”

In his remarks, the Chairperson of AU, Macky Sall, commended President Biden for the attachment to the African partnerships, pointing out that the summit presents an opportunity for African to revitalise its common agenda with US government, “certainly, times are uncertain and troubled, the challenges are more numerous. It is in hard times that friendship finds its greatest test of greatness, trust and mutual respect.”

He added that in these times of profound transition, and working together, this requires another way of thinking of the world by working as conscious partners in a world of unequal development, in respect of common values and their differences.

Nigeria’s Commitment

On his part, the President Muhammadu Buhari has stated that Nigeria remains Africa’s largest single consumer market, which is projected to account for over 15 percent of overall growth in Africa’s spending, by 2025, adding that investors in the country would have access to new markets under the African Continental Free Trade Area, (AfCTA).

He stated that since 2015, the administration assumed office, the fixing of the infrastructural gaps needed for business to thrive in Nigeria, such as roads, railways, air and sea ports, energy and telecommunications, constituted greater priorities for the government.

Buhari said the resolve by the administration is to improve the business environment through business incentives, regulatory reforms and visa-regime that are business-friendly.

He also noted that the outcome of the massive efforts and investments by the administration in infrastructure development and refurbishment, through road construction and rehabilitation, investment tax credit Policy, led to the reconstruction of 21 selected Federal roads, totalling 1,804.6 KM.

He further explained that with regards to railways, sea and air ports as well as energy, which are expected to facilitate movements of people, goods and services as well as sustain the stabilization of industries and their growth respectively, the outcome of ggovernment efforts are well documented in basic facts on Nigeria.

Buhari remarked that on economy, Nigeria like other countries , including the developed economies, is facing economic challenges, occasioned by the disruptions as a result of the COVID-19 pandemic the ongoing Ukraine war and the climate change, in which massive flooding is one the manifestations.

He added that nnotwithstanding these global challenges, Nigeria had witnessed seven consecutive quarters of growth, after the negative growth rates recorded in the 2nd and 3rd Quarters of 2020.

Buhari added that Nigeria’s GDP grew by 3.54percent year-on-year in real terms in the 2nd Quarter of 2022, which represents a sustained positive economic performance, especially for the Non-Oil GDP which fell by 4.77percent in Q2 2022 against Oil GDP that grew by -11.77percent.

According to him, “Statistics continue to indicate that most sectors of our economy recorded positive growth despite these challenges, which reflect the effective implementation of the economic sustainability measures introduced by our Administration. For our economy to favourably meet up the global digitization, Nigeria embraced Communication and Digital Economy. Already, the broadband coverage of the country stands at 44.32% and 77.52%. 4G coverage has also been achieved, with the establishment of 36,751 4G base stations nationwide.

“Bearing in mind the necessity for adequate and sustained power supply as a pre-requisite for any socio-economic and industrial development, our administration placed the power sector as a critical priority area. In the pursuit of our energy development, Nigeria remains mindful of her commitment to carbon neutrality by 2060. In this regard, our administration launched an Energy Transition Plan (ETP) in September, 2022 aimed at meeting the national energy needs, in line with Nigeria’s net zero target. The Energy Transition Plan is a home-grown, data-backed, multipronged strategy developed for the achievement of net-zero emissions’ reduction across five (5) key sectors; Power, Cooking, Oil and Gas, Transport and Industry. The Energy Transition Plan (ETP) is therefore, a huge investment opportunity in the gas sector.

“Peace and Security have become global phenomena, in relation to human activities, including governance and businesses. While peace enhances the climate of stability and potential progress, insecurity is not only the reverse but also makes our collective future unpredictable. When our administration came to power in 2015, most of the North-East of Nigeria was under the control of Boko Haram Terrorist Group.

“Governance and Socio-Economic activities came to stand-still. This state of happening has today been reversed. Internally Displaced Persons (IDPs) are returning to their ancestral home-areas, rebuilt through efforts by the Borno State Government and some philanthropic individuals, to recommence their lives in relative peace. As a country and sub-region, we continue to make sustained investments and efforts to strengthen our national and sub-regional security. In such circumstances, Nigeria continues to treasure strong partnerships with friends and allies in our national, continental and global efforts for safety and survival. We thank the United States of America for her partnership and as an ally, which made it possible to acquire arms, weapons and other military hardware, which has assisted Nigeria in her efforts to contain the scourge of terrorism and maritime insecurity. It is our strong belief that these determined efforts will rekindle interest to invest as well as enhance the volume of your investments in the Nigerian economy.”