Dr. Ngozi Okonjo-Iweala, Managing Director of the World Bank, has presented a dynamic plan whereby the African Diaspora can buy into bonds that can accelerate the continent’s development. She cites, for example, the fact that 50% of the world’s arable land is in Africa, but African farmers lose up to half their produce due to poor roads and lack of storage. The so-called “Diaspora bonds” would be sold by governments, private companies and public-private partnerships to raise funds to correct this problem and others limiting African development, but under her plan, these bonds would be sold only to native-born Africans living abroad.
What’s wrong with this picture?
When the African Union sponsored a conference on the African Diaspora in Washington in December 2002, the conflict over how many African viewed the Diaspora and how the descendants of Africa saw the Diaspora was highlighted. Until then, when the AU spoke of its Diaspora, they meant only those born on the continent who live elsewhere. However, as members of the traditional African Diaspora – those whose ancestors were kidnapped into slavery long ago – made clear during that conference, we are a part of that Diaspora too. When the AU soon thereafter declared the African Diaspora to be the continent’s sixth region, many of us thought this conflict had ended. Apparently, we were wrong.
Many native-born Africans may say they believe the traditional Diaspora is part of the global African Diaspora, but their actions and sometimes their words – such as Dr. Okonjo-Iweala’s – belie their continued belief that only native-born Africans really qualify.
On this side of the Atlantic Ocean, members of the traditional Diaspora continue to reach out to our brothers and sisters in and from Africa. This is increasingly due to the African Ancestry DNA tests that link people like myself to Africa (in my case Cameroon), but our links to Africa much predate such scientific evidence. It dates back to the 1800s when freed slaves and their children returned to Africa. The links have included Diaspora missions to provide health and education assistance and Pan African conferences to outline terms of engagement. It included such projects as Marcus Garvey’s Black Star Line. More recently, it included Reverend Leon H. Sullivan’s summits in Africa. Today, it includes Congressman Bobby Rush’s African Investment and Diaspora Act (H.R. 656).
H.R. 656 recognizes and offers to build on the potential of Diaspora investment in Africa. Investments on the continent have averaged nearly 30% annually over the past several years, according to a United Nations Conference on Trade and Development study. For Diaspora and other American investors, whose investment portfolios have taken a beating in the bursting of the various tech and housing bubbles in the past decade or so, investment in African companies offers a potentially more profitable means of growing our money. While investment in Diaspora bonds could be one way of making such investments, H.R. 656 is not limited to any one vehicle for investment.
Congressman Rush’s bill calls for the appointment of a Special Representative for United States-Africa Trade, Development and Diaspora Affairs; directs the establishment within the Department of State of the Office of United States-Africa Trade, Development and Diaspora Affairs headed by that Special Representative, and mandates the establishment of five regional centers of that office to conduct public outreach, education and liaison.
Since 1996, the African Growth and Opportunity Act (AGOA) has sought to encourage both U.S.-Africa trade and American investment in Africa. To date, much of the trade still involves the extractive sectors, although non-extractive trade admittedly has grown as well. But the American investment in Africa still focuses on the extractive industries, and without the encouragement offered by vehicles such as H.R. 656, it may remain focused on those industries.
As Congressman Rush points out in his bill, the combined consumer spending of Africa is projected to reach US$1.4 trillion over the next decade. Much of the rest of the world – from China to India to Brazil to Turkey – sees the potential of African economies. Unfortunately, Americans still haven’t completely caught on to the financial rewards Africa already delivers to its investors. When you factor in the anticipated US$1.24 trillion in consumer spending by African Americans alone by 2013, you have an economic explosion waiting to be experienced.
H.R. 656 is an example of the interest and willingness of African Americans to engage with the rest of the African Diaspora and Africa in the coming years. More of us realize our common heritage and destiny every day. First- and second-generation Africans in the Diaspora increasingly work collaboratively with us. Relationships between members of the African Diaspora and Africans have been built over more than a century and continue today. What we need to know is: does official Africa accept us as member of the family?
Saturday, March 19, 2011
Saturday, March 12, 2011
Why Hasn’t AGOA Worked Better for Africa?
Since 2000, the African Growth and opportunity Act (AGOA) has been America’s main vehicle to enhance U.S.-African trade. If you look merely at the numbers, trade between the United States and the AGOA-eligible African countries has increased significantly. However, growth has been uneven and has not benefitted the bulk of African entrepreneurs and their societies as was intended.
When AGOA was crafted, the textiles and apparel sector was predicted to be the key to sparking African industrialization as it had been previously for Great Britain and other currently industrialized countries. Unfortunately, the process of vertical integration, synchronizing several stages of production from raw materials through the finished product, never widely took place in Africa. Cotton producers in countries like Benin and Mali looked to sell their product to America rather than other African countries, although the latter was an easier market to crack.
Under AGOA, African textile and apparel producers were originally intended to buy their raw materials from their neighbors or from the United States. Because this was either impractical or unworkable, a third-party fabric exemption was granted to allow the purchase of inputs from other sources. This has not helped African producers nor sped the development of vertical integration, which has been a source of frustration for American lawmakers who created and must maintain AGOA.
If you travel by road in Africa, at some point you will see old, abandoned factories left behind by the colonial powers. Breweries still operate, but many cereal production facilities and other manufacturing plants no longer operate. Partly, this is due to inconsistent or non-existent electric power in places where production would be most efficient. It also may be due to the lack of financing for such facilities because of disinterest in local banks in financing large, long-term projects under favorable terms. Whatever the reason, Africa lags behind the rest of the world in industrialization and remains dependent on the production of manufactured goods by other nations when it could be creating jobs and selling its own products to the rest of the world.
This is especially critical in the agriculture sector, which should be Africa’s most productive sector. During and just after the colonial period in Africa, many of its countries were not only self-sufficient in agricultural production, but also sold their products internationally. Due to war and unrest, many areas became non-productive. In Nigeria, the discovery of oil diminished interest in agricultural production. Without value-added agricultural production, its nations are vulnerable to a volatile world market for primary products. The massive leasing of African land to foreigners is ostensibly meant to be mutually beneficial, but it does not involve African farmers and doesn’t increase the indigenous capacity to produce value-added agricultural products. Moreover, there doesn’t seem to be strategies to grow more valuable crops such as gum Arabic, even though desertification is increasing the land most useful for its production.
In America and other developed countries, there is engagement between government and the business community that allows for impediments to trade to be identified and eliminated. This process is far from perfect, but it is helpful. In Africa, there remains far too much mistrust and lack of mutual understanding for such a process to be established or last even if it is. I have helped such public-private partnerships be created, as have some of my colleagues, but it is an uphill battle to maintain them. In no country is government good at business, and if there is no effective input from the private sector, too many logjams are created, and investments in infrastructure can easily be misdirected. African executive and legislative branches work together far worse than they do in America even in this time of political discord. This is a recipe for disaster in creating a productive export industry in any African country.
Finally, we in civil society promote the “three-legged” stool concept of government-private sector-civil society cooperation, but in far too much of Africa, civil society organizations lack the information and understanding of the trade process to be of much help in this. Thus, their influence on policy is minimal in far too many countries. If you think mistrust between government and the private sector is rampant, you should see the lack of trust between government and civil society. Not only do thin-skinned government officials resist constructive criticism from civil society organizations, but many of those organizations are considered way stations for would-be politicians. Consequently, what could be useful sources of information for government and the private sector go unheeded, even when such information comes from the many functional, and even exceptional, think tanks on the continent.
U.S. government policymakers have expressed frustration over the lack of progress by Africans in enhancing their own machinery of trade. Moving forward with the next AGOA bill, or whatever its future vehicle will be, this disappointment on the part of American lawmakers could limit future trade benefits for Africa. The American government clearly needs to do more, but that may not happen if African governments and their private sectors and civil societies can’t meet us halfway.
When AGOA was crafted, the textiles and apparel sector was predicted to be the key to sparking African industrialization as it had been previously for Great Britain and other currently industrialized countries. Unfortunately, the process of vertical integration, synchronizing several stages of production from raw materials through the finished product, never widely took place in Africa. Cotton producers in countries like Benin and Mali looked to sell their product to America rather than other African countries, although the latter was an easier market to crack.
Under AGOA, African textile and apparel producers were originally intended to buy their raw materials from their neighbors or from the United States. Because this was either impractical or unworkable, a third-party fabric exemption was granted to allow the purchase of inputs from other sources. This has not helped African producers nor sped the development of vertical integration, which has been a source of frustration for American lawmakers who created and must maintain AGOA.
If you travel by road in Africa, at some point you will see old, abandoned factories left behind by the colonial powers. Breweries still operate, but many cereal production facilities and other manufacturing plants no longer operate. Partly, this is due to inconsistent or non-existent electric power in places where production would be most efficient. It also may be due to the lack of financing for such facilities because of disinterest in local banks in financing large, long-term projects under favorable terms. Whatever the reason, Africa lags behind the rest of the world in industrialization and remains dependent on the production of manufactured goods by other nations when it could be creating jobs and selling its own products to the rest of the world.
This is especially critical in the agriculture sector, which should be Africa’s most productive sector. During and just after the colonial period in Africa, many of its countries were not only self-sufficient in agricultural production, but also sold their products internationally. Due to war and unrest, many areas became non-productive. In Nigeria, the discovery of oil diminished interest in agricultural production. Without value-added agricultural production, its nations are vulnerable to a volatile world market for primary products. The massive leasing of African land to foreigners is ostensibly meant to be mutually beneficial, but it does not involve African farmers and doesn’t increase the indigenous capacity to produce value-added agricultural products. Moreover, there doesn’t seem to be strategies to grow more valuable crops such as gum Arabic, even though desertification is increasing the land most useful for its production.
In America and other developed countries, there is engagement between government and the business community that allows for impediments to trade to be identified and eliminated. This process is far from perfect, but it is helpful. In Africa, there remains far too much mistrust and lack of mutual understanding for such a process to be established or last even if it is. I have helped such public-private partnerships be created, as have some of my colleagues, but it is an uphill battle to maintain them. In no country is government good at business, and if there is no effective input from the private sector, too many logjams are created, and investments in infrastructure can easily be misdirected. African executive and legislative branches work together far worse than they do in America even in this time of political discord. This is a recipe for disaster in creating a productive export industry in any African country.
Finally, we in civil society promote the “three-legged” stool concept of government-private sector-civil society cooperation, but in far too much of Africa, civil society organizations lack the information and understanding of the trade process to be of much help in this. Thus, their influence on policy is minimal in far too many countries. If you think mistrust between government and the private sector is rampant, you should see the lack of trust between government and civil society. Not only do thin-skinned government officials resist constructive criticism from civil society organizations, but many of those organizations are considered way stations for would-be politicians. Consequently, what could be useful sources of information for government and the private sector go unheeded, even when such information comes from the many functional, and even exceptional, think tanks on the continent.
U.S. government policymakers have expressed frustration over the lack of progress by Africans in enhancing their own machinery of trade. Moving forward with the next AGOA bill, or whatever its future vehicle will be, this disappointment on the part of American lawmakers could limit future trade benefits for Africa. The American government clearly needs to do more, but that may not happen if African governments and their private sectors and civil societies can’t meet us halfway.
Saturday, March 5, 2011
U.S. Federal Budget Should Reflect Africa’s Importance
Amid all the talk of federal budget cuts these days, spending on foreign aid of all sorts is a prime target. Public opinion polls have consistently shown over the years that voters believe our government spends far more on assisting other countries than we actually do. So that brings on talk of drastic cuts – even consideration of eliminating the U.S. Agency for International Development.
In all these deliberations, many members of Congress and even some Administration officials may see aid to Africa as particularly ripe for cutting back. We have seen corrupt African leaders fall and others desperately hold onto power in lands so far away to many Americans that they might as well be on the dark side of the Moon. But America is linked to Africa in many ways that are too important to ignore, and our social investments on the Africa continent are not just favors we do for foreigners for whom we have sympathy; it is spending to protect allies, save lives and safeguard our own future.
In the last few weeks, unrest in North Africa has caused oil prices to rise steadily. We face the prospect of US$5-a-gallon gasoline not only because oil supplies are interrupted, but also on the fear of potential interruption. The United States gets nearly one-fifth of our oil from West Africa, and with increasing oil finds in Uganda, Ghana, Sierra Leone, Sao Tome and Principe and other locations on the continent, Africa has become too important a petroleum source to hope that the supplies will not be interrupted. Energy security has long been a concern of the U.S. government – even before the creation of the Africa Command.
Failed states provide safe havens for terrorists and now pirates, who threaten commerce and lives. Somalia and Sudan have long been well known as sites for al Qaeda and other terrorist organizations to train and harbor their minions. The Horn of Africa in the East is home to Islamic fundamentalists, some of whom perpetrated attacks on the U.S. embassies in Kenya and Tanzania. As we watch government after government fall suddenly or crumble under the pressure of popular uprisings, there is concern that Islamic militants could seize power and create enemy states where allies now exist.
Failed states or even weak states can become bases for international crime cartels. International drug trafficking is increasingly using African countries as transshipment points. In fact, since 2003, West Africa has been the source of 99% of all drugs seized in Africa, and those seizures have increased by a factor of five during that period. The United Nations has dubbed Guinea Bissau, one of the world’s poorest countries, as Africa’s first “narco-state.” The War on Drugs has shifted from Central and South America and that fact cannot be ignored.
Health care concerns in Africa have limited the life spans of Africa, but beyond the basic human concern for the welfare of other people, Africa’s health issues impact others in the world, including Americans here in our own country. Globalization has accelerated the linkage of the world and allows people – and sometimes the diseases they carry – to leave one country and arrive in another in less than a day. Scientists tell us that West Nile virus has existed in Africa for 1,000 years and has been identified as one of the possible causes of the death of the legendary Alexander the Great. Now this disease is loose worldwide. West Nile virus was first identified in the United States in 1999, and it has been identified in locations across the country.
The very air we breathe is partially created by the world’s rain forests. While the role of rain forests in oxygen generation has been somewhat exaggerated, they are realistically estimated to be responsible for the production of 20% of earth’s oxygen. Cutting down the rain forests in Africa is not merely a local problem for African countries; it is a global issue for all of us. We debate the concept of global warming, but climate change is indisputable. We just don’t know yet what impact it has on the global ecosystem. Certainly, we know storms in West Africa contribute to hurricanes in our hemisphere, so mitigating the negative impact of climate change in Africa is our problem too.
The rise of food prices in recent years is a global problem. Scarcity of food produced in Africa means the worldwide shortage causes our prices to rise too. The Food and Agricultural Organization says the global food price index has hit a record high for the third straight month. Even if we produce enough for ourselves, the market for food is not limited to one country alone. The demand for staples such as rice, wheat and corn affects everyone, and the lack of money to buy such agricultural products means American farmers have their market opportunities limited.
I have said before and repeat now that nearly 80 percent of the strategic minerals we need originate in Africa. An estimated 97 percent of the world’s platinum is from Africa, as well as 90 percent of the cobalt, 80 percent of the chromium, 64 percent of the manganese, half the world’s gold reserves and as much as a third of all uranium. In recent years, the mineral coltan, largely coming from Africa, has enabled the development of computers, cell phones and other electronic devices. We would be hard-pressed to construct jet aircraft, automobile catalytic converters or computers, cell phones and iPods without the minerals found in Africa, and in some cases, almost nowhere else in the world.
The health, security and well-being of Africa and its people must matter to us. So when we look at the necessary task of cutting the federal budget, we must be careful to consider the implications of cuts in aid to Africa. Such aid is not just a kindness to others; it is a favor we do for ourselves as well.
In all these deliberations, many members of Congress and even some Administration officials may see aid to Africa as particularly ripe for cutting back. We have seen corrupt African leaders fall and others desperately hold onto power in lands so far away to many Americans that they might as well be on the dark side of the Moon. But America is linked to Africa in many ways that are too important to ignore, and our social investments on the Africa continent are not just favors we do for foreigners for whom we have sympathy; it is spending to protect allies, save lives and safeguard our own future.
In the last few weeks, unrest in North Africa has caused oil prices to rise steadily. We face the prospect of US$5-a-gallon gasoline not only because oil supplies are interrupted, but also on the fear of potential interruption. The United States gets nearly one-fifth of our oil from West Africa, and with increasing oil finds in Uganda, Ghana, Sierra Leone, Sao Tome and Principe and other locations on the continent, Africa has become too important a petroleum source to hope that the supplies will not be interrupted. Energy security has long been a concern of the U.S. government – even before the creation of the Africa Command.
Failed states provide safe havens for terrorists and now pirates, who threaten commerce and lives. Somalia and Sudan have long been well known as sites for al Qaeda and other terrorist organizations to train and harbor their minions. The Horn of Africa in the East is home to Islamic fundamentalists, some of whom perpetrated attacks on the U.S. embassies in Kenya and Tanzania. As we watch government after government fall suddenly or crumble under the pressure of popular uprisings, there is concern that Islamic militants could seize power and create enemy states where allies now exist.
Failed states or even weak states can become bases for international crime cartels. International drug trafficking is increasingly using African countries as transshipment points. In fact, since 2003, West Africa has been the source of 99% of all drugs seized in Africa, and those seizures have increased by a factor of five during that period. The United Nations has dubbed Guinea Bissau, one of the world’s poorest countries, as Africa’s first “narco-state.” The War on Drugs has shifted from Central and South America and that fact cannot be ignored.
Health care concerns in Africa have limited the life spans of Africa, but beyond the basic human concern for the welfare of other people, Africa’s health issues impact others in the world, including Americans here in our own country. Globalization has accelerated the linkage of the world and allows people – and sometimes the diseases they carry – to leave one country and arrive in another in less than a day. Scientists tell us that West Nile virus has existed in Africa for 1,000 years and has been identified as one of the possible causes of the death of the legendary Alexander the Great. Now this disease is loose worldwide. West Nile virus was first identified in the United States in 1999, and it has been identified in locations across the country.
The very air we breathe is partially created by the world’s rain forests. While the role of rain forests in oxygen generation has been somewhat exaggerated, they are realistically estimated to be responsible for the production of 20% of earth’s oxygen. Cutting down the rain forests in Africa is not merely a local problem for African countries; it is a global issue for all of us. We debate the concept of global warming, but climate change is indisputable. We just don’t know yet what impact it has on the global ecosystem. Certainly, we know storms in West Africa contribute to hurricanes in our hemisphere, so mitigating the negative impact of climate change in Africa is our problem too.
The rise of food prices in recent years is a global problem. Scarcity of food produced in Africa means the worldwide shortage causes our prices to rise too. The Food and Agricultural Organization says the global food price index has hit a record high for the third straight month. Even if we produce enough for ourselves, the market for food is not limited to one country alone. The demand for staples such as rice, wheat and corn affects everyone, and the lack of money to buy such agricultural products means American farmers have their market opportunities limited.
I have said before and repeat now that nearly 80 percent of the strategic minerals we need originate in Africa. An estimated 97 percent of the world’s platinum is from Africa, as well as 90 percent of the cobalt, 80 percent of the chromium, 64 percent of the manganese, half the world’s gold reserves and as much as a third of all uranium. In recent years, the mineral coltan, largely coming from Africa, has enabled the development of computers, cell phones and other electronic devices. We would be hard-pressed to construct jet aircraft, automobile catalytic converters or computers, cell phones and iPods without the minerals found in Africa, and in some cases, almost nowhere else in the world.
The health, security and well-being of Africa and its people must matter to us. So when we look at the necessary task of cutting the federal budget, we must be careful to consider the implications of cuts in aid to Africa. Such aid is not just a kindness to others; it is a favor we do for ourselves as well.
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