Feb 2013

US set to increase trade with sub-Saharan Africa

Written by Neo Semono

International relations

Business relations between sub-Saharan Africa and the United States (US) are set to reach new heights following the launch of a new campaign by acting US Secretary of Commerce Rebecca Blank.

Blank launched the Doing Business in Africa campaign recently.

The campaign aims to increase US business involvement in Africa and further the US commercial relationship with the continent.

In 2012 US President Barack Obama issued the US Strategy Toward Sub-Saharan Africa, committing his country to finding ways for economic growth, trade and investment in sub-Saharan Africa.

“Overall the campaign is about finding new ways to form stronger partnerships for prosperity,” said Blank

The campaign will cover the entire sub- Saharan region. “We expect to be working in as many countries as we possibly can on this. There are no exclusions at all,” she pointed out.

Blank said US agencies would work to encourage US companies and Africanowned businesses to trade with and invest in Africa through expanded trade promotion programmes, tailored towards the continent.

Mfundo Hlatshwayo, who is an executive in Trade, Investment and Special Programmes at Business Unity South Africa, said there were real opportunities for emerging companies in South Africa to benefit from increased US investment.

“South African companies may partner with US firms through joint ventures, supply services and products to the investors, or receive much needed capital injection for their local operations. Nonetheless, the success of the campaign will be determined by the commitment of the US to the campaign as well as the global economic environment,” he said.

Hlatshwayo added that the US realised it needed to tap into growth markets, which currently include the African continent, to sustain its economic growth.

“The engines of global growth are currently in Asia and Africa, with Asia having grown at 5.5 per cent and Africa at approximately five per cent for 2012. These two regions are the fastest growth areas in the world.”

He explained that trade between the US and the Southern African Development Community had been increasing since 2002 before collapsing in 2008.

“Trade between the two regions has been on the rebound and in 2011 stood at $66 billion (approximately R574 billion).”

The US has diverse markets, which South African entrepreneurs could tap into, Hlatshwayo said.

He added that the South African automotive and chemical industries were doing quite well in the US but there was room for increased South African export there. The agriculture, winery and textile sectors were also areas of focus for small, medium and micro enterprises.

On a recent visit to South Africa, US Secretary of State Hillary Clinton said that the US was committed to including South Africa as it prepared to extend the Africa Growth and Opportunity Act (AGOA) beyond 2015.

The Act was signed in 2000 to offer tangible incentives for African countries to continue their efforts in opening up their economies and building free markets.

The programme also has a Third Country Fabric Provision (TCFP) from which South Africa has been excluded since its inception.

The TCFP provision is crucial to the continued survival of Africa’s textile and clothing industry. It has generated jobs in sub-Saharan Africa and has helped American retailers reduce their costs.

The inclusion of South Africa in the TCFP would enable South African exporters to enjoy AGOA benefits for clothing and to source clothing inputs from countries outside Africa.

Speaking at an AGOA beneficiaries’ conference in August 2012, Trade and Industry Minister Rob Davies said that the South African government would like an extension of AGOA for a reasonable period.

Blank said that the current administration had stated its strong support for on-going access to AGOA.

The US government has added that it recognises that financial help is vital to increasing trade and investment in sub-Saharan Africa.

As part of the campaign, agencies like the Overseas Private Investment Agency Corporation will assist with the opening of the establishment of the US-Africa Clean Energy Development and Finance Centre in Johannesburg.

It aims to provide a coordinated approach to clean energy project development in the region. The centre will also coordinate its resources with those of the US private sector, local development banks and private banks, among others.

Blank praised the South African government for working towards increasing access to electricity, saying energy was crucial for development.

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