AGOA and the Prosper Africa Initiative

             I count myself blessed to have been involved in the creation of the African Growth and Opportunity Act (AGOA) and nearly a dozen years later the Prosper Africa initiative.  These are America’s primary tools to enhance U.S.-Africa trade, and I was able to be a part of the birth of both.  However, some U.S. government officials may see AGOA as a thing of the past in the last few years of its current iteration rather than realizing that AGOA and Prosper Africa are complementary programs.  It’s just that neither is yet fully understood by those that may benefit from them nor even by some of those who administer them.

            AGOA was a response to the lack of attention to U.S.-Africa trade in overall U.S. government trade documents.  Not having been as colonial power, the United States doesn’t have a cadre of officials or businesspeople with longstanding experience on the continent.  Add to that the dearth of positive coverage of Africa as a place that, despite its challenges, offers unique and abundant commercial opportunities.  As Mike Williams, the Congressional staff person who initially researched the need for the legislation and wrote its first draft found, there were many government officials then as there are still who don’t believe Africa commerce can be successful.  In fact, those of us who supported this legislation had to present it as a development tool – creating wealth and jobs for Africans — to get the votes of some Members of Congress.  We always intended for AGOA trade to be mutually beneficial, but given the prevailing focus of government trade interests, that was more difficult that we imagined.

            Trade is inherently a two-way process for several reasons.  First, as has been found out in the case of the Maersk Sealand route from Cote d’Ivoire to Philadelphia, Pennsylvania, Africans are eager to sell goods such as cocoa to willing buyers in the United States, but there initially were insufficient American sellers of goods to Africa to make the shipping cost-efficient, as well as an insufficient effort to identify and facilitate more ready African exporters to the United States.  If you don’t have full ships going and coming between Africa and other destinations, then those who do ship will have to cover the cost of that empty space.  That makes trade with Africa more costly than it should be. A widely misunderstood fact is that profit margins for most products are thin to start with once you subtract the costs of doing business.  So, having high transportation costs makes the venture not worth what it seems.  For example, if you are a producer in Kentucky and can sell your goods more profitably to Tennessee than to Tanzania, why would you place much effort in doing international trade?

            Additionally, the skewed transportation scene, with limited direct U.S.-Africa shipping alternatives, means that too many African products, such as flowers, end up being shipped through Europe, where they are labeled as products of a country such as the Netherlands.  The Dutch certainly have beautiful flowers, but the lack of recognition of Africa’s unique floral production means little effort is made here to identify African flower producers and work together directly to eliminate the transportation obstacles that exist.

            Another reason for two-way trade is that American products of all kinds are or would be very competitive in African markets, and our companies are missing significant growth opportunities by not being more able to take advantage of this African interest.  With many American products being produced in the Middle East and other areas, direct commercial interactions between U.S. producers and African buyers are skipped.  Of course, it can be easier and cheaper to produce some of these U.S. products closer to Africa, but why couldn’t American producers and African buyers find ways to produce those goods in Africa?  Middlemen have emerged, as they always will, to fill the gaps that don’t have to exist.

            Yet another issue is that the effort to sell an expanding array of goods to Africa must be coupled with an equally robust effort to facilitate purchases from Africa – not only for the reasons explained previously but also to create mutual benefit that makes two-way trade sustainable.  Why would I continue to buy from you when you don’t provide an equitable opportunity for me to sell to you?  Africans may like American products, but they are also proud of products made on the continent as well.  Some of these African producers have been frustrated by regulations and paperwork that have delayed their entry into the lucrative American market.  In many cases, these obstacles could be eliminated sooner if greater U.S. effort was exerted to provide the clearances needed for African products to enter this market.  Ask the Namibians about their difficult experiences in selling their beef to the United States.  And I don’t believe it’s a deliberate effort by the U.S. government to block such sales; there just aren’t enough officials investigating such products to allow for their timely clearance.

            AGOA is tailor-made for African Diaspora trade.  Many African producers are too small to deal with the big American buyers, who often buy products such as clothing on a seasonal basis in large quantities with short, strict delivery times.  Americans don’t wear African clothing enough to buy them year-round.  Those of us who travel to Africa usually buy our clothes on the continent, tailor-made to fit us in the styles we prefer.  However, many admirers of African clothing – as well as other African products such as jewelry or handicrafts – don’t get to the continent often or at all.  Consequently, they would need to purchase such goods that are shipped to this country.  For a regular supply of African products that are sent in small lots, that would require companies that service such buyers here, and that most likely requires Diaspora importers.  These African-born or African-descendant companies cater to the Diaspora markets most likely to purchase such products on a regular basis.  Big supermarket chains aren’t regularly selling products such as goat meat or pepper soup mix because they don’t have large enough portions of their clientele asking for them. 

            Unfortunately, when AGOA was initiated, the government officials responsible for its implementation didn’t have relationships with Diaspora importers and contacted only large buyers as had been the practice for many years.  That worked for a short while, but such unequal relationships were not sustainable.  The U.S. implementers of AGOA didn’t adapt because they didn’t know how or didn’t realize they should have.  So, for more than two decades now, Diaspora businesses largely have been ignored in the effort to make AGOA successful, and one hopes this won’t happen with Prosper Africa.

            Just about every organization involved in trade in the United States today talks about the Diaspora, and while I don’t doubt their good intentions, most are just talking about it without making concrete, identifiable efforts to correct the long sidelining of Diaspora businesses.  One U.S. government agency that is taking action is the U.S. International Development Finance Corporation.  That Prosper Africa partner agency is starting a campaign to reach out to Diaspora business associations to inform them of what the government can offer in terms of assistance in their trade efforts and connect them with the other 16 agencies in the Prosper Africa group.  When I was at USAID at the outset of the initiative, we briefed these Diaspora business groups about what Prosper Africa would offer and were met with great skepticism from people who’d tried to be included in government trade programs before without success.

            I should point out here that the agencies in Prosper Africa usually deal with large American companies, such as Caterpillar, General Electric and Boeing.  Consequently, their initial focus was to “move the needle” on trade statistics quickly by rapidly increasing the amount of big-ticket trade deals to justify the initiative.  That makes sense, but it does not consider the need to create jobs in Africa and the United States, which is more reliably achieved through small and medium enterprises (SMEs).  Moreover, many of these SMEs are Diaspora businesses.  So, while it is prudent to help larger U.S. companies secure big trade deals in Africa, smaller deals cannot be ignored.  It was said more than once while I was on the Prosper Africa secretariat that it takes as much effort to work on a $100,000 deal as it does for a $100 million deal.  Even though that may be true, the $100,000 deal may be more transformative for both sides of the Atlantic Ocean than the $100 million deal in terms of increased middle-class wealth, jobs and even stimulated entrepreneurship.

            There are elements of Prosper Africa that favor larger deals, of course.  For example, a major theme of Prosper Africa is that rather than the U.S. government telling African governments that they should make certain reforms to attract U.S. investment, the initiative calls on these large potential investors to present a fully formed deal with an appeal for certain regulatory reforms necessary to make that deal come to fruition.  It would be as though you went to a mall and looked in a window at something you wanted to buy and saw the price.  Now you know what’s necessary to have what it is you want – as opposed to someone telling you that if you had a certain amount of money, you could find that same product somewhere.  Which situation is more realistic and desirable?

            Prosper Africa has two other factors that make it compatible with AGOA.  Two of the elements of the initiative call for facilitating African imports into the United States and African investment in the United States.  As I stated earlier, the more reliable importers of African goods will be among Diaspora businesses.  Moreover, there are Diaspora businesses that would be quite attractive for African investors since they more likely would cater to African or African-interested customers.  African investors would be interested in obtaining a B-1/B-2 visa, which allows for multiple entries into the United States for business purposes for up to six months and can be extended for one year.  Foreign nationals wishing to work in the U.S. by starting or investing in an American business may be eligible for an E-1 or E-2 investor visa, or an L-1 business expansion visa. While not all countries are eligible, business owners and investors from those countries that are may qualify if they meet several criteria. Employees as well as spouses and children of the principal visa holder also may be eligible for a visa.

            Of course, the other two elements of Prosper Africa’s focus – exports to Africa and U.S. investment in Africa – also would be of great interest to the Diaspora, particularly African-born members of the Diaspora, by having the backing and facilitation of the U.S. government in any business venture.  Thus, combining elements of AGOA and Prosper Africa make perfect sense. Prosper Africa is not a replacement for AGOA; it is a complementary piece in the U.S. effort to enhance U.S.-Africa trade.

            In the last few years of the current iteration of AGOA, which expires in June 2025, more needs to be done to inform African and American business audiences, as well as African trade officials and economic think tanks about what AGOA is.  I have conducted such training, along with a discussion of what Prosper Africa is and what it offers.  I have conducted this training for the African diplomatic corps in Washington and the African Women’s Entrepreneurship program. At the outset of AGOA, I conducted AGOA training in Benin, Mali, Nigeria and Senegal, and currently I am discussing providing such training in other African countries.  In recent years, I have added the element of discussing how best to do business in America – examining regulations, sub-markets and business styles that would be successful in this country.

            For those who think the United States isn’t interested in Africa, I would say you haven’t looked at the facts as they have existed now for more than two decades.  We can do better, but the tools are in place to significantly increase the dollar amounts of U.S.-Africa trade, increase African and American jobs and mutually benefit consumers in the United States and AGOA beneficiary countries.