[Senate Hearing 117-161]
[From the U.S. Government Publishing Office]
S. Hrg. 117-161
U.S. TRADE AND INVESTMENT IN AFRICA
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HEARING
BEFORE THE
SUBCOMMITTEE ON AFRICA AND
GLOBAL HEALTH POLICY
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
JULY 28, 2021
__________
Printed for the use of the Committee on Foreign Relations
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
46-867 PDF WASHINGTON : 2022
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COMMITTEE ON FOREIGN RELATIONS
ROBERT MENENDEZ, New Jersey, Chairman
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware RON JOHNSON, Wisconsin
CHRISTOPHER MURPHY, Connecticut MITT ROMNEY, Utah
TIM KAINE, Virginia ROB PORTMAN, Ohio
EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky
JEFF MERKLEY, Oregon TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland MIKE ROUNDS, South Dakota
BILL HAGERTY, Tennessee
Jessica Lewis, Staff Director
Christopher M. Socha, Republican Staff Director
John Dutton, Chief Clerk
SUBCOMMITTEE ON AFRICA AND
GLOBAL HEALTH POLICY
CHRIS VAN HOLLEN, Maryland, Chairman
CORY A. BOOKER, New Jersey MIKE ROUNDS, South Dakota
TIM KAINE, Virginia MARCO RUBIO, Florida
JEFF MERKLEY, Oregon TODD YOUNG, Indiana
CHRISTOPHER A. COONS, Delaware JOHN BARRASSO, Wyoming
RAND PAUL, Kentucky
(ii)
C O N T E N T S
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Page
Van Hollen, Hon. Chris, U.S. Senator From Maryland............... 1
Hagerty, Hon. Bill, U.S. Senator From Tennessee.................. 4
Liser, Florizelle President and CEO, Corporate Council on Africa,
Washington, DC................................................. 6
Prepared Statement........................................... 7
Signe, Dr. Landry, Senior Fellow, Global Economy and Development
Africa Growth Initiative, The Brookings Institution,
Washington, DC................................................. 10
Prepared Statement........................................... 11
Hruby, Aubrey, Nonresident Senior Fellow, The Africa Center,
Atlantic Council, Washington, DC............................... 21
Prepared Statement........................................... 22
Additional Material Submitted for the Record
Report by the Labor Advisory Committee on Trade Negotiations and
Trade Policy on U.S.-Kenya Trade Agreement..................... 46
Letter From AFL-CIO Director of Government Affairs Dated July 27,
2021........................................................... 64
(iii)
TRADE AND INVESTMENT IN AFRICA
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WEDNESDAY, JULY 28, 2021
U.S. Senate,
Subcommittee on Africa and
Global Health Policy,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:30 p.m. in
room SH-216, Hon. Chris Van Hollen, chairman of the
subcommittee, presiding.
Present: Senators Van Hollen [presiding], Kaine, Hagerty,
and Young.
OPENING STATEMENT OF HON. CHRIS VAN HOLLEN,
U.S. SENATOR FROM MARYLAND
Senator Van Hollen. Welcome, everybody, and good afternoon.
The Subcommittee on Africa and Global Health Policy will
come to order.
I want to begin by welcoming my colleague, Senator Hagerty,
who is a fellow member of the Senate Foreign Relations
Committee and ranking member of the Subcommittee on State
Department and USAID Management, International Operations, and
Bilateral International Development, for joining us.
He will be filling in this afternoon for Senator Rounds,
and I want to thank Senator Rounds and his team for all their
work as part of this subcommittee.
I also want to welcome today's witnesses. We have with us
Florizelle Liser, who is the president and CEO of the Corporate
Council on Africa, Landry Signe, senior fellow in Global
Economy and Development Program, and the Africa Growth
Initiative at the Brookings Institution, and Aubrey Hruby,
Senior Fellow with the Atlantic Council's Africa Center. I will
provide a little more on each of their bios shortly.
Welcome, everybody, to the first hearing of the 117th
Congress for the Africa and Global Health Policy Subcommittee.
Today's hearing will focus on U.S. trade and investment in
Africa, an area that holds real promise for U.S. businesses,
for our partners on the continent, and the global economy.
I hope that we can use this hearing as a venue to explore
practical ways to expand U.S. economic engagement in sub-
Saharan Africa and work together to identify clear trade and
investment priorities for Congress to explore.
Africa represents an ever more promising investment
frontier, and targeted economic engagement will be key to
unlocking opportunity, building prosperity, and bolstering
security both on the continent and here at home.
Make no mistake, we all recognize there are vast economic
challenges and other obstacles facing African nations. Those
challenges begin with low-quality high-cost infrastructure,
which creates real barriers to economic growth.
As we have seen in our own country, infrastructure touches
every part of our lives, from the digital divide, to energy
costs, to job and business growth to innovation, and we are now
working to try to reach a bipartisan agreement on modernizing
our infrastructure here at home.
The current infrastructure deficit across Africa takes a
daily toll, ballooning the price of energy, making it harder
for businesses to move their products, and stunting
productivity in most sectors.
We must view these infrastructure and other challenges as
opportunities to overcome by nurturing some of the budding
infrastructure, by boosting American business and export
possibilities, and opportunities to lift communities across the
continent and unleash economic potential.
These opportunities are amplified by a fast-growing African
population. In the next 30 years, the population of the entire
continent is expected to double and one-quarter of the world
will live in Africa by the year 2050.
It is also the youngest continent in the world, with 60
percent of Africans under the age of 25 years old. This new
wave of young people provides new opportunities, expanding
markets, innovation, technology, and growth, not just for
Africa but around the world.
This youth growth presents huge potential for the
continent, and I am pleased that Senator Mike Rounds and I will
shortly be introducing legislation to codify the Young African
Leaders Initiative, the YALI program, legislation that
Congresswoman Bass has introduced in the House side, and I want
to thank Senator Rounds for his leadership on that.
African nations are already taking steps to seize the
growing economic potential through the new African Continental
Free Trade Area, a multi-phased endeavor to grow trade between
African nations.
The first phase of the project launched in January of this
year, and over the next few years this initiative will link 55
African member nations and become the largest free trade area
in the world since the establishment of the WTO.
The World Bank estimates that the successful implementation
of this free trade area would increase Africa's exports by $560
billion and add $76 billion to the income of the rest of the
world.
As you can see, the potential is enormous and part of our
goal on this subcommittee is to help American businesses large,
medium, and small become familiar with the economic landscape
across the African continent and emphasize the potential
rewards of engagement.
The good news is we already have many tools to help us meet
the mission of building public and private partnerships between
the United States and Africa. The duty-free tariff program
AGOA, shorthand for the African Growth and Opportunity Act, has
long been a magnet for trade between the United States and
African countries.
U.S. imports under AGOA a total of $4.1 billion in 2020,
and 39 countries and counting are currently eligible AGOA
states. Over the years, USAID has established a series of trade
and investment hubs throughout the continent to boost AGOA use,
among other key priorities.
It should be our shared goal to make full use of this vital
program and do more to strengthen AGOA as we push ahead.
We also have some newer tools at our disposal, including
Power Africa, an initiative dedicated to expanding energy
infrastructure through public-private partnerships with a focus
on clean energy, and Power Africa has provided more than 100
million people with access to power since 2013.
More recently, the United States Government formed two
programs that will help build out economic engagement in
Africa. The first is the U.S. International Development Finance
Corporation, or DFC, which Congress created in 2018 and which
focuses 27 percent of its total portfolio on Africa.
I was pleased to see that just last month, the DFC joined
forces with the development finance institutions from the G-7
nations in committing to invest $80 billion in the private
sector in Africa over the next 5 years to support sustainable
economic growth on the continent.
The second initiative is Prosper Africa, which is designed
to weave together the efforts of 17 U.S. agencies and
departments involved in trade, investment, and development,
including USAID, DFC, the Ex-Im Bank, and the U.S. Trade and
Development Agency, among others.
I look forward to discussing how Prosper Africa can most
effectively achieve its mission with all of our witnesses
today.
As we work to make full use of these resources, we will, in
turn, strengthen our ability to do effective business in the
region, and when the United States does effective business we
not only enhance our bilateral relationships, we also set an
example for the world.
Our economic partnerships can and must be focused on mutual
gain and shared success. While a number of our adversaries,
especially China, attempt to use their economic leverage and
engagement as a weapon for taking advantage of other countries
including through debt trap diplomacy, we must remain dedicated
to promoting prosperity for all here at home and on the African
continent.
That proposition must be our guide as we work together to
deepen bilateral trade and investment relationships throughout
Africa, and I look forward to hearing the perspective of our
committee members and our witnesses as the best way to move
forward.
It is in that spirit that I would like to end where I
began, thanking all of our witnesses for being here to share
their thoughts, and before I turn it over to our witnesses, I,
again, want to thank Senator Hagerty for joining us and turn it
over to him for his opening statement.
Senator.
STATEMENT OF HON. BILL HAGERTY,
U.S. SENATOR FROM TENNESSEE
Senator Hagerty. Thank you, Chairman Van Hollen.
I appreciate very much your convening this hearing today
and I also appreciate all of our witnesses for being here to
discuss the important topic of the United States trade with
Africa and the potential that it presents to all of us.
I am a lifelong businessman and I also served as head of
economic development in my home state, and I have an acute
appreciation for the value and the importance of capital
investment and what it can mean to growth and prosperity.
Africa possesses significant economic potential and offers
tremendous opportunities for the United States, particularly as
American businesses search for new markets and for new
investment opportunities.
In the next decade, Africa's importance to the world market
will only grow, most notably in sectors that drive American
prosperity and innovation including energy, resources, finance,
infrastructure, and telecommunications, to name a few.
Furthermore, as Africa's population continues to increase,
expected to be 26 percent of the world's population by 2050,
the failure to successfully integrate Africa into the global
economy could pose major threats to global prosperity and
stability. We all know that a strong economic foundation
underpins broader political and social stability.
Increased U.S.-African cooperation also serves the
strategic interest of the United States. It is not a
coincidence that there is increasing demand from Africa for
greater economic cooperation with our great nation.
Leaders in government and business understand the need for
robust market-based economic growth, a model that the United
States continues to espouse in developing countries.
In contrast, the Chinese Communist Party continues to
aggressively pursue predatory economic projects in Africa.
According to a recent report, China is now the single largest
financier of infrastructure in Africa, funding one in five
projects and constructing every third.
Make no mistake, China will leverage their economic
advantage to press their geopolitical ambitions. This neo-
colonial approach to trade breeds corruption and dependency.
China has no interest in hiring local people. China has no
interest in training the local people. China has no interest in
leading them. Indeed, China's self-serving approach will not
establish the foundation for long-term economic success in
Africa.
The onus is on the United States, working with our allies
and partners, as well as various multinational institutions to
demonstrate that there is another path to prosperity.
The United States stands for local jobs, honest business
practices, high-quality projects, environmental responsibility,
and mutual prosperity. For instance, the Prosper Africa
initiative that Chairman Van Hollen just mentioned, seeks to
foster us investment.
It expands Africa's middle class and it improves business
climates across the region. We need more programs like this.
Congress should also do its part to ensure that such
initiatives have the appropriate oversight and the resources
necessary to advance their objectives.
I hope that the hearing today will spur greater debate
about ways to improve U.S. trade and investment in Africa.
Thank you, Mr. Chairman.
Senator Van Hollen. Thank you, Senator.
Now I would like to introduce our witnesses more fully
before we turn it over to them.
We are joined by Ms. Liser, who is the third president and
CEO of the Corporate Council on Africa, and before taking this
role, Ms. Liser served as Assistant U.S. Trade Representative
for Africa where she led trade and investment toward 49 sub-
Saharan African nations and oversaw the implementation of the
African Growth and Opportunity Act.
In addition to her role on the Corporate Council on Africa,
Ms. Liser also sits as co-chair of the Advisory Council for the
Millennium Challenge Corporation and is a member of the Sub-
Saharan Africa Advisory Committee for the Ex-Im Bank.
Ms. Liser received her B.A. in international relations from
Dickinson College, and I am proud that she earned her M.A. in
international relations from Johns Hopkins University in the
state of Maryland.
Welcome to you.
Dr. Signe is a senior fellow in the Global Economy and
Development program at the Africa Growth Initiative at the
Brookings Institution.
In addition to his role at Brookings, he is also a full
professor and founding co-director of the Globalization 4.0 and
Fourth Industrial Revolution Initiative at the Thunderbird
School of Global Management, a distinguished fellow at Stanford
University Center for African Studies, and chairman of the
Global Network for Africa's Prosperity, as well as a senior
advisor to top leaders in business and politics from around the
world.
Dr. Signe is the author of numerous scholarly publications
and has taught at Oxford, Stanford, Georgetown, and many other
institutions of higher education. Dr. Signe was educated in
Cameroon, France, and Canada, received his Ph.D. from the
University of Montreal and completed his post-doctoral studies
at Stanford University on a Banting Fellowship. Welcome, Dr.
Signe.
Ms. Hruby is a nonresident senior fellow with the Africa
Center at the Atlantic Council. Over the course of her career,
she has consulted extensively in over 25 African markets and
regularly advises senior policymakers and private sector
leaders on doing business in Africa.
Ms. Hruby also teaches at Georgetown University and is the
co-author of ``The Next Africa: An Emerging Continent Becomes a
Global Powerhouse.''
Previously, she worked as managing director of the Whitaker
Group, an Africa-focused advisory firm that has helped
facilitate over $2 billion in capital flows to the continent,
and served as an international trade specialist at the Barnett
Group, where she specialized in Middle East and Africa trade.
She studied economics, political science, and international
relations at the University of Colorado, received a Master's
degree from the School of Foreign Service at Georgetown, and
received an executive MBA from the Wharton School at the
University of Pennsylvania.
Welcome, Ms. Hruby.
I think we can see from the vast experience and expertise
on this panel that we have a terrific group of people. So why
do not we begin now in the order in which I introduced all of
you with, Ms. Liser.
STATEMENT OF FLORIZELLE LISER, PRESIDENT AND CEO, CORPORATE
COUNCIL ON AFRICA, WASHINGTON, DC
Ms. Liser. I would like to thank Senator Van Hollen, the
Subcommittee on Africa and Global Health Policy, Senator
Hagerty, and others on the committee for the invitation to
speak today at this important hearing.
I am Florie Liser, president and CEO of the Corporate
Council on Africa, which is the only U.S. trade association
solely focused on expanding trade and investment between the
United States and Africa.
This hearing is perfectly timed. Today, CCA concluded the
second of 3 days of this year's U.S.-Africa Business Summit.
Although we are holding it virtually this year, the summit
annually gathers U.S. and African leaders from government and
business to discuss the most important opportunities and
issues.
The theme of this year's summit is ``New Pathways to a
Stronger U.S.-Africa Economic Partnership,'' and sessions at
the summit have just covered a number of important themes you
target in this hearing, including a session we had just this
morning where we hosted Representative Karen Bass and
Representative Chris Smith, who met with a number of key
companies who are investing in Africa to hear more from them
about just how we can expand our trade and investment
relationship with the nations of Africa.
This is the right time to reassess our economic
relationship with the continent, and the short version of my
conclusions about how we do this is that the United States and
companies are not taking advantage of the opportunities we
could in terms of what Africa offers, while our competitors are
doing a much better job.
In the next 10 to 20 years, Africa's importance to world
markets will grow significantly in many of the sectors that
drive American prosperity, including ICT, energy, finance,
infrastructure, and health.
The COVID pandemic has accelerated existing African efforts
to change the continent's narrative. As they look to build back
better, African countries are doubling down on integrating
their economies, accelerating digitalization efforts, better
linking up with shifting global supply chains, and improving
their health security as well as their overall economic
prosperity by increasing manufacturing of health as well as
many other products on the continent, and they are looking to
the private sector to lead the way in each of these cases and
sectors.
In sum, African governments and companies have made it
crystal clear that they intend to build a better Africa that is
much more competitive and better integrated into global supply
chains. They have also made it clear that the United States and
American companies are very welcome, often preferred partners.
So how should we respond? The U.S. Government and Congress
can help by providing some public guidance on what kind of
long-term relationship we have in mind. Since its enactment in
2000, AGOA has been the cornerstone of U.S. economic policy
towards Africa. It is now set to expire in 2025.
Africa has become much more sophisticated and better
integrated globally since 2000. Africa is now in the process of
completing the first phase of creating the world's largest
unified market through the African Continental Free Trade
Agreement.
The United States would best serve its own interests by
recognizing the progress Africa has made and putting in place
policies that will allow our companies to mutually grow the
U.S. and African economies along the lines above.
We should adopt a more nuanced policy and multifaceted
approach that recognizes that there is no one-size-fits-all
approach to Africa that accepts that unilateral preferences for
certain African nations should continue under AGOA while we go
beyond AGOA in developing mutually beneficial reciprocal
agreements, FTAs, and support the AfCFTA's implementation and
ensure its success.
The Biden administration has helpfully reiterated U.S.
support for AfCFTA and we should definitely continue that. On
AGOA, the goal should be to help the countries which have yet
to benefit from this important duty-free access to U.S. market,
and there is no conflict in doing these while at the same time
continuing the U.S.-Kenya FTA discussions and establishing a
template or model for trade agreements with Africa that go
beyond Africa, go beyond AGOA, and mutually benefit our
companies and workers.
We should also keep in mind that these discussions are
taking place against the backdrop of Africa's pressing fight to
combat the COVID pandemic. African officials never again want
to be at the end of supply chains that can fail, leaving their
populations vulnerable.
One of the aspects of the U.S. response to COVID that
African leaders have singled out approvingly is the provision
of the advanced market purchase for vaccines. The G-20 is
already looking at whether some version of this can be applied
to set up funding to minimize the impact of future pandemics.
In conclusion, CCA looks forward to the opportunity to work
with members here today and many others, both Senate and House
and on both sides of the aisle, to develop the kind of
multifaceted approach that will grow and enhance the U.S.-
Africa economic relationship.
Thanks for the opportunity to speak to you today at this
hearing, and I look forward to answering any questions.
[Prepared statement of Ms. Liser follows:]
Prepared Statement of Ms. Florizelle Liser
I would like to thank the Subcommittee on Africa and Global Health
Policy for the invitation to speak today at this important hearing. I
am Florie Liser, the President and CEO of the Corporate Council on
Africa, which is the only U.S. trade association solely focused on
expanding trade and investment between the United States and Africa.
This hearing is perfectly timed. Today, CCA concluded the second of
3 days of this year's U.S.-Africa Business Summit. Although we are
holding it virtually this year, the Summit annually gathers U.S. and
African leaders from government and business to discuss the most
important opportunities and issues. The theme of this year's Summit is
``New Pathways to a Stronger U.S.-Africa Economic Partnership,'' and
sessions at the Summit have just covered a number of important themes
you target in this hearing.
This is the right time to reassess our economic relationship with
Africa. The short version of my conclusion is that:
The United States and American companies are not taking
advantage of all of the opportunities we could be in terms of
what Africa offers, while our competitors are doing a much
better job.
In the next 10 to 20 years, Africa's importance to world
markets will grow significantly in many of the sectors that
drive American prosperity, including ICT, energy, finance,
infrastructure and health.
The COVID pandemic has accelerated existing African efforts
to change the continent's narrative. As they look to build back
better, African countries are doubling down on integrating
their economies, accelerating digitalization efforts, better
linking up with shifting global supply chains and improving
their health security as well as their overall economic
prosperity by increasing manufacturing of health as well as
many other products on the continent. And they are looking to
the private sector to lead the way in each of these cases.
In sum, African governments and companies have made it crystal
clear that they intend to build a better Africa that is much more
competitive, and better integrated into global supply chains. They have
also made it clear that the United States and American companies are
very welcome--often preferred--partners. How should we respond?
The U.S. Government and Congress can help by providing some public
guidance on what kind of long-term relationship we have in mind. Since
its enactment in 2000, AGOA has been the cornerstone of U.S. economic
policy towards Africa; it is now set to expire in 2025. Africa has
become much more sophisticated, and better integrated globally since
2000. Africa is now in the process of completing the first phase of
creating the world's biggest unified market through the African
Continental Free Trade Agreement, or AfCFTA. Far beyond just lowering
tariffs, it has set up an innovative mechanism to resolve trade
disputes and resolve non-tariff barriers to trade, as well as establish
a payments network and adopt common standards and regulations.
The United States would best serve its own interests by recognizing
the progress Africa has made and putting in place policies that will
allow our companies to mutually grow the U.S. and African economies
along the lines outlined above. We should adopt a much more nuanced
policy and multi-faceted approach that recognizes that there is no `one
size fits all' approach to Africa--that accepts that unilateral
preferences for certain African nations should continue under AGOA
while we go beyond AGOA in developing mutually beneficial, reciprocal
agreements (FTAs), and support the AfCFTA's implementation and ensure
its success.
The Biden administration has helpfully reiterated U.S. support for
AfCFTA. This should be a critical component for U.S. economic
engagement with Africa, and nothing we do should undermine this
important African process. Indeed, to the extent that we can support
African governments creating the kinds of trade and investment
provisions under AfCFTA that will allow U.S. companies to thrive, it is
in our interest to support Phase II negotiations on chapters like
digital services and standards. The U.S. Government should make more
experts from the technical U.S. agencies available immediately to
consult and offer lessons learned from our experience. Greater
engagement with select U.S. regulatory agencies will also pay huge
dividends as African governments grapple with how to handle technical,
but crucial issues, particularly in the digital space.
On AGOA, the goal should be to help the countries which have yet to
benefit from this important duty-free access to the U.S. market.
And there is no conflict in doing these while at the same time
continuing the U.S.-Kenya FTA discussions, and establishing a template
or model for trade agreements with Africa that go beyond AGOA and
mutually benefit our companies and workers The USG has the opportunity
to negotiate a trade agreement that doesn't merely adopt the U.S.
``gold standard'' FTA provisions, but is open to an FTA model that
makes sense for the U.S. and its African partners. . Such a model would
cover more than just goods trade to include services, digital trade,
and other areas that are critical to 21st century trade, and would
highlight what kind of transition periods that may be necessary, and
will help both sides think through how to integrate bilateral trade and
investment provisions with existing African Regional Economic
Communities and the AfCFTA. For other African countries, our best
approach may well be to consider extending AGOA provisions broadly or
for specific sectors, like textiles and apparel, although we should do
so in a way that reinforces regional economic integration and value
chains, while also not eroding African competitive access to the U.S.
market.
There is an urgency about this, as several of our competitors are
ahead of us in terms of developing their potential for two-way trade
and investment with Africa. Europe, in particular, has concluded
Economic Partnership Agreements with most of the continent, including
Regional Economic Communities. Kenya has very recently concluded a
trade agreement with the UK and other Africans are in the process of
doing the same. And the advanced of African countries (like Mauritius)
have concluded reciprocal trade agreements with a range of countries
including China, the European Union, EFTA, and Mercosur countries. The
faster we can raise our profile and increase our engagement, the
better.
We also need to get more allies involved. Specifically, the U.S.
Government could best amplify its efforts by engaging more trade
associations and private sector groups, both to make them aware of the
opportunities, and to engage them in trade negotiations and discussions
with our African partners. Prosper Africa is an admirable initiative to
raise the USG profile and to more effectively support U.S. companies
who are competing against companies from all around the world (not just
China) who have the full support of their governments in helping them
be competitive in Africa's growing markets. Beyond Prosper Africa and
the President's Advisory Committee on Africa (PAC-DBIA), the U.S.
Government can do more to level the playing field and support more
U.S.-Africa commercial deals.
We should also keep in mind that these discussions are taking place
against the backdrop of Africa's pressing fight to combat the COVID
pandemic. African officials never again want to be at the end of supply
chains that can fail, leaving their populations vulnerable. They are
determined to partner with private sector firms to increase investments
in vaccines, their various inputs and PPE. Their preferred partners
would be American, but they are intent on moving quickly with whichever
companies will respond. DFC has announced some very helpful investments
and grants. CCA is pleased to share that we have established our U.S.-
Africa Health Security Resilience Initiative, which was specifically
designed to help identify gaps and areas where the private sector can
help deliver better health outcomes while saving limited resources, and
building a much bigger market. This is the kind of proactive initiative
that can help raise the U.S. profile in health and beyond.
One of the aspects of the U.S. response to COVID that African
leaders have singled out approvingly is the provision of the Advanced
Market Purchase for vaccines. The G20 is already looking at whether
some version of this can be applied to setting up a fund to minimize
the impact of future pandemics and/or support current commercial
investments to bolster the base line of health systems. Congress might
usefully consider whether that kind of mechanism could be applied in
other priority areas, including energy, infrastructure, and
agriculture. This could be combined with the very important efforts of
creating mechanisms to reallocate the $650 billion in additional IMF
Special Drawing Rights that have been critical to address the economic
impact of COVID beyond health.
CCA looks forward to the opportunity to work with the Members here
today and many others--both Senate and House and on both sides of the
aisle--to develop the kind of multi-faceted approach that will grow and
enhance the U.S.-Africa economic relationship.
Thanks for the opportunity to speak to you today at this hearing
and I look forward to answering any questions.
Senator Van Hollen. Well, thank you for your testimony, Ms.
Liser.
I want to explain that we have a vote on, so it is nothing
that you said as to why Senator Hagerty left. He is going to go
vote and come back, and then we will do a relay so that we can
continue with the hearing without interruption. So thank you.
Dr. Signe.
STATEMENT OF DR. LANDRY SIGNE, SENIOR FELLOW, GLOBAL ECONOMY
AND DEVELOPMENT AFRICA GROWTH INITIATIVE, THE BROOKINGS
INSTITUTION, WASHINGTON, DC
Dr. Signe. Thank you very much, Chairman Van Hollen,
Ranking Member Rounds, and distinguished members of the
subcommittee for your extraordinary leadership on U.S. trade
and investment with Africa.
I am incredibly honored and grateful for the opportunity
offered to me by the members of the subcommittee to testify on
U.S. trade and investment in Africa.
I am Landry Signe, executive director and professor at the
Thunderbird School of Global Management, senior fellow at the
Brookings Institution, Global Economy and Development, and
Africa Growth Initiative. I am the author of ``Unlocking
Africa's Business Potential.''
It is time for the U.S. to reverse the trend on the ground
in Africa, the ground lost in Africa, as many traditional and
emerging powers are racing to capture Africa's tremendous
economic potential.
By 2050, Africa's combined consumer and business spending
will exceed USD $16 trillion and the combined GDP may also
exceed USD $29 trillion.
So by the end of the century, Africa will contain up to 40
percent of the world population. The United States has a
sustained competitive advantage to partner with Africa, advance
U.S. trade and investment with Africa while meeting Africa's
priorities for mutual prosperity.
This could be best realized through a long-term
comprehensive Africa strategy building on value-based foreign
policy and a market-based model of development, technology,
commerce, education, accountability, amongst others.
My recommendations for effective U.S. trade and investment
in Africa are as follows.
Focus policy action on impact and on the effective
implementation and delivery of initiatives beyond big policy
announcements.
Make Prosper Africa more agile in its ability to manage
complexity and competition, and appoint a dedicated full time
chief executive officer to assist the current leadership team.
Redefine the base for new engagement with Africa by
appointing a U.S. Special Presidential Envoy for Africa to
represent the U.S. at high-level meetings and increase
presidential and high-level visits in Africa.
Promote commercial diplomacy through an economic strategy
that goes beyond the traditional vision of trade and
investment, and domestically increase efforts to document and
disseminate Africa's tremendous potential to U.S. SMEs.
Capitalize on the AfCFTA that provides the opportunity for
the U.S. and the world to address the global macroeconomic
imbalances largely due to excessive concentration of supply
chains.
For the AfCFTA of the post-2025 AGOA to be successful, the
U.S. should really be involved in regular high-level
consultations between the United States Trade Representative,
the AfCFTA, and the African Union, creating a working group
which will define the critical steps forward.
Capitalize also on the diaspora, which is heavily
represented in the U.S., by specifically adopting a diaspora
commercial diplomacy.
Accelerate the COVID-19 vaccine strategy and partnerships,
and invest in the vaccine-manufacturing industry and healthcare
in Africa.
Contribute to closing the gap in the physical and digital
infrastructure by leveraging existing program through
initiatives and agencies, but also by supporting African
strategic digital transformations.
The U.S. can, finally, build on higher education to provide
technical training and reskilling programs through initiatives
and agencies to close the digital skill gap and improve human
capital, especially the youth and women. You spoke about YALI,
which is an illustration of such an initiative.
In closing, by acting promptly and forging transformative
leadership aligned with African values, the U.S. has the
opportunity not only to advance its own interests but to
contribute to the transformation of Africa.
Thank you very much for your attention. I am looking
forward to your questions.
[Prepared statement of Dr. Landry Signe follows:]
Prepared Statement of Dr. Landry Signe
Thank you very much, Chairman Van Hollen, Ranking Member Rounds,
and distinguished members of the Subcommittee, for your extraordinary
leadership on U.S. Trade and Investment with Africa. Your exemplary
bipartisan work on Africa inspires many in the U.S. and abroad on how
politics can be used to serve the greater good. I am incredibly
honored, and grateful, for the opportunity offered to me by the members
of the Senate Foreign Relations Committee's (SFRC) Subcommittee on
Africa and Global Health Policy to testify on U.S. Trade and Investment
in Africa.
I am Landry Signe, Executive Director and Professor at the
Thunderbird School of Global Management, Senior Fellow at the Brookings
Institution's Africa Growth Initiative in the Global Economy and
Development Program, and a member of the World Economic Forum's
Regional Action Group on Africa, and the World Economic Forum's Global
Future Council on Agile Governance.
Advancing trade, investment, and technology in Africa offers
enormous economic growth and increased prosperity for both regions and
is best realized through value-based foreign policy and a market-based
model of development, education, and accountability. There is no better
time to accelerate U.S. trade and investment in Africa than now.
Despite Africa's tremendous economic potential, the U.S. has lost
substantial ground to traditional and emerging partners, especially
China. Indeed, while recent trends indicate that the U.S. engagement
with the region has fallen, it has not and should not cede its
relationship with the region to other powers.
Importantly, the U.S. can build on new regional momentum to revive
and strengthen its partnership with Africa for mutual prosperity,
including building on the recent launch of the African Continental Free
Trade Area (AfCFTA), and given the promise of the initiatives of the
DFC, Prosper Africa, and the post-AGOA 2025 options. To do so means a
shift in emphasis in the relationship to one more focused on value-
based foreign policy (https://foreignpolicy.com/2021/01/15/united-
states-africa-biden-administration-relations-china/),\1\ and also
building upon the areas of strength and convergence with African
citizens' preferences (https://www.brookings.edu/blog/africa-in-focus/
2020/10/23/us-foreign-policy-toward-africa-an-african-citizen-
perspective/); \2\ such as trade, investment, technology, education,
accountability, and a market-based model of development.
why should the u.s. care? africa's tremendous trade and investment
potential, and expanding continental integration and global
partnerships (strategic geopolitical partner)
``Borders frequented by trade seldom need soldiers.''
-William Schurz, second President of the American Institute for
Foreign Trade (now the Thunderbird School of Global Management)
Trade and investment are not just about money and prosperity. They
also bring and support peace, stability, and security. In my book
Unlocking Africa's Business Potential (https://www.brookings.edu/book/
unlocking-africas-business-potential/),\3\ I explore key trade and
investment trends, opportunities, challenges and strategies, that
illustrate the tremendous potential of Africa, and explain the complex
competition between emerging and established powers on the continent.
The following key trends are critical for policymaking given their
implications for trade investment, economic transformation, inclusive
prosperity, geopolitical dynamics, and mutual U.S.-Africa interests.
Africa's economic transformation and business potential are more
substantial than most people think: the world's next growth
market
Considered a hopeless continent in 2000 by The Economist (https://
www.economist.com/weeklyedition/2000-05-13), Africa has seen the two
best cumulative successive decades of its existence in the 21st
century. Trade in and with Africa has grown 300 percent in the last
decade, outperforming global averages (196 percent).\4\ It has become
home to many of the world's fastest-growing economies, offering unique
opportunities for U.S. trade and investment. Moreover, Africa has
tremendous economic potential and offers rewarding opportunities for
local and global partners looking for new markets and long-term
investments with some of the highest returns, but also the potential to
foster economic growth, diversification, job creation, including for
women and youth, and improved general welfare.
The fast population growth on the continent could be turned into
demographic dividends, or threats to global prosperity and
stability
Africa was home to 17 percent of the world population in 2020, and
is expected to have 26 percent of the global population in 2050 (2.53
billion people).\5\ If Africa is not successfully integrated into the
global economy, there could be a major threat to global prosperity and
stability. Citizens could be further subject to extreme poverty,
fragility, violent extremism, illegal immigration, health challenges,
among others--challenges that many already face on the continent. If
our goal is a prosperous and safe world, Africa must not be left
behind.
The growth of household consumption and business spending: a unique
opportunity for U.S. trade and investment
By 2050, Africa will be home to an estimated USD $16.12 trillion of
combined consumer and business spending.\6\ \7\ And Africa's prosperity
can be good for the U.S.: Such growth will offer tremendous
opportunities for U.S. businesses in household consumption (USD $8
trillion) in areas such as food and beverages, housing, hospitality and
recreation, health care, financial services, education and transport,
and consumer goods, but also business to business spending
(construction, utility, and transportation, agriculture and agri-
processing, wholesale and retail, etc.).
The rise of global partnerships and the competition between traditional
and new players: an opportunity for the U.S. to build on its
sustainable competitive advantage
China (https://foreignpolicy.com/2021/01/15/united-states-africa-
biden-administration-relations-china/) became the region's prime
trading partner. In fact, between 2006 and 2016, China's trade with
Africa surged, with imports increasing by 233 percent and exports
increasing 53 percent, as they did for several other global players as
well.\8\ During the same period, the U.S. lost ground in exports to
Africa (^66 percent).\9\
China's influence goes beyond the trade relationship: It is also
the top investor in infrastructure, and now is the first destination of
English-speaking African students, outperforming the U.S. and the
U.K.\10\
But the U.S. remains a critical player on the continent, as I
mentioned in a recent article (https://foreignpolicy.com/2021/01/15/
united-states-africa-biden-administration-relations-china/):
``Successes in the past decades--initiatives such as the African Growth
and Opportunity Act (AGOA), the President's Malaria Initiative, the
President's Emergency Plan for AIDS Relief, the Millennium Challenge
Corporation, and U.S. trade and investment hubs--have generated
tremendous opportunities for millions of Africans and Americans. But
the current era--and competition from other global powers--will require
new ideas and a new approach to several key issues.'' \12\ In fact,
African countries would often prefer to work with the U.S. given local
content regulation rules, more investment in on-the-ground resources,
and standards about hiring/training locals. In other words, it's less
extractive and more transparent than numerous other partners.
Fast urbanization but also fast rural population growth
By 2030 (https://www.brookings.edu/research/spotlighting-
opportunities-for-business-in-africa-and-strategies-to-succeed-in-the-
worlds-next-big-growth-market/), Africa will be home to 5 cities of
more than 10 million inhabitants and 12 other cities of more than 5
million inhabitants.\13\ Cities in Africa are becoming powerful
economic centers, and a city-based approach to foreign policy, but also
trade and investment, will be critical to outperform competitors and
build mutual prosperity. Contributing to the prosperity of African
cities will also make a difference in addressing security challenges.
Africa has made tremendous progress in mobilizing resources for
infrastructure development, working hard to bridge gaps in ICT,
energy, water and sanitation, and transportation
Despite the remaining deficits, the Infrastructure Consortium for
Africa (ICA) (https://www.mckinsey.com/business-functions/operations/
our-insights/solving-africas-infrastructure-paradox) reported that
between 2013 and 2017 the annual funding for infrastructure development
in the region was USD $77 billion, about twice as much as the annual
funding average of the first 6 years of the two-thousands.\14\ However,
many of these gaps persist. In 2018 the African Development Bank (AfDB)
found that Africa's infrastructure requirements range between USD $130
and $170 billion (https://www.afdb.org/en/documents/document/african-
economic-outlook-aoe-2018-99877) a year, leaving a financing gap of USD
$68 to $108 billion.\15\ China has played a key role in financing, and
has become the largest bilateral infrastructure financier in Africa
(Chinese FDI grew 40 percent annually (https://www.forbes.com/sites/
miriamtuerk/2020/06/09/africa-is-the-next-frontier-for-the-internet/
?sh=4f4d1f774900) over the last decade).\16\ However, the U.S. has the
chance to make a monumental difference when it comes to investing in
infrastructure development in Africa.
In fact, Africa has one of the fastest-growing (https://
www.afdb.org/en/knowledge/publications/tracking-africa's-progress-in-
figures/infrastructure-development), and is the second-largest, mobile
phone market in the world.\17\ \18\ In sub-Saharan Africa alone, there
were 477 million mobile subscribers in 2019; by 2025, the region will
host 614 million cell phone subscribers, and 475 million mobile
internet users.\19\ The internet is also expected to contribute to at
least 5 to 6 percent (https://www.afdb.org/en/knowledge/publications/
tracking-africa's-progress-in-figures/infrastructure-development) of
Africa's total GDP by 2025.\20\ While the Information and Communication
Technology sector is making incredible advancements, water and
sanitation, transportation, and energy infrastructure development still
needs significant investment. However, this is indicative of positive
and extensive investment opportunities that can be undertaken on the
African continent.
Fast digitalization, increased technological innovation, and an
accelerated Fourth Industrial Revolution (4IR)
The Fourth Industrial Revolution is characterized by the fusion of
the digital, biological, and technological world, and technologies such
as artificial intelligence, big data, 5G, drones and automated
vehicles, and cloud computing.\21\ As a world leader in technological
innovation, digital transformation, and the Fourth Industrial
Revolution, the United States is well-positioned to play a leading role
in the African digital space and contribute to Africa's pursuit of now-
vital technologies.
Indeed, advanced technology can have beneficial spillover effects:
For example, in health, countries such as Rwanda and Ghana are using an
American drone company (https://www.businessinsider.com/zipline-drone-
coronavirus-supplies-africa-rwanda-ghana-2020-5), Zipline, to deliver
in record time, medication, blood, and medical supplies to remote rural
areas with limited road accessibility.\22\ In agriculture, African
farmers now have access to affordable precision farming tools (https://
hbr.org/2017/05/how-digital-technology-is-changing-farming-in-africa)
that use sensors, satellites, smart devices, and big data technologies
to inform every decisions. The lending, insurance, and e-commerce
opportunities provided by the fintech industry are transforming the
lives of all Africans, and not just those in urban centers. These
advancements are just the beginning too, as African entrepreneurs are
increasingly seeking partners to bring transformative businesses to
life. African tech startup funding increased over 40 percent in 2020 to
over USD $700 million, a fraction of tech startup funding outside of
Africa. Despite such progress, the digital divide remains important and
must be bridged to allow inclusive development. During the pandemic for
example, access to school and business on the continent was more
complex given the level of internet connectivity, among others.
Bridging the digital divide represent an opportunity to both advance
U.S. trade and investment in Africa while addressing some of Africa's
key priorities.
Fast regional integration and the African Continental Free Trade Areas:
opportunities for a continental engagement
With the signing of the African Continental Free Trade Area
(AfCFTA) in 2018, ratification in 2019, and an official launch in
January 2021, African growth prospects and business opportunities have
been magnified. The continent is giving the world just one more reason
to invest in it with the creation of the largest new free-trade zone
per number of countries in world, since the creation of the WTO. The
AfCFTA will accelerate Africa's industrialization as well as incomes,
which will lead to the increase of both household consumption and
business spending, generating unique opportunities for U.S. trade and
investment. Per a World Bank study (https://www.worldbank.org/en/topic/
trade/publication/the-african-continental-free-trade-area), the AfCFTA
has the potential to lift 30 million people out of extreme poverty,
increase the income of 68 million Africans, increase Africa's exports
by USD $560 billion, and generate USD $450 billion of potential gains
for African economies by 2035.\23\
The sustained demand for accountability, democracy, and stability of
African citizens, and policy priorities aligned with U.S. core
values
Per Afrobarometer surveys (https://www.brookings.edu/blog/africa-
in-focus/2020/10/23/us-foreign-policy-toward-africa-an-african-citizen-
perspective/), 7 out of 10 Africans support democracy and accountable
governance, and approximately two-thirds are opposed to a single party
or military government.\24\ Importantly, areas in which the U.S. has a
sustained competitive advantage, given its global leadership in
democracy and human rights, and its support for such issues as health
and education, are priorities for Africans too.\25\ Given China's
leadership in infrastructure, the U.S. could grow its footprint in this
area but by partnering with other players such as the G7 and the
European Union countries. This approach will be welcomed by African
citizens, who prefer the U.S. model of development (32 percent) over
the Chinese one (23 percent).\26\
u.s. policy recommendations for bolstering trade with africa by
increasing investment, bridging the digital divide, and addressing the
continent's energy and infrastructure needs
The pandemic has created unique momentum for engagement with
Africa. The U.S. should seize this momentum and build on Congress'
historical bi-partisan support for the region to develop and
successfully implement a long-term comprehensive Africa strategy that
effectively coordinates action around trade, investment, commerce, and
economic growth. This strategy should draw from consultations with
African partners and multilaterals, building on areas of sustainable
competitive advantages. The strategy should:
a) be rooted in the American values and principles that are
aligned with the priorities of African citizens and U.S.-
Africa mutual trade and investment interests
b) protect American, African, and global interests by advancing
security, stability, and peace through strategic
partnerships with African organizations
c) utilize U.S. strengths (digital transformation, Fourth
Industrial Revolution, education, creative industries,
health, democratic values, etc.) in the context of the new
continental trade dynamics brought about by the African
Continental Free Trade Areas (AfCFTA).
Importantly, these are areas where the U.S. can still outperform
its main competitors such as China or Russia. More specifically, my
recommendations to the Subcommittee are as follows:
Build on multilateralism and strategic alliances in concert with
African partners to advance U.S. and African interests
Given Africa's own emphasis on regionalism, the U.S. would do well
to support those efforts and align its own strategy with this
perspective in mind. Core African partners include: the African Union,
the African Continental Free Trade Area, the Africa Centres for Disease
Control and Prevention, the African Union Development Agency, the
African Development Bank, among others.
African leaders are looking for partners, especially in terms of
trade and investment, more than they need aid. Initiatives from the
Millennium Challenge Corporation and the DFC should further support
African regional and continental projects, when possible, through
regional compacts (MCC, through the 2018 AGOA and MCA Modernization Act
(https://www.mcc.gov/news-and-events/feature/regional-investments),
allows investments to be made across borders in Africa, creating
opportunities for trade and investment by fostering regional
integration and integrated markets).\27\ For the U.S. to outperform its
competitors, it must be on the ground engaging with Africa both at the
base but also at the highest levels, building on the Trade and
Investment hubs, but going much further.
Enhance the effectiveness and better coordinate the action of U.S.
agencies acting around trade and investment in Africa by
adopting the principle of agile governance
The U.S. already has phenomenal tools, which in principle, could
make a monumental difference if successfully implemented. Prosper
Africa holds a lot of potential in terms of trade, investment, shared
prosperity, and effective coordination of U.S. agencies, which is not
yet realized. The goal of Prosper Africa is to coordinate the tools
from across government agencies \28\ and to foster trade and investment
between the U.S. and Africa. Although it is a great idea, many players,
especially on the African side, are still hoping for it to achieve its
full potential. It will be extremely important to have major wins to
reinstate trust with African partners.
I recommend making Prosper Africa more agile in its ability to
manage complexity and competition, and appoint a dedicated full-time
Chief Executive Officer to assist the current Executive Chairman and
Chief Operating Officer, who are doing tremendous work. This new
position should have the authority needed to fix the pacing,
(appropriate speed of action) coordination (legitimate and appropriate
coordination), and representation challenges (uniqueness of the voice,
communication, and acceptance of the credibility), to deliver
exceptional outcomes for U.S. and African businesses, and investors, to
achieve mutual prosperity.
Redefine the base for new engagement with Africa by appointing a U.S.
Special Presidential Envoy for Africa to represent the U.S. at
high-level meetings and multiply presidential and high-level
visits in Africa
To stop ceding ground to other powers in Africa, it is crucial that
the U.S. reiterate the respect it has for Africa, Africans, and their
leaders. Appointing a Special Envoy and reinstating high-level
meetings, including presidential visits to the region, between the
United States and Africa will send a strong signal. Regular visits by
senior U.S. officials, including the President and his cabinet, will
help to shift perceptions around Africa, highlighting the continent as
a safe, reliable destination for investment. Creating a forum for
dialogue between government officials and the SME community will create
the opportunity to engage in a systematic and coordinated way.\29\
Advancing such levels of engagement, with specific actions, will
substantially advance mutual interests. The U.S. should build on this
to further institutionalize relations with Africa and engagements at
the highest level. The success of the U.S.-Africa Business Forum
(https://obamawhitehouse.archives.gov/the-press-office/2016/09/21/
remarks-president-obama-us-africa-business-forum), which did contribute
to deals around USD $14 billion between 2014 (first edition) and 2016,
with additional deals and commitments of USD $9 billion at the 2016
edition, illustrate the importance of high-level meetings, which should
be reinitiated (The first edition (https://2014-2017.commerce.gov/tags/
us-africa-business-forum.html) of the U.S.-Africa Business Forum was
attended by about 50 heads of state and governments, and 150 global
CEOs).
This is not just important for African leaders, but also for
African citizens who prefer the U.S. model of development compared to
any other country.\30\ Strategically seizing such as opportunity to
build a long-term sustainable advantage will be critical.
For the successful implementation of the AfCFTA and other critical
initiatives (post-2025 AGOA, among others) the U.S. should be
involved in regular high-level consultations between the United
States Trade Representative, the AfCFTA, and the African Union,
creating a working group which could define the critical steps
forward
It is important to engage with Africa on the way forward about
U.S.-Africa relations, through regular consultations. The AfCFTA offers
new opportunities for U.S. businesses to use Africa as a global
platform, not just to capitalize on the large African market, but to
benefit from the unique advantage provided to sell around the world.
The U.S. will also gain market shares, etc. Africa can become the base
for U.S. companies to trade not just with Africa, but with the world as
well. Africa is not just a market, but also a platform to manufacture
and export in other regions of the world. The AGOA Forum provides a
platform to discuss these questions in partnership with Africans, but
it remains underutilized.
The U.S. should capitalize on the AfCFTA that provides the opportunity
for the U.S. and the world to finally address the global
macroeconomic imbalances which have been reflected in
structurally large U.S. current account deficits with a handful
of countries largely on account of excessive concentration of
supply chains
The growth opportunities associated with increasing economies of
scale and productivity growth under the AfCFTA provides the path to
reorder and diversify the supply chains for greater resilience and
while also sustainably addressing the macroeconomic imbalances which
have dominated the world economy over the past decades.
Already several countries and corporations are taking advantage of
growth opportunities offered by the AfCFTA in the automotive industry.
Volkswagen (https://www.economist.com/business/2018/06/28/vw-opens-
rwandas-first-car-assembly-plant) has opened its first car plant in
Rwanda.\31\ \32\ Groupe Peugeot Societe Anonyme (https://
www.peugeot.co.za/brand-and-technology/news/peugeot-to-open-a-new-
assembly-plant-in-namibia.html) has established its first plant to
assemble up to 5000 cars a year in Namibia, taking advantage of the
free market area to target customers in other countries across the
region.\33\ With its population growth and rising middle class, Africa
could well become the largest market for the automotive industry in the
coming decades.
These are tremendous opportunities that U.S. carmakers, including
those manufacturing less polluting new energy vehicles should be
targeting, especially with Africa's excess reserves of lithium and
coltan which are some of the most important raw materials for a rapidly
changing industry.
Focus policy action on impact, and on the effective implementation and
delivery of initiatives, not just on big policy announcements
The U.S. should distinguish itself by focusing on successful
implementation of existing or new initiatives. For example, the G7
countries and partners have announced an USD $80 billion dollars
commitment for Africa's private sector for the next 5 years. How will
it be implemented? It is critical to have a clear mechanism for
successful implementation that includes sufficient details about the
projects. For example, the U.S. and partners should engage with African
multilaterals (AfCFTA, AU, etc.) and governments during the
policymaking and implementation processes to strategically identify and
align objectives. An implementation unit may be created, and a
multistakeholder working group to assess and decide on mutual
priorities. Similarly, how could the Build Back Better World initiative
be successfully implemented, and to what extent will Africa benefit
from it? The Administration needs to appoint a leader to strategically
engage and to have consultations with allies. Bringing the allies
together, and giving teeth to the plans that have been put together,
will be critical to build sustainable competitive advantage for the
U.S.
The U.S. should promote commercial diplomacy through an economic
strategy that goes beyond the traditional vision of trade and
investment. Domestically, the U.S. should increase efforts to
document and disseminate the tremendous potential Africa can
have for U.S. businesses
Given that a central goal of Prosper Africa is to double two-way
trade, the United States should play a better role in identifying and
sharing business and investment opportunities with its domestic
businesses and corporations. As large corporations are already better
resourced when dealing in Africa, American SMEs are the most likely
beneficiaries of Prosper Africa--whether through market access or on
the supply side--and the DFC should provide them with resources to help
trade and invest in a timely manner. For Prosper Africa to benefit both
the U.S. and Africa, each side needs to feel confident in the trading
process and consider each other as friends.
Prosper Africa should focus on specific mechanisms aimed at
ensuring that American SMEs better understand the dynamics in Africa,
to develop a specific interest and attraction on the continent and make
others more eager to invest and do business there. This goal can be
achieved through business promotion and facilitation activities
encouraging business development as well as corporate diplomacy.
The U.S. should capitalize on the African Diaspora, which is heavily
represented and active in the U.S., by specifically adopting
diaspora commercial diplomacy to foster trade and investment
between the U.S. and Africa
President Biden has made steps in strengthening this relationship
through early engagement with the community, but this strategy can be
pursued further in regard to trade and investment with Africa in order
to distinguish the U.S. from other competitors and accelerate its
competitive advantage. The collaborations between African innovators on
the continent and African and African-American innovators based in the
U.S. have the potential to advance (https://www.brookings.edu/blog/
africa-in-focus/2019/02/14/from-wakanda-to-reality-building-stronger-
relations-between-african-americans-and-africa/) U.S.-Africa relations
on several levels.\34\ Members of the African diaspora have an
incredibly valuable understanding of Africa-U.S. cross-cultural
engagement, not to mention existing relationships and networks on the
continent, making them perhaps the best suited to Prosper Africa's
efforts to support and facilitate business I mentioned above. Prosper
Africa should formalize a relationship with the African diaspora's SME
community and the continent's SME community, and routinely engage as a
group, to support the formulation of strategies and mechanisms to
increase two-way trade. It has started such an effort, but can do more:
For example, in 2019, Brookings hosted a conversation between USAID and
members of the diaspora's SMEs. It brought to light specific,
actionable ways to enhance the program's mechanisms, including the need
to expand staff support at trade hubs, expedite DFC loans, and improve
data collection and analysis. SMEs in Africa are crucial to include in
these conversations so that all stakeholders are involved to ensure
Prosper Africa designs effective, efficient policies.
Accelerate the COVID-19 vaccine strategy and partnerships, and
aggressively pursue vaccine diplomacy beyond COVID-19 by
supporting the development of a vaccine manufacturing industry
in Africa, including investments in human capital and
technology development \35\
According to the Africa Centers for Disease Control and Prevention
(Africa CDC), only 3.19 percent (https://africacdc.org/covid-19-
vaccination/) of Africans have received at least one dose of the COVID-
19 vaccine as of July 21, 2021.\36\ A Duke University study estimated
that most Africans will not have had an opportunity to receive the
COVID-19 vaccine until 2024 (https://www.ey.com/en_gl/public-policy/
how-free-trade-can-accelerate-africas-covid-19-recovery).\37\ The
devastation of the COVID-19 pandemic, as well as other epidemics in
recent years like, has revealed the urgent need for investment in
Africa's national and continental healthcare systems. Vaccine diplomacy
is a crucial first step towards helping Africa recover from the
pandemic and prevent the emergence of new variants that might damage
the recoveries in other nations.
While it is the right thing to do, it will also support U.S.
businesses. Poor healthcare systems threaten Africa's industrialization
and workforce development, and now is the opportunity for the U.S. to
help build equitable health systems and ensure preparedness for future
health emergencies. This support should not be limited to loans or
donations. Partnerships with academic institutions or public-private
partnerships between U.S. and African agencies and firms that create
avenues for collaboration, knowledge exchange, and skill and technology
development will all be instrumental in strengthening the soft power of
the U.S.
Specifically, the U.S. should provide broad technical and financial
support for the new African Union-Africa CDC initiative, Partnerships
for African Vaccine Manufacturing (PAVM), which aims to build five
vaccine-manufacturing research centers over the next 10-15 years. The
success of this PAVM initiative would open doors for a transformation
of Africa's pharmaceutical industry in Africa, a sector that has
enormous growth potential. The development must go beyond ``fill and
finish'' manufacturing, which does little to truly decrease Africa's
overreliance on foreign suppliers.\38\
Contribute to closing the gap in the physical and digital
infrastructure by leveraging existing programs supporting
African countries' digital transformation strategies \39\
The U.S. already has established infrastructure and technology
development programs, but is underutilizing them. Such initiatives,
especially those that focus on electricity and internet penetration,
should be prioritized and fast-tracked.\40\
Most importantly and prior to even leveraging these existing
initiatives, the U.S. should consult and act in partnership with
African countries for the investments in major infrastructures,
including 5G. For example, an opportunity is within OPIC [now DFC]'s
``Connect Africa'' initiative, which was launched with a fund of USD $1
billion for transportation, ICT, and value chain development
projects.\41\ The Power Africa initiative has been successful, and
augmenting the program now would contribute to repairing and
strengthening the U.S.-Africa relationship.\42\
Furthermore, several African countries are developing and
implementing a multi-stakeholder Fourth Industrial Revolution (4IR)
national task force or commission to assess country readiness and adopt
a comprehensive national strategy. Initiatives such as the Centers for
the Fourth Industrial Revolution (South Africa and Rwanda), or the
Presidential Commission on the 4IR (South Africa) should be supported
and replicated across the continent.
The U.S. must continue and increase its support to bridging the
infrastructure gap in Africa while advancing trade and
investment for mutual prosperity
This, simultaneously, represents both a way forward to enhance
trade and investment while achieving the global public good. In fact,
in Sub-Saharan Africa, over 50 percent (https://data.worldbank.org/
indicator/EG.ELC.ACCS.ZS?locations=ZG) of people live without access to
electricity, more than 70 percent (https://data.worldbank.org/
indicator/SH.H2O.SMDW.ZS?locations=ZG) of people live without access to
safe drinking water, 69 percent (https://data.worldbank.org/indicator/
SH.STA.BASS.ZS?locations=ZG) of people live without basic
sanitation,\43\ and 53 percent (https://www.afdb.org/en/knowledge/
publications/tracking-africa's-progress-in-figures/infrastructure-
development) of the roads are unpaved.\44\ China has been playing a
central role by investing in these areas.
Importantly, the U.S. should differentiate its approach from
competitors by emphasizing engagement with African continental
organizations (PIDA, the AFDB, the African Development Fund, among
others), bilaterally--and more importantly, transparently, with
specific countries, and by partnering with allies. The U.S. also could
better support capacity building and regional projects through
investments, new projects, and partnerships. The U.S. could better
partner with Africa to bring its own expertise and knowledge to serve
at various phases of project development, such as studies and
implementation.\45\ A long-term partnership will also be key to
outperforming other players. The U.S. will see a high return for its
investments, as well as geostrategic balance. The U.S. will fill an
empty seat, that would otherwise be occupied by other players on the
continent.
The U.S. can build on higher education, another area of comparative
advantage, to provide technical training and reskilling
programs through initiatives and agencies to close the digital
skills gap and human capital gap (especially for youth and
women) \46\
It is crucial the U.S. expand educational and training
opportunities in Africa. The soft skills and development of academic
institutions provide the opportunity for the U.S. to lay the foundation
for a lasting win-win partnership with Africa, sustained by knowledge
exchange and deepening business ties. U.S. policy needs to provide
support that incentivizes American universities to open more campuses
and degree programs, especially in STEM and technology, throughout
Africa. Such programs provide skills in areas critical for the rise of
manufacturing industry and effective decentralisation of global supply
chains and will be equally beneficial learning opportunities for
African students and American students who may study abroad. For
example, Carnegie Mellon University has a campus in Rwanda that offers
master's programs in information technology and electrical and computer
engineering.\47\ Morgan State University has recently launched a
partnership (https://global.morgan.edu/africa/) with a university in
Ghana, offering two graduate degree programs to students.\48\ Fast-
growing SMEs will be far more likely to evolve and invest in areas
where there is a skilled workforce or, at least, resources to support
training workers, and added U.S. support could go a long way towards
creating an attractive business environment for SME investment. It is
indeed an opportunity to establish a long-term partnership of a new
nature between U.S. and Africa.
conclusion
In closing, it is time for U.S. to reverse the trend in the ground
lost in Africa as many traditional and emerging global powers are
racing to capture Africa's tremendous economic potential. The U.S. has
a sustained competitive advantage to partner with Africa, advance U.S.
trade and investment with the continent, while meeting the majority of
Africans' priorities. It is up to the U.S. to pursue the
recommendations above and seize this unique momentum to advance mutual
U.S.-Africa trade and investment interests. By acting promptly, and
forging transformative partnerships aligned with African values, the
U.S. has the opportunity not only to advance its own interests, but to
contribute to the transformation of a continent that will make up
nearly 40 percent of the world's population by 2100, but also the
opportunity to lead the way in building a more prosperous, democratic,
secure, and stable world. As mentioned by William Schurz, ``borders
frequented by trade seldom need soldiers.''
Thank you very much for your attention and looking forward to your
questions.
----------------
Notes
\1\ Landry Signe, ``How to Restore U.S. Credibility in Africa,''
Foreign Policy, January 15, 2021 (https://foreignpolicy.com/2021/01/15/
united-states-africa-biden-administration-relations-china/).
\2\ E. Gyimah-Boadi, Landry Signe, and Josephine Appiah-Nyamekye
Sanny, ``US foreign policy toward Africa: An African citizen
perspective,'' Africa in Focus, Brookings (https://www.brookings.edu/
blog/africa-in-focus/2020/10/23/us-foreign-policy-toward-africa-an-
african-citizen-perspective/).
\3\ Landry Signe, Unlocking Africa's Business Potential
(Washington: Brookings Institution Press, 2020).
\4\ Landry Signe and Chris Heitzig, ``Seizing the momentum for
effective engagement with Africa,'' forthcoming 2021.
\5\ Signe, Unlocking Africa's Business Potential, p. 247.
\6\ Ibid.
\7\ Ibid., p. 14.
\8\ Wenjie Chen and Roger Nord, ``Reassessing Africa's global
partnerships,'' in Foresight Africa 2018 (Brookings Institution,
January 11, 2018) p. 110 (https://www.brookings.edu/research/
reassessing-africas-global-partnerships/)
\9\ Ibid.
\10\ Signe, ``How to Restore U.S. Credibility in Africa.''
\11\ Ibid.
\12\ Signe, ``How to Restore U.S. Credibility in Africa.''
\13\ Acha Leke and Landry Signe, ``Spotlighting opportunities for
business in Africa and strategies to succeed in the world's next big
growth market'' in Foresight Africa 2019 (Brookings Institution,
January 11, 2019), p. 83 (https://foreignpolicy.com/2021/01/15/united-
states-africa-biden-administration-relations-china/)
\14\ Kannan Lakmeeharan and others, ``Solving Africa's
infrastructure paradox,'' McKinsey & Company, March 6, 2020 (https://
www.mckinsey.com/business-functions/operations/our-insights/solving-
africas-infrastructure-paradox)
\15\ AfDB, African Economic Outlook 2018, p. xvi (https://
www.afdb.org/en/documents/document/african-economic-outlook-aoe-2018-
99877)
\16\ Miriam Tuerk, ``Africa is the Next Frontier for the
Internet,'' Forbes, June 9, 2020 (https://www.forbes.com/sites/
miriamtuerk/2020/06/09/africa-is-the-next-frontier-for-the-internet/
?sh=1bf4088a4900)
\17\ AfDB, ``Infrastructure Development,'' 2021, (https://
www.afdb.org/en/knowledge/publications/tracking-africa's-progress-in-
figures/infrastructure-development).
\18\ GSMA, ``The Mobile Economy Sub-Saharan Africa,'' 2020 (https:/
/www.gsma.com/mobileeconomy/wp-content/uploads/2020/09/
GSMA_MobileEconomy2020_SSA_Eng.pdf).
\19\ Ibid. In Sub-Saharan Africa mobile internet users (https://
www.gsma.com/mobileeconomy/sub-saharan-africa/) are expected to
increase from 272 million (26 percent of the population) in 2019 to 475
million (39 percent) in 2025, and 65 percent of people will own
smartphones by 2025.
\20\ AfDB, ``Infrastructure Development.''
\21\ Njuguna Ndung'u and Landry Signe, ``The Fourth Industrial
Revolution and digitization will transform Africa into a global
powerhouse,'' in Foresight Africa 2020, (Brookings Institution, January
8, 2020), p. 61 (https://www.brookings.edu/research/the-fourth-
industrial-revolution-and-digitization-will-transform-africa-into-a-
global-powerhouse/)
\22\ Noah Lewis, ``A tech company engineered drones to deliver
vital COVID-19 medical supplies to rural Ghana and Rwanda in minutes,''
Business Insider, May 12, 2020 (https://www.businessinsider.com/
zipline-drone-coronavirus-supplies-africa-rwanda-ghana-2020-5)
\23\ World Bank, ``The African Continental Free Trade Area,'' July
27, 2020 (https://www.worldbank.org/en/topic/trade/publication/the-
african-continental-free-trade-area)
\24\ Gyimah-Boadi, Signe, and Sanny, ``US foreign policy toward
Africa: An African citizen perspective.''
\25\ Ibid.
\26\ Signe, ``How to Restore U.S. Credibility in Africa.''
\27\ MCC, ``Regional Investments,'' 2021 (https://www.mcc.gov/news-
and-events/feature/regional-investments)
\28\ The agencies include: USAID (U.S. Agency for International
Development), DFC (U.S. International Development Finance Corporation),
U.S. Department of Commerce (DOC), U.S. Department of State, U.S. Trade
and Development Agency (USTDA), Export-Import Bank of the United States
(EXIM), U.S. African Development Foundation (USADF), U.S. Office of the
Trade Representative (USTR), Millennium Challenge Corporation (MCC),
U.S. Department of Energy (DOE), U.S. Department of Labor (DOL), U.S.
Department of Homeland Security's Customs and Border Protection (DHS/
CBP), U.S. Department of Transportation (DOT), U.S. Department of
Treasury, U.S. Department of Defense (DoD), U.S. Department of
Agriculture (USDA), U.S. Small Business Administration (SBA).
\29\ This recommendation is an adapted excerpt from my previously
published article ``Can Trump's Prosper Africa make America greater
than China and other partners in Africa?'' Brookings, 26 July 2019
(https://www.brookings.edu/blog/africa-in-focus/2019/06/26/can-trumps-
prosper-africa-make-america-greater-than-china-and-other-partners-in-
africa/)
\30\ Gyimah-Boadi, Signe, and Sanny, ``US foreign policy toward
Africa: An African citizen perspective.''
\31\ ``VW opens Rwanda's first car-assembly plant,'' The Economist,
June 30, 2018 (https://www.economist.com/business/2018/06/28/vw-opens-
rwandas-first-car-assembly-plant)
\32\ Ignatius Ssuuna, ``Volkswagen opens Rwanda's 1st car assembly
plant,'' The Washington Post, June 27, 2018 (https://
www.washingtonpost.com/world/africa/volkswagen-opens-rwandas-1st-car-
assembly-plant/2018/06/27/83c9bcb2-7a07-11e8-ac4e-
421ef7165923_story.html)
\33\ ``Peugeot to open new assembly plant in Namibia,'' Peugeot,
2018, (https://www.peugeot.co.za/brand-and-technology/news/peugeot-to-
open-a-new-assembly-plant-in-namibia.html)
\34\ Landry Signe, ``From Wakanda to reality: Building mutual
prosperity between African-Americans and Africa,'' Africa in Focus,
Brookings, February 14, 2019 (https://www.brookings.edu/blog/africa-in-
focus/2019/02/14/from-wakanda-to-reality-building-stronger-relations-
between-african-americans-and-africa/)
\35\ This recommendation is adapted from my forthcoming report,
``Seizing the momentum for effective engagement with Africa,'' co-
authored with Chris Heitzig.
\36\ Africa CDC, ``Africa CDC Vaccine Dashboard,'' (https://
africacdc.org/covid-19-vaccination/)
\37\ Douglas Bell and Kyle Lawless, ``How free trade can accelerate
Africa's COVID-19 recovery,'' EY, February 23, 2021 (https://
www.ey.com/en_gl/public-policy/how-free-trade-can-accelerate-africas-
covid-19-recovery)
\38\ Carlos Mureithi, ``What Pfizer and BioNTech's partnership in
Africa means for the continent,'' Quartz Africa, July 22, 2021 (https:/
/qz.com/africa/2036736/what-pfizer-and-biontechs-partnership-in-africa-
means-for-africa/?utm--source=email&utm_medium=africa-weekly-
brief&utm_content=2ed74f95-ebc6-11eb-a0a8-ca71a6b14d37)
\39\ This recommendation is adapted from my forthcoming report,
``Seizing the momentum for effective engagement with Africa,'' co-
authored with Chris Heitzig.
\40\ Emilia Columbo, ``Leveraging Africa's Technology Boom to
Protect U.S. Interests,'' Lawfare, April 7, 2020, (https://
www.lawfareblog.com/leveraging-africas-technology-boom-protect-us-
interests)
\41\ U.S. International Development Finance Corporation (USDFC),
``OPIC Launches Connect Africa Initiative to Invest more than $1
Billion Supporting Infrastructure, Communications, and Value Chain
Connectivity,'' July 2, 2018, (https://www.dfc.gov/media/opic-press-
releases/opic-launches-connect-africa-initiative-invest-more-1-billion-
supporting)
\42\ Katie Auth and others, ``Going Big on Power Africa: Fortifying
the Initiative for Today's Urgent Challenges,'' Energy for Growth Hub,
March 24, 2021 (https://www.energyforgrowth.org/report/going-big-on-
power-africa-fortifying-the-initiative-for-todays-urgent-challenges/)
\43\ Data retrieved from the World Bank DataBank (https://
databank.worldbank.org/home.aspx) and represents various years between
2017 and 2019.
\44\ AfDB, ``Infrastructure Development.''
\45\ The United States Trade and Development Agency (USTDA) is
already playing an important role in advancing capacity building and
regional projects in Africa.
\46\ This recommendation is adapted from my forthcoming report,
``Seizing the momentum for effective engagement with Africa,'' co-
authored with Chris Heitzig.
\47\ W. Gyude Moore, ``Biden already has Africa's early goodwill,
here's how to deliver on its promise,'' Quartz Africa, January 22, 2021
(https://qz.com/africa/1961323/?utm_term=mucp)
\48\ Morgan State University, (https://global.morgan.edu/africa/)
Senator Van Hollen. Thank you. Thank you, Dr. Signe.
Now we will turn to Ms. Hruby. Thank you for your testimony
today.
STATEMENT OF AUBREY HRUBY, NONRESIDENT SENIOR FELLOW, THE
AFRICA CENTER, ATLANTIC COUNCIL, WASHINGTON, DC
Ms. Hruby. Thank you, Senators, for the opportunity to
speak today, and a special thanks to your hard-working staff
for putting this hearing together and all that they do.
My name is Aubrey Hruby and I am a senior fellow at the
Africa Center at the Atlantic Council and I am a long-term
advisor to investors investing across the continent.
You spoke eloquently about the tools that we now have in
our toolbox when it comes to U.S.-Africa commercial diplomacy.
I wanted to give some recommendations on how those tools could
be improved and then what we should use those tools to do.
So going first to the DFC, the biggest issue there has been
the equity power that was granted to the DFC in the BUILD Act
and has not been fully realized because of scoring budgetary
issues with OMB.
So I fully support efforts by Senator Murphy and by
Representative Castro in the EAGLE Act and the Innovation and
Competition Act to fix this issue and allow the DFC to be able
to operate with its full equity allocation, making it
competitive with European DFIs and with other states that
finance infrastructure and projects globally.
The DFC should also work with Prosper Africa to engage
domestically in the United States, not invest but to engage in
terms of mobilizing investment, interest, and institutional
capital to be introduced to African opportunities.
We have a big country and we have a very dynamic market,
and one of the reasons why many companies do not look to Africa
is they have many other places to look, and we need to
introduce them to the opportunities. So this domestic
imperative to mobilize capital should be a part of how the DFC
works with Prosper Africa.
Also on the DFC, I hope that it continues to remain focused
on investing in lower income countries and maintaining that
development finance mandate with the exceptions it can get
through the White House process to invest in higher income
countries.
The focus should remain one that would benefit U.S.
companies and African markets as they seek to develop.
On Prosper Africa, I think the biggest issue there comes in
terms of its focus area. It needs to have sectoral focus,
because trying to mobilize investment around a general mission
of just facilitating trade investment is very difficult because
no one goes to a cocktail party and says, I work for the
private sector.
No, they work in banking. They work in farming. They work
in tech. So we need to organize the Prosper Africa outreach
based on a sectoral focus.
When it comes to MCC, I believe MCC should have the ability
to do subnational compacts. Today, it can do national compacts,
partnerships between, say, the U.S. and Ghana, which received
multiple compacts from the MCC, and it can do regional
compacts, and I was pleased to see the announcement of a
movement to do the West Africa Power Pool, which is an example
of a regional compact.
However, I do believe we are leaving something on the table
when we do not think about working with subnational entities
like Nigerian states, for example, where we could have huge
impact on poverty alleviation and encourage good governance
with that competition that happens in federalism, which we know
well, as a large, messy federal democracy ourselves.
So in that sense, I think we are missing an opportunity
with MCC.
On AGOA, Florie spoke eloquently on the importance that
AGOA has played in undergirding our commercial ties with
African nations.
Thinking about what replaces a 25-year program is an
important process, and I think this committee and others can
encourage hearings, encourage Prosper Africa to start a process
of thinking about what should replace AGOA. It needs the best
minds and energies that we have to bear.
Now, with these tools, what should we focus on? We spoke
about the need to remain competitive in the face of competition
with China.
My focus would be on digital infrastructure, in particular.
We have been concerned for some time about Huawei, ZTE, and
other companies building out the telecom infrastructure that is
in African markets.
I think we have the opportunity in the U.S. to leapfrog
some of that with satellite, not to mention our dominance in
things like media, entertainment, and venture capital.
So if you think of the future of African markets, it will
be shaped by the cell phone, and this is the mirror of the
world of hundreds of millions of young Africans.
The question is who is going to shape how this is used,
what is on it, the content of the future, and for me, that is
what we should be thinking about, how best the U.S. can use our
tools and American companies' investments and our policy to
kind of shape a better digital future more aligned with shared
values between the U.S. and African nations around democracy,
free and fair internet, and participating fully in a digital
economy.
So thank you. I look forward to taking questions.
[Prepared statement of Ms. Hruby follows:]
Prepared Statement of Aubrey Hruby
Distinguished members of the committee and fellow witnesses: I
would like to begin by thanking you for the opportunity to testify
before you today.
My name is Aubrey Hruby. I am a Senior Fellow with the Africa
Center at the Atlantic Council, and I have spent my career advising
Fortune 500 companies and investors to design and implement successful
investment and market entry strategies in over 32 African markets. I
will devote my testimony to the following 5 themes: (1) improving DFC,
USAID, MCC, AGOA, Prosper Africa and the new tools needed to bolster
economic engagement in Africa; (2) playing a greater role in helping to
aid implementation of the African Continental Free Trade Area (AfCFTA)
and the opportunities the AfCFTA afford U.S. firms; (3) how to work
with allies and partners to meet Africa's needs and present a better
alternative to China and Russia; (4) how U.S. investment in 5G and
telecoms can help bridge the digital divide on the continent; and (5)
what the next generation of Africans is looking for in U.S.-Africa
relations and where the alignment is between U.S. investment
opportunities and African growth needs.
introduction
Emerging markets, home to 6 billion people, accounted for nearly
two-thirds of global growth and half of new consumption came from
emerging markets over the past 15 years.\1\ In order to remain
competitive throughout the 21st century and beyond, U.S. companies need
to be better equipped to navigate and succeed in the fast-growing
markets of Asia and Africa. As the youngest continent with the highest
urbanization rate in the world, Africa's 1.2-billion-person market,
home to six of the world's ten fastest growing economies, increasingly
commands more attention from U.S. tech and entertainment companies.
This momentum should be accelerated by creative U.S. government
financing and support initiatives. Ensuring that Prosper Africa
actualizes its potential and continuing to enhance the DFC should be
key pillars of U.S. commercial policy moving forward.
Improving DFC, USAID, MCC, AGOA, Prosper Africa and the new tools
needed to bolster economic engagement in Africa
DFC--In order to enable the U.S. to compete with Chinese financing
activity in African markets and match the offerings of European DFIs,
the DFC needs the full equity power afforded to it in the BUILD Act and
potentially more. It is my understanding that OMB faces challenges
scoring equity in the budget and the DFC has yet to receive the full $1
billion outlined by the BUILD Act because OMB is treating equity
investments on a dollar-to-dollar basis as it would with grants. The
DFC must be allowed to start with at least $1 billion in equity
authority, using a net present value model so only 5 percent of the $1
billion needs to be provided in direct appropriations in the form of a
loan loss reserve as is common with European DFIs. The legislation
currently allows for up to 35 percent of its $60 billion investment
portfolio (or $21 billion) to be made in the form of equity.\2\
Therefore $1 billion of equity authority is a minimum for the DFC to be
taken seriously. As the Senate considers the EAGLE Act and reconciles
it with the U.S. Innovation and Competition Act, I urge that the
changes put forth in the amendment from Rep. Joaquin Castro (D-TX) to
the EAGLE Act and those from Senator Chris Murphy to the Innovation and
Competition Act that would fix the budget scoring issue around equity
investing be codified into law.
I strongly supported the expansion of the DFC through the BUILD Act
as it is crucial to U.S. commercial policy globally and particularly in
African markets. And going forward, it should remain focused on
investing in low-income countries and this committee should resist
efforts that have been made within the EAGLE Act to shift the agency
away from its core development finance mandate. The DFC also needs the
resources, personnel, and direction to mobilize capital domestically in
order to optimize its international activities.
While, by mandate, the DFC must operate internationally, it must
also embrace a domestic imperative, in partnership and coordination
with Prosper Africa, to actively mobilize institutional capital and
better support U.S. investors who venture into new markets. This will
require the DFC to address key data, network, visibility, and
structural gaps that have historically handicapped U.S. investment in
the emerging world. It can no longer remain passive in Washington
waiting for investors or project sponsors to facilitate opportunities.
The DFC could partner with USAID's Prosper Africa to create an
office of project promotion that would facilitate the collection and
synthesis of data from an investor perspective on projects in sectors
of U.S. competitive advantage. The data could be accessed via a portal
by state offices of international trade, business associations and
investors, and used as part of DFC roadshows to major U.S. cities.
There remains a widespread perception that U.S. companies are not
active and are disadvantaged in African markets. This office could help
to dispel this misperception by working with U.S. business schools to
commission a series of in-depth case studies of both successes and
failures in African markets. High-level business forums can also help
to address the visibility gap between U.S. investors and investment
opportunities by creating a platform for sharing these investment case
studies, especially when they have highly visible White House or
Congressional support. The natural tendency of investors is to invest
in what they know best, which is often what is in their backyard. But
in today's interconnected market and video-conferencing world, distance
is no longer an excuse for ignorance.
In parallel, the DFC should create a program for private sector
secondees, volunteers, and retirees to serve in advisory council roles
on specific funds, deals, and sector teams. Or for those interested in
a longer, on-the-ground commitment, a Peace Corps MBA-type initiative
(a U.S. commercial corps) should be considered.\3\ The Dutch
Government-funded PUM Netherlands Senior Experts--a nonprofit
organization that develops small and medium-sized enterprises in over
thirty emerging markets--provides a viable model.\4\ These types of
programs would amplify U.S. soft power and create a new cadre of
American business leaders with experience and linkages to African
markets.
Prosper Africa--Building on the recommendations above, I believe
that Prosper Africa, despite its slow roll-out, has been a positive
development in U.S. Africa commercial policy. The deal teams are an
unprecedented effort to coordinate the disparate agencies involved in
U.S.-Africa commercial policy. This backend coordination should be
sustained and strengthened. In terms of enhancing its competitiveness,
Prosper Africa needs to have an outward sectoral organizing principle
and focus. For example, Power Africa should be a front-facing focus of
Prosper Africa, as well as a future digital Africa program. I often
like to use the analogy of a computer chip to describe Prosper Africa.
Prosper Africa is like the intel chip of a Dell or HP laptop. For me,
Prosper Africa is our computer processor, universal in the backend
process, operating as a coordination mechanism that brings everything
together while the front-facing brand to our African partners or U.S.
companies in Chicago, Houston or Seattle see and engage with Power
Africa or Digital Africa.
As Prosper Africa approaches its 2-year mark, it is still
struggling to articulate and operationalize its vision of doubling
trade and investment by mobilizing U.S. capital. To put it on the right
course, the Biden administration and/or Congress should encourage the
following recommendations:
(1) Define priority sectors for U.S. commercial policy in African
markets. Prosper Africa should announce and market a focus on two or
three priority sectors, choosing among energy, financial services,
agribusiness and renewables, specialized oil and gas services, digital
infrastructure/technology, or media and entertainment as priority
sectors for its capital mobilization and partnership development
efforts. Each can then be operationalized through task forces,
replacing the Doing Business in Africa (DBIA) campaign as the mechanism
for channeling engagement with U.S. companies. When it comes to
infrastructure and implementing the vision outlined by the Build Back
Better World Initiative, the U.S. Government should engage companies on
African opportunities in niche areas that make commercial sense--
especially in renewables, energy management services, cybersecurity,
data centers, and smart city technologies.
Taking a sectoral approach does not mean that U.S. Government
agencies will shut the door on companies seeking support in sectors
that are not a priority, but rather structure active promotion and
communication around priority sectors. If Prosper Africa were to adopt
a sectoral focus, it could inject excitement about potential
investments through industry-specific communications and outreach. A
sectoral emphasis also has a secondary effect--it enhances and
accumulates expertise in a particular sector within the U.S. Government
(as has happened with Power Africa), which can be further leveraged to
support investors. Instead of being jacks-of-all-trades and masters of
none, U.S. officials become steeped in specific sectors and
consequently become well positioned to engage with and help U.S.
companies succeed.
(2) As part of the office of project promotion outlined above,
Prosper Africa should find credible interlocutors and create champions
to be used in investment mobilization efforts. Prosper Africa should
convene a group of industry ambassadors in priority sectors with
experience in emerging markets to act as validators and mobilize their
networks. These industry ambassadors would play a critical operational
role in the sectoral task forces. The ideal person would be someone who
had recently retired or was taking a sabbatical and is interested in
goal-oriented public service. They should remain based in cities
outside of Washington, DC, enabling the Prosper Africa team to have a
wider reach across the country.
(3) Take the show on the road. Prosper Africa needs to
significantly expand outreach efforts to connect U.S. businesses with
commercial opportunities in African markets. Prosper Africa can help
coordinate with the DFC and other government agencies on a series of
roadshows in U.S. cities that are home to the most competitive
companies to generate interest in Prosper Africa's target sectors. For
example, a focus on the media and entertainment sector would include
regular activities in Los Angeles and New York.
Internal mobilization of capital and business interest could be
paired with U.S. investor trips, segmented by sector and investor type,
to African markets and reverse trips of stellar African entrepreneurs
to the U.S. These trips could be modeled on the USAID-supported
Mobilizing Institutional Investors to Develop Africa's Infrastructure
(MiDA) program that has been bringing U.S. pension funds to large
African markets for the past 3 years. By educating and building trusted
networks for U.S. companies, focused investor missions can help Prosper
Africa meet the goal of doubling trade and investment between the
United States and Africa.
The efforts outlined above should be informed by market data. Given
the size and breadth of the American economy, mobilizing U.S.
investment into African markets will require experimentation. As a
starting point, Prosper Africa could focus on experiments in three main
areas: messaging, education, and structure. First up, U.S. Government
agencies need a better understanding of how to effectively present
African investment opportunities to U.S. investors. Despite years of
economic and governance progress in African nations, old stereotypes
remain, and U.S. investment is stagnant. By holding focus groups and
leveraging innovative public relations and marketing firms, this team
could experiment with new messaging tactics to learn what works and
what doesn't. Beyond messaging, effectively educating different types
of investors from venture capitalists to pension fund trustees requires
some experimentation. This includes everything from determining who in
these organizations are the correct targets for education to
understanding which up-to-date, actionable data are needed and which
platforms are most effective.
MCC--Congress must also work to make the Millennium Challenge
Corporation a more efficient and sustainable investment platform by
allowing it to make subnational compacts. MCC currently works on a
bilateral basis with individual national governments and the Millennium
Challenge Act allows for such assistance to ``regional or local
government units,'' but the act requires the MCC Board to identify and
evaluate countries, not regions, for compacts.\5\ I am glad to see that
MCC is using its regional capacity in West Africa with the recent
progress with ECOWAS around the West Africa power pool.\6\ This is an
important new effort that will hopefully deliver learnings that can be
used in future regional projects.
But we are missing an opportunity to advance MCC's mandate to drive
poverty alleviation in well-governed places at the subnational level.
MCC's selection indicators typically reported only at the national
level, especially for the corruption and democratic governance hurdles
which are the primary cause of scorecard failures.\7\ It is likely that
the MCC is going to run out of partner countries as countries
increasingly will not pass the indicators on the national level. This
would also prevent particularly impoverished regions of otherwise
wealthy countries from participation in the MCC. Therefore, I am in
agreement with former MCC CEO Dana J. Hyde that the MCC should, in
certain contexts, address poverty reduction at the local level through
regional or sub-regional compacts.
The subnational approach would make a lot of sense in federal
countries such as Nigeria and would mirror the changing private sector
market-entry strategies of focusing on cities rather than national
economies. It would enable the MCC to partner with states and
municipalities that would be overlooked given national failure in the
scorecard assessment and mobilize the competitive nature of federalism
to drive regulatory reform.
The African Growth and Opportunity Act (AGOA)--Given that AGOA has
been the backbone of the U.S.-Africa trade relationship for the past
20+ years and its expiration is on the horizon, it is important to
create a process to mobilize the best thinking on the future of U.S.-
African trade. Prosper Africa, working with USTR, could oversee this
process working with think tanks to create a working group with
experts, surveying companies and consulting with African policy and
business leaders. Congress can support this process by calling for
hearings and reports.
Playing a greater role in helping to aid implementation of the African
Continental Free Trade Area (AfCFTA) and the opportunities the
AfCFTA afford U.S. firms
AfCFTA promises U.S. firms a much larger market in which to operate
their businesses by helping to reduce the high costs of operating in
the region, particularly in terms of regulatory and logistics expenses.
The challenge lies in implementing the bold vision that African nations
have codified in the AfCFTA. The market potential will remain
unrealized if there is a major gap between the realities on the streets
and border crossings and what is on the books in terms of the AfCFTA.
The U.S. can lead in the effort to support the Secretariat of AfCFTA in
developing digital infrastructure solutions, smart city and e-
government solutions and reducing the cost of logistics through
digitization. While we have certainly faced our own challenges in
modernizing our digital and physical infrastructure in the U.S., U.S.
targeted support for digitization would help African countries to
leapfrog 20th century approaches to moving people, goods, and services
across borders. The focus on digital infrastructure would also allow
the U.S. to compete with Chinese approaches to shaping the digital
future of over 1 billion Africans. In addition to digital
infrastructure support, the U.S. can provide embedded advisors and
technical experts to the Secretariat to support the implementation of
the AfCFTA.
How to work with allies/partners to meet Africa's needs and present a
better alternative to China and Russia
This is a broad and far-ranging question, and I will touch on some
of the issues when discussing digital and telecom infrastructure. I
would like to draw the attention of the committee to one particular
area of potential U.S.-European-African cooperation--the lithium
battery value chain. China currently dominates the supply chains for
inputs to lithium batteries though the majority of the primary
resources sit in African markets. Ensuring U.S. competitiveness in
electric vehicles and the future green economy will require a
rethinking of existing supply chains. To move these supply chains away
from China and towards the U.S. and EU, we need to create a triangle
value chain that incorporates African value addition to these vital
natural resources.
How U.S. investment in 5G and telecoms can help bridge the digital
divide on the continent
It is important that we recognize that most African countries are
years away from 5G, and estimates state only seven African countries,
including South Africa, Nigeria, and Kenya will have 5G by 2025.\8\
Currently, Chinese companies such as Huawei and ZTE have state-backed
financing mechanisms and have already built 2G and 3G infrastructure in
over 40 African countries. According to Cobus van Staden, a senior
China-Africa researcher at the Southern African Institute of
International Affairs, Huawei has built roughly 70 percent of the
continent's 4G network.\9\ Currently, eleven Sub-Saharan African
nations are deploying Huawei's AI surveillance technologies.\10\ They
include Cote d'Ivoire, Ghana, Kenya, Uganda, Nigeria, Rwanda, South
Africa, Zambia, and Zimbabwe. During the COVID crisis, China is greatly
expanding its aid to African countries and may support countries with
surveillance technologies that can support tracking and tracing that
may have other uses beyond the pandemic.\11\ Therefore, the U.S. should
focus support on other aspects of the telecom and mobile tech space
sector such as: satellite development and support, support for African
space agencies, phone applications, fintech, venture capital, content
creation and creative industries (i.e. Netflix), cybersecurity. This
could all be done in a flagship digital Africa initiative that would be
housed under Prosper Africa. By doubling down on sectors in which the
U.S. is already competitive or at a significant advantage, we can
maximize U.S. support for a digital future in Africa markets that
aligns with U.S. values and enhances long-term U.S. competitiveness.
The current competitive challenge that China presents the U.S. in
African markets is no longer around its financing and construction of
physical infrastructure, but rather its new efforts to shape Africa's
technology stack \12\ and digital future, and as a result how the next
generation of Africans will consume, interact, and do business with the
world. Mobile devices have near-universal penetration in Africa's media
markets, and increasingly, smartphones are becoming more accessible and
affordable throughout the continent.\13\ Chinese firms have the lion's
share of the market. By 2025, Africa's mobile penetration is expected
to reach 50 percent or 614m connections, with 65 percent of those via a
smartphone.\14\ Shenzhen-based Transsion, which does not operate in the
United States or Europe, dominates the African smartphone space. It
holds 40.6 percent unit share under its three brands (Tecno, Indinix,
and iTel), ahead of second-place Samsung with roughly 19 percent.\15\
Increasingly important are the preferential treatment Transsion can
give its own apps, including market-leading music streaming service
Boomplay and mobile-money provider PalmPay.\16\ These Transsion brands
also dominate the featured phone landscape with a combined 69.5 percent
share. In South Africa alone, Huawei accounts for 14.5 percent of
phones sold, the second-highest share and significantly more than
Apple's 4 percent.\17\ Price and Africa-focused features are some of
the determining factors. Smartphones that cost under $100 composed of
half the total market share in Africa in Q4 in 2019.\18\
However, as China's telecommunication infrastructure expands across
the continent, there are concerns around built-in Chinese-apps,
privacy, data protection, and over dependence. The recently launched
African Youth Survey, which interviewed 4,200 African youths aged 18 to
24, finds that 80 percent of those surveyed view regular access to the
internet as a human right.\19\ Access to the internet, especially in
autocratic countries, is often restricted or completely shut down
during periods of protests and around elections.\20\ A report by Access
Now, indicates that globally, in 2019, there were 36 incidents in 19
countries of internet shutdowns lasting longer than 7 days.\21\ Among
these countries include eight African nations including Chad, Ethiopia,
the Democratic Republic of the Congo, Eritrea, Mauritania, Sudan and
Zimbabwe. The U.S. can appeal to young Africans by defending open
internet standards and policies, especially as U.S. companies are
involved in some of the largest digital infrastructure projects
underway in African markets.
In 2019, Google announced a subsea cable called Equiano that runs
from South Africa to Portugal, with a stop in Nigeria.\22\ This
submarine cable will be owned and operated solely by Google, in
contrast to the consortium of investors that typically co-own these
cables. Facebook is undergoing an even more ambitious project--the
2Africa subsea cable that loops around the continent and connects 23
countries in Africa, Europe, and the Middle East.\23\ The 2Africa cable
alone, which is scheduled to be completed by 2024, would double the
total internet capacity on the continent. These subsea investments from
American firms stand to drastically increase the supply of internet on
the continent, potentially leading to reduced internet prices.
The additional broadband capacity that will be delivered by the new
subsea cables will then require investment into terrestrial fiber
infrastructure to spread access from the port inland. U.S. companies
are also investing in innovations still at pilot stage but with the
potential to scale and be transformative. Google's parent company,
Alphabet, through its X moonshot company has launched Project Taara to
expand the existing fiber network to surrounding rural areas at
significantly lower costs.\24\ Initially piloted in Kenya and India,
Project Taara transmits high-speed data between two points above ground
through invisible streams of light.\25\ Transmitting data through the
air avoids the costs and inconveniences of digging paths to lay fiber
cables and will be met with fewer regulatory hurdles since private and
public land is not required. U.S. Government agencies, such as the
Millennium Challenge Corporation, the U.S. International Development
Finance Corporation, the Export-Import Bank of the United States, and
the U.S. Agency for International Development, could partner with X
moonshot to scale these pilots and provide regional solutions as
learnings accumulate and costs drop.
The high cost and low margins of laying fiber cables in rural areas
has led to a persistent last-mile problem, reinforcing dependence on
mobile data usage and reinforcing the digital divide. Less than one-
third of Africans have regular access to internet of any kind.\26\ U.S.
policy should also provide an alternative to Chinese technology by
promoting new direct-to-consumer satellite solutions. The SpaceX
StarLink satellite project could also prove transformative in
delivering high-quality internet directly to consumers wherever they
may be.\27\ The project's network of interconnected satellites can
provide high-speed internet access to even the most remote locations on
the planet, with speeds that are faster than 95 percent of U.S.
connections.\28\ It is currently in a public invitation-only testing
phase and is only available in latitudes 45 to 53 degrees, which covers
a small range of regions in the northern hemisphere.\29\ Initially only
available in the northern United States and southern Canada, recent
regulatory permission in the U.K. has allowed StarLink services to be
offered in the country as well. As more satellites are launched, more
areas around the globe will be covered by this service. Countries such
as Greece, Germany, and Australia have already approved StarLink
operations in anticipation of such an expansion.\30\ StarLink's startup
kit cost of $499 and monthly payment of $99 would be an obstacle for
expansion into African economies but expected price drops of new models
will make this an exciting option for internet access in African
markets in the next 18 to 24 months.
In addition to supporting U.S. tech firms that are already
investing in African markets with financing, advocacy or promotion, the
United States can also invest in tech solutions, such as improved
routing protocols, that stand to build device trust and avoid the
binary choice between U.S. and Chinese tech.\31\ Through these
policies, the United States can slow and possibly erode the gains that
companies like Huawei have made on the continent by promoting
innovative U.S. technologies and providing resources to help unleash
the second wave of the internet revolution in African countries.\32\
What is the next generation of Africans looking for in U.S.-Africa
relations and where is the alignment between U.S. investment
opportunities and African growth needs
Africa's young people are looking to countries and companies that
can speak to and keep up with their ambitions. They want to engage
actively in the digital economy and in creative industries and consume
creative content. And they increasingly are demanding a free and open
internet as seen in the rise of VPN usage in Nigeria after the June
Twitter ban. Already a 1.2-billion-person market, Africa's youth are
better connected than ever before and COVID has accelerated
digitization of products and services. African start-up ecosystems have
attracted double-digit fundraising growth year-over-year.\33\ As
technology adoption expands, the means by which Africans view and see
the world will be shaped by the hardware and software they have access
to and use.
Despite the influx of Chinese investment into the backend of the
continent's telecommunications infrastructure, venture start-ups, and
the media space, the United States still has many competitive assets to
build upon.\34\ The U.S. must leverage the strategic advantage of our
African diaspora population to build and strengthen ties with the
African continent. Higher education has a central role to play. The
United States was built on the backs of Africans and their descendants,
and the African diaspora continues to play an important role in
strengthening people-to-people ties across the Atlantic. Of the more
than 46.8 million African Americans, as of 2018, there were about 2.4
million foreign-born Africans in the United States, a dramatic rise
from even 2000 when there were fewer than 1 million. About 40 percent
of America's African immigrants hold at least a bachelor's degree, a
rate higher than that of the U.S. born population.
One area the U.S. Government has long promoted, but faced setbacks
under the Trump administration, is opening the American education
system to international students. Since 1950, the United States has
welcomed an estimated 1.6 million African students to colleges and
universities adding diversity to classrooms and communities. Today,
Nigeria is ranked eleventh for the number of students in the United
States based on country of origin, ahead of countries including the
United Kingdom, Germany, and France. U.S. universities, and people-to-
people exchanges such as YALI, thus serve as essential mechanisms for
developing close relations with future African decision makers. More
than 20 percent of current African leaders studied in the United
States, including the leaders of Cote d'Ivoire, Ethiopia, Ghana, and
Kenya. Studying or living in the United States unquestionably deepens
one's understanding of the country, and while this does not mean future
African leaders will agree with all U.S. policies, it often does
predispose them to an openness and familiarity with American policy and
business ties. Yet, China surpassed the U.S. in 2015 in hosting the
largest number of English-speaking African students for higher
education.
While we face our own infrastructure challenges at home in the U.S.
in terms of roads and bridges and rail, we should focus on our
strengths in education as we think of investing in African
infrastructure as part of the B3W initiative. Creating jobs for the 10
to 12 million young Africans that enter into the labor force each year
will require a revolution and expansion of education and it will need
to be delivered in a mobile digital format.
Even during the current global pandemic, following the closure of
schools because of government efforts to mitigate the spread of COVID-
19, the Chinese StarTime's Kenyan subsidiary has launched homeschool
programming.\35\ It presents primary and high school students with the
unique opportunity to continue their education through audio visual
programming that will include live sessions by experienced teachers at
no cost.
China is also shaping media content through educational
initiatives. It helps shape the careers of African journalists through
high-level media cooperation initiatives and new China-Africa press
centers.\36\ Each year about 1,000 African journalists participate in
training programs in China with the aim to build deeper understanding
and cultural ties with the country.\37\ This is a concerning practice
given China's history of media coercion and censorship.\38\
With traditional markets moving digital, the future of the African
technology stack will only rise in importance. A critical area of
future competition will be in digital currencies, including China's
digital yuan, and the potential to undermine dollar hegemony. While
today the utility of the digital yuan in Africa is minimal, 10 years
down the road this picture could change significantly with businesses,
governments, and perhaps everyday individuals using digital yuan to
settle transactions. All of this may be accelerated by Chinese handsets
with pre-downloaded apps and wallets that support these
transactions.\39\
While trucks, trains, and planes have long dominated how African
consumers and businesses are able to interact with global markets, the
digitization in the last decade has changed this equation, and the U.S.
must update U.S.-Africa policy considering this important trend. By
marrying soft power and commercial success, the United States can do
much more than simply help the bottom line of American companies--it
can win the next generation of hearts and minds in some of the world's
fastest-growing and youngest markets.
----------------
Notes
\1\ ``Outperformers: High-growth emerging economies and the
companies that propel them,'' McKinsey, September 11, 2018, https://
www.mckinsey.com/featured-insights/innovation-and-growth/outperformers-
high-growth-emerging-economies-and-the-companies-that-propel-them#;
David Muller, ``Emerging Markets--Powerhouse of global growth,''
Ashmore Group, May, 2018, http://www.ashmoregroup.com/sites/default/
files/article-docs/MC_10%20May18_2.pdf.
\2\ Rob Mosbacher, ``We need to get the new U.S. DFC over the
finish line. Here's why.'' Devex, October 2, 2019, https://
www.devex.com/news/opinion-we-need-to-get-the-new-us-dfc-over-the-
finish-line-here-s-why-95728.
\3\ Aubrey Hruby, ``Go where the action will be: Biden needs to
pursue African initiatives,'' The Hill, January 21, 2021, https://
thehill.com/opinion/international/535171-go-where-the-action-will-be-
biden-needs-to-pursue-africa-initiatives.
\4\ For more on PUM see: https://www.pum.nl/en.
\5\ Sec. 605(c) identifies the entities eligible for assistance,
while Sec. 606 and Sec. 607 define the selection process.
\6\ ``MCC Advances Regional Integration to Expand Energy Access in
West Africa,'' MCC, June 16, 2021, https://www.mcc.gov/news-and-events/
release/release-061621-mcc-advances-regional-integration-west-africa.
\7\ Nick M. Brown, ``Millennium Challenge Corporation: Overview and
Issues,'' Congressional Research Service, October 3, 2019, https://
fas.org/sgp/crs/row/RL32427.pdf.
\8\ `` 5G in Sub-Saharan Africa: laying the foundations,'' GSMA,
July 16, 2019, https://www.gsma.com/subsaharanafrica/resources/5g-in-
sub-saharan-africa-laying-the-foundations.
\9\ Amy Mackinnon, ``For Africa, Chinese-Built Internet is Better
Than No Internet at All,'' Foreign Policy, March 19,2019, http://
foreignpolicy.com/2019/03/19/for-africa-chinese-built-internet-is-
better-than-no-internet-at-all/.
\10\ Abdi Latif Dahir, ``Chinese firms are driving the rise of AI
surveillance across Africa,'' Quartz Africa, September 18, 2019, http:/
/qz.com/africa/1711109/chinas-huawei-is-driving-ai-surveillance-tools-
in-africa/.
\11\ Simnikiwe Mzekandaba, ``Govt puts mobile tech at centre of
COIV-19 mass screening, testing,'' itweb, March 31, 2020, http://
www.itweb.co.za/content/rxP3jqBmKaKMA2ye.
\12\ The technology stack is defined as the individual layers that
makeup the digital communications ecosystem, including six main layers:
undersea cables & satellites, telecommunication companies & internet
service providers, mobile handsets, cellular networks & Wi-Fi,
operating systems, and lastly apps, mobile money, content platforms,
and web browsers.
\13\ ``New study reveals African media consumption habits,''
African Marketing Confederation, June 3, 2016, http://
www.africanmc.org/index.php/daily-articles/item/433-new-study-reveals.
\14\ ``The Mobile Economy of Sub-Saharan Africa 2020,'' GSMA, 2020,
https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/09/GSMA--
MobileEconomy2020_SSA_Eng.pdf.
\15\ ``Africa's Smartphone Market Posts Growth, but Uncertainty
Around Global COVID-19 Outbreak Casts Shadow over Short-Term
Prospects,'' IDC, March 5, 2020, http://www.idc.com/
getdoc.jsp?containerId=prMETA46110420.
\16\ Ingdrid Lunden, ``Boomplay, a Spotify-style music and video
streaming service for African music and Africa, raises $20M,''
TechCrunch, April 5, 2019, https://techcrunch.com/2019/04/05/boomplay-
a-spotify-style-music-and-video-streaming-service-for-african-music-
and-africa-raises-20m/
?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referre
r_sig=
AQAAAE6IdsMZejXxQIGSAEEURIQUXsRZqDK-hoPJGG413N1cS6YQ-
eiQ9c2kWEXUd9eigOia6Sn9IJFJmXjEHGQI00QP79vAomFzKr4i-
Ct0jp-3VQD2lR8YWvtZPJEA5dq6NQ5aCHPpGQZxCgW8zhS4Jgd3TVR1YstGga-
IL0rZW7hY.
\17\ ``Huawei is beating Apple in South Africa--and is gaining on
other competitors,'' My Broadband, August 3, 2019, http://
mybroadband.co.za/news/smartphones/270741-huawei-is-beating-apple-in-
south-africa-and-is-gaining-on-other-competitors.html.
\18\ Yinka Adegoke, ``The Chinese-made, sub-$100 smartphone is
Africa's fastest-growing handset.''
\19\ ``Africa Youth Survey 2020,'' Ichikowitz Foundation, 2020: 60,
http://ichikowitzfoundation.com/wp-content/uploads/2020/02/African-
Youth-Survey-2020.pdf.
\20\ Yomi Kazeem, ``Internet shutdowns in Africa were more frequent
and lasted longer in 2019,'' February 27, 2020, http://qz.com/africa/
1808728/african-internet-shutdowns-were-more-frequent-in-2019/.
\21\ Ibid.
\22\ For Equiano overview see: https://cloud.google.com/blog/
products/infrastructure/introducing-equiano-a-subsea-cable-from-
portugal-to-south-africa.
\23\ Najam Ahmad, Kevin Salvadori, ``Building a transformative
subsea cable to better connect Africa'' Facebook Engineering, May 13,
2020, https://engineering.fb.com/2020/05/13/connectivity/2africa/
#::text=As%20part%20of%20our%20commitment,continent%20and%20Mid
dle%20East%20region.&text=At%2037%2C000%20kilometers%20long%2C%202Africa
,the%20cir
cumference%20of%20the%20Earth.
\24\ For more on Project Taara see: https://x.company/projects/
taara/.
\25\ Mahesh Krishnaswamy, ``Bringing light-speed internet to Sub-
Saharan Africa,'' X, November 10, 2020, https://blog.x.company/
bringing-light-speed-internet-to-sub-saharan-africa-4e022e1154ca.
\26\ ``Individuals using the Internet (% of population)--Sub-
Saharan Africa,'' World Bank, https://data.worldbank.org/indicator/
IT.NET.USER.ZS?locations=ZG.
\27\ For more on Starlink see: https://www.starlink.com/.
\28\ Kate Duffy, ``SpaceX's Starlink internet public beta is giving
some users blistering download speeds of more than 210 Mbps, including
in rural Montana,'' Business Insider, July 27, 2021, https://
www.businessinsider.com/starlink-internet-satellite-public-beta-speed-
spacex-mbps-elon-musk-2020-
11#::text=SpaceX's%20public%20beta%20test%20of,as%20part%20of%20the%20be
ta.
\29\ ``Starlink Mission,'' Space X, November 24, 2020 https://
www.youtube.com/watch?v=J442-ti-Dhg&feature=youtu.be&t=606.
\30\ Thomas Seal, ``Elon Musk's Starlink Broadband Terminals Gets
Approval in U.K.'' Bloomberg Quint, January 11, 2021, https://
www.bloombergquint.com/business/elon-musk-s-starlink-broadband-
terminals-gets-approval-in-u-k.
\31\ David Bray, ``5G's geopolitics solvable by improving routing
protocols against modern threats,'' Atlantic Council, April 9, 2020,
https://www.atlanticcouncil.org/blogs/geotech-cues/5gs-geopolitics-
solvable-by-improving-routing-protocols-vs-modern-threats/.
\32\ Briefing, ``How the pursuit of leisure drives internet use''
The Economist, June 8, 2019, https://www.economist.com/briefing/2019/
06/08/how-the-pursuit-of-leisure-drives-internet-use.
\33\ Tage Kene-Okafor, ``How African startups raised investments in
2020,'' TechCrunch, February 11, 2021, https://techcrunch.com/2021/02/
11/how-african-startups-raised-investments-in-2020/.
\34\ Aubrey Hruby, ``Making the most of Prosper Africa; Leveraging
U.S. competitiveness in African markets,'' March 27, 2020, http://
www.atlanticcouncil.org/in-depth-research-reports/report/making-the-
most-of-prosper-africa-leveraging-us-competitiveness-in-african-
markets/.
\35\ Molly Wasonga, ``StarTimes Launches a Homeschooling Program
For Students,'' CIO, April 6, 2020, http://www.cio.co.ke/startimes-
launches-a-home-schooling-program-for-students/.
\36\ ``The 4th Forum on China-Africa Media Cooperation Held in
Beijing and Joint Statement on Further Depending Exchanges and
Cooperation Declared,'' Forca Summit, July 19, 2018, http://
focacsummit.mfa.gov.cn/eng/pthd_1/t1578639.htm; Darrel Frost, ``Even if
you don't think you have a relationship with China, China has a big
relationship with you,'' Columbia Journalism Review, June 20, 2019,
http://www.cjr.org/special_report/china-foreign-journalists-oral-
history.php.
\37\ ``China is broadening its efforts to win over African
audiences,'' The Economist, October 20, 2018, http://www.economist.com/
middle-east-and-africa/2018/10/20/china-is-broadening-its-efforts-to-
win-over-african-audiences.
\38\ Geoffrey York, ``Why China is making a big push to control
Africa's media,'' The Globe and Mail, September 11, 2013, http://
www.theglobeandmail.com/news/world/media-agenda-china-buys-newsrooms-
influence-in-africa/article14269323/.
\39\ Eric Olander, ``Don't Worry America, Africans Aren't Going to
Start Using China's New Digital Currency . . . At Least Not Right
Away,'' China Africa Report, May 26, 2021, https://
chinaafricaproject.com/analysis/dont-worry-america-africans-arent-
going-to-start-using-chinas-new-digital-currency-at-least-not-right-
away/.
Senator Van Hollen. Well, thank you very much, Ms. Hruby,
for that terrific testimony, and to all of you. We have been
joined by Senator Kaine. Thank you, Senator Kaine.
Let me just start with the questioning and then Senator
Hagerty will be back and I will go vote after that. Let me
start with you, Ms. Hruby, because thank you for identifying
some specific measures that we could take in terms of improving
some of these tools, including the DFC, and we are working to
try to address the issue of making sure that we have more
equity, leverage, and power with the CBO issue you identified.
You also mentioned the issue of focusing on digital,
especially with Huawei and 5G, and I am pleased that it is part
of the sort of competitiveness bill that we passed here in the
Senate to enhance our competitiveness.
We included an amendment to direct the DFC to strengthen
its capabilities there. You have mentioned a sectoral approach.
I do not know if you have got an idea of what sectors you think
would be most fruitful for us to focus on as we move forward.
Ms. Hruby. Sure, I can speak to that issue.
I spent some time working on questions of American
competitiveness when looking to African markets, and I think it
is important when we talk about infrastructure, because we
talked about infrastructure broadly.
If you look at the composition of the U.S. economy, we are
a services-based economy. We have not built infrastructure in
our own country for decades, and this is something that is,
obviously, taking up a lot of your time here in the Senate.
When we think about being involved in infrastructure, I
think it is important to think about niche areas: renewable
energy, satellite infrastructure, basically, digital
infrastructure.
So I agree with some of the efforts that is happening in
the White House to think about a digital Africa policy or
initiative that would fall under Prosper Africa. Prosper
Africa, for me, is like the umbrella.
It is the back end that facilitates the coordination
between all of our disparate government agencies. The front end
needs to be led with a sector.
So I think digital Africa makes sense, which is digital
infrastructure, content development, that kind of
entrepreneurial ecosystem and venture capital. I would put that
all under a digital Africa kind of headline.
Power Africa continue to focus on power and renewable
energy, especially with the new ambitious climate goals this
Administration has, and then we can look to other things.
We can look at finance. We can look at agriculture and
agribusiness. There are many areas. I think the key is to pick
two or three and stick with them and stop having the focus of
generalities when it comes to promoting trade and investment
with Africa.
Companies do not invest in Africa. They invest in a country
like Nigeria, they invest in a city like Lagos, and they invest
in a sector. So I think it is important to drill down and have
a sector focus when it comes to building our partnerships in
African markets and in mobilizing U.S. investment.
So when Prosper Africa was rolled out, and you will
remember it was kind of a stuttering rollout, many my
colleagues and friends in African market said, wait, is it just
an American--that the agencies are just going to do their jobs
better?
They are just going to coordinate better? That cannot be
what we are selling or putting on the table that is the nature
of American partnership.
No, it needs to be around things like educational
partnerships, which Dr. Signe just mentioned. It needs to be
around digital partnerships or agribusiness investments.
We need something specific to focus on. So from my
perspective, there are quite a few good choices. We just need
to pick two or three.
Senator Van Hollen. Thank you for that, and that leads to a
question.
Ms. Liser, you mentioned in your comments that while some
African countries have prospered more or taken more advantage
of AGOA, many have not benefited.
If you look at the figures, I think you see that over 50
percent of trade and investment in Africa is, really, two
countries, Nigeria and South Africa.
How do we do what you suggested? How do we get more African
countries to benefit from that, using these other tools as
well?
Then, Dr. Signe, if you could also focus on that question.
Ms. Liser. Thank you, Senator. I think that picking up a
bit on what Aubrey said, we need to be sector focused and we
need to be region focused, and we need to think about how
global supply chains work.
So I have had the privilege over the years when I was at
USTR and even since then to visit factories on the continent in
Africa in a range of sectors, and what I mean by focusing on
sector country is that if you look at value chains, if you
visit a plant in Mombasa that is producing apparel--Kenya is
now the largest exporter of apparel to the U.S. under AGOA--
what you realize is that you have factories there that have
5,000, 6,000 people, you can visit similar factories in
Tanzania and Uganda that only have maybe 200 or 300 people.
They are not able to really scale up in the same way as the
Kenyans. But if they work together through the East Africa
Customs Union, and if Kenya actually had a free trade agreement
where it had permanent duty-free access to U.S. market, then
what we would be able to do is not just scale up competitive
production of apparel in Kenya, but they would then be able to
bring into that value chain some of the smaller producers in
the region and perhaps some who might be able to make zippers
but could not really put the final product together, or the
buttons or, any of the things that go into apparel.
So I think that as we think about how to help countries
like the Tanzanias and the Ugandas to take greater advantage of
AGOA, we should think about are there particular supply chains
where they already have some capacity but if they are linked to
others in the region that they could do more.
I saw this also in the automobile sector. I visited a
factory in Lesotho that was producing leather seats for
automobiles in South Africa that are being shipped to the U.S.
under AGOA.
Again, it is unlikely that an auto manufacturer is going to
go and set up in Lesotho. How do you bring the Lesotho in to
the automotive value chain? That is something that is possible.
I think we could take lots of these kinds of example,
including in value-added agricultural products, manufacturing
of footwear. I have seen that as well, and then try to take
advantage of the way that companies operate these days.
They cannot be in small, tiny markets all across Africa.
They need a larger unified market that can drive investment.
I would just think that that goal of the companies for
markets that are larger and economies of scale can also be
linked to how we help countries do better under AGOA.
Thank you.
Senator Van Hollen. To my colleagues, we will do 7-minute
rounds. I think we will have ample opportunity and we will have
more than one round of questions if people are interested.
Dr. Signe, I am going to apologize because I do have to
vote right now, but I will be back to follow up with some of my
questions. Let me turn it over to Senator Hagerty.
Senator Hagerty. Thank you, Chairman. I will see you in a
few minutes after your vote.
Ms. Hruby, I would like to turn to you for the moment to
talk with you about something that you mentioned in your
testimony I found very interesting and that is electric
batteries.
You mentioned specifically that we need to work more
closely with our allies and partners to meet Africa's needs and
prevent a better alternative than what is presented by China
and Russia.
I think that is an excellent case in point that you brought
up about the potential of focusing on the electric battery
value chain as a way to cooperate between the United States,
between Europe and, certainly, with Africa, and something that
I am aware of and that you brought up as well is that China
currently dominates the supply chain for lithium batteries.
Yet, the majority of the inputs come from Africa, and I
think you highlight a critical point that is of great interest
to me, because in my home state of Tennessee we produce a lot
of cars. We are very interested in the evolution toward the
electronic vehicle.
We want to maintain our leadership role there. In fact, we
just announced a $2.3 billion investment in Tennessee in
lithium batteries.
I would, certainly, support any initiative that we can work
on that would increase cooperation between Africa and the
United States on this issue, particularly, when it comes to
supply chains.
I would look forward to just having you elaborate a bit on
how we might create greater cooperation with Africa on the
electric battery supply chain.
Ms. Hruby. Thank you, Senator.
I think the COVID crisis has shown us globally a need to
rethink supply chains and many countries around the world--many
of our allies are doing that.
I know the Japanese, for example, they have this big
program through their central bank to reshore some supply
chains outside of China after they realized vulnerabilities
that they did not see before.
I think the lithium battery supply chain is one we can look
at because of its importance to continued U.S. competitiveness
when it comes to EVs and other areas of renewable energy.
Obviously, solar is very key in terms of use of renewable
or lithium batteries. So as African countries are home to many
of these resources from the lithium that you can get in Congo
to graphite in Mozambique, right now, China refines about 80
percent of the world's graphite that goes into these supply
chains and there is a need to think about how to do that
better.
Because of some of the trade and proximity benefits that
European countries have to African nations and their shared
desire to have supply chains that are less dependent on China,
I think there are ways we can begin to have that conversation.
One of them is to convene a lot of the mining companies
that know a lot of the rare earth minerals and core competitive
minerals like lithium to understand what they consider key in
thinking about their supply chains and what investments would
need to be made.
I think where African nations share this interest is they
want to do value addition locally. For too many centuries, you
could say even decades for sure, but centuries they have been
exporting raw commodities to the world unrefined and,
therefore, exporting the jobs that comes with them.
So many of the countries seek to do some of the refining at
home, and, hopefully, with Power Africa, because some of the
problems with refining is because the high cost of electricity,
with some of the Power Africa investments that have been made
and increasing investment into renewable energy sources, maybe
some of that power can be locally used to do some of the
smelting and refining.
So, for me, it is about having a dialogue with both the
mining companies, private sectors, the companies that are doing
the batteries and consuming the batteries, and then European
and Asian countries in addition to the African homes of these
minerals.
Senator Hagerty. Yes. I think it also is important as well
to continue to convey the basic principles of free market
competition that we support here in America that are not
available in dealing with Chinese companies.
There has been adequate experience, I will just say this,
in Africa and around the world right now to see the great
difference and there is a great contrast between our approach
and that of the Chinese Communist Party.
I hope we can continue to find ways, but I particularly
appreciate your identifying that sector because it rings close
to home for me, and I look forward to finding ways to continue
to cooperate.
Ms. Liser, I would like to turn to you next and talk about
recent press reports that China has proposed an alternative
Quad framework.
I was surprised to see their outreach to Germany and France
to propose a Quad framework with the African nations, and they
propose to cooperate on development projects there in Africa.
It is not clear whether or not this proposed China-led Quad
will actually materialize or go anywhere. If it were to
proceed, it might pose significant challenges to the United
States, and I would like to get your perspective and your
opinion on how this might evolve.
What would it mean for our U.S. interest in Africa?
Ms. Liser. Yes, this kind of approach where the Chinese are
trying to, basically, become a part of sort of the usual
processes, become linked to others that may have more of the
reputation that African countries and others like is a part of
their strategy.
They know they have been in Africa. They surpassed U.S. in
trade with Africa years ago. They are providing favorable
financing for their companies to build roads and airports, et
cetera, in Africa and build out the infrastructure, which the
Africans, very much need. So when the Chinese come to them,
they offer that.
Now, I think that if they can link arms with others who are
considered probably a bit more legitimate in terms of the kinds
of things that they do and the ways that the Africans view
them, then I think that that is something that will benefit
them.
I think the key for the U.S., though, is to not be
reactive. I think we have to think proactively and creatively
about what we can do, because I have not been to any country,
and I have been to many on the continent, where they are not
saying, look, Florie, where are the U.S. companies? How can we
get more U.S. investment? What do we have to do to get your
companies to come?
They like our products. They like the fact that U.S.
companies will transfer technology, will transfer skills and
train. So they want to work more with us, and I think that what
we have to do is to look at the tools that we have now.
As has been said here already, look at the Prosper Africa,
where they are bringing together all of the 17 U.S. Government
agencies and try to be on one page and leverage what the others
are doing.
I think that we have to look at what it is that the U.S.
can do, both the Government, Congress and the executive branch
and what U.S. companies can do in Africa that is desirable,
perhaps more than anything than those others and this new G-4
approach can offer, and I think it will be welcomed, sir.
So that is where I think we have to sit down and map out
what we can do and the tools that we can use more effectively.
Senator Hagerty. I, certainly, agree with the substance of
your statement.
In terms of not being reactive, that was precisely my
reaction to what China announced in terms of an Africa-oriented
Quad because we have been so successful with our Quad approach
between ourselves, Japan, India, and Australia and the Indo-
Pacific.
In many ways, I think this is yet more propaganda coming
from China. I like your choice of words legitimate because
United States does provide a legitimate framework, and I agree
with you.
If we can bring our 17 agencies together under the Prosper
Africa initiative and really develop and drive the full force
and power of the American position, I think we can make great
strides.
Dr. Signe, may I turn to you quickly?
Africa's infrastructure needs are massive, as we have
discussed. Recent estimates by the African Development Bank put
the continent's minimum infrastructure needs at $130 to $170
billion. For over two decades, China has actively poured money
into infrastructure projects in Africa and it is unclear
whether their motives are market-based or whether they are
strategic.
As a lifelong businessman, I understand it is very
difficult to do business with a competitor that plays by a
different set of rules and has the balance sheet of China
behind it.
So, Dr. Signe, are U.S. firms showing interest in building
infrastructure and can they do so in an effective way, given
the difference in a competitive posture versus China?
Dr. Signe. Thank you very much for the question.
So one point I want to highlight is that African citizens,
per Afrobarometer surveys, prefer the American model of
development compared to the Chinese one. For example, in one of
the recent studies, 32 percent prefer the American model over
the Chinese model (23 percent); other countries lagged
substantially.
So, definitely, there is an appetite in Africa for American
investors, and I think both Madam Liser and Ms. Aubrey Hruby
have identified also that appetite as illustrated.
So that is one point. So the second point is that I think
the U.S. should be strategic in terms of engagement, in terms
of infrastructure. A sectoral perspective and as mentioned in
my written testimony, in the context, especially to bridge the
gap in terms of digital technology, the digital infrastructure
gap. Extremely important. It is still possible for the U.S. to
be more competitive than some of the Chinese corporations.
I think for this to happen, it is important to engage with
African organization, whether the African Union, who have
programs for infrastructure development in Africa like, for
example, the plan aiming at bridging the infrastructure gap in
Africa by 2040, among other initiatives. It is important to,
engage especially at the continental level from a multilateral
perspective, by setting the priorities together, and given the
support that the U.S. already has on the continent, I think it
will definitely be possible for American companies to
outperform some of the external players.
Senator Hagerty. I would certainly like to see that. Thank
you, Dr. Signe.
I would like to turn it over now to my colleague, Senator
Kaine from Virginia.
Senator Kaine. Thank you, Senator Hagerty, and to you and
the chair of the subcommittee for holding this important
hearing today on trade and investment opportunities.
I am going to spend my time talking about the interaction
between economic opportunity and COVID and vaccination. I just
returned from a CODEL to the Americas with six members of this
committee--three Democrats, three Republicans--and it was
pretty amazing.
Even if I had seen the briefing and it had said exactly
what I am about to say, it was so different seeing it in
person, and that was the incredible gratitude of the nations we
visited--Mexico, Guatemala, Ecuador, and Colombia--for the U.S.
donations of vaccines.
What we heard from the presidents of these nations, and the
shortest meeting we had was 2 hours and the longest was 3
hours, and that is not the norm. I think it was because of this
vaccine diplomacy.
What we heard was they really appreciate the U.S. donations
of vaccines because they can buy vaccines from China or Russia,
but the donations from both the U.S. but then also from COVAX
to which the U.S. is a significant supporter, that is
appreciated.
They also feel that the U.S. quality of the vaccines--
Moderna, Pfizer, J&J--is very high while the Sinovax and
Sputnik vaccines are safe but the effectiveness is not nearly
as desirable, at least in their view and I think the evidence
would bear that out.
So the power of U.S. vaccine diplomacy became very obvious
to me when we were there, but also the stories of the economic
challenges faced by these nations during COVID while they are
still dealing with the Delta variant, et cetera, are pretty
stiff.
This is the case for Africa as well. The IMF estimates that
Africa, the continental GDP contracted by 1.9 percent in 2020
and that was the largest regional contraction on record.
There is a growth prediction of 3.4 percent in 2021, but
that is compared with a global growth projection of about 6
percent. The recent surge in coronavirus cases has lessened,
but Africa continues to struggle, as we all do, with the Delta
variant.
Thus far, only about 1 percent of Africans have been fully
vaccinated and the AU's relatively modest goal of getting 20
percent vaccinated by the end of 2021 seems pretty hard to
reach.
The U.S. has to recognize that the continent is not going
to reach its potential economically on the issues we are
talking about today until the virus is contained. That is the
case for Africa and elsewhere.
So what I want to ask is each of you to give us your own
thoughts about what the U.S. should do. In July, the U.S. began
making its first COVID-19 vaccine shipments to Africa, the
ultimate goal of sharing 25 million doses this summer across
the partnership in connection with the African Union.
The Biden administration's recent vaccine donations are a
good step. The reality is that Africa will need about 200
million doses to stem the crisis and meet its year-end goal.
So given the crying need to do better on vaccination in
order to both help people but also create the conditions that
are necessary for robust economic activity, what do each of you
have to recommend to us in the U.S. Senate with respect to U.S.
vaccine diplomacy in Africa?
Ms. Liser. May I?
Senator Kaine. Please.
Ms. Liser. Thank you, Senator Kaine.
At the Corporate Council on Africa, we are very focused on
this issue you are talking about. In fact, we had just
yesterday as a part of our U.S.-Africa Business Summit a
session on vaccine access, and we had in that session
executives, some CEOs from major companies in the U.S., some
that are members of CCA, Pfizer, Johnson & Johnson, Abbott and
others, who are playing a role.
We had the CEO of a South African company that is producing
vaccines with the support of Johnson & Johnson. The key here
is, is that collaboration is definitely needed. It is needed
between the African Union, the African Medical Supply Platform,
the AMSP, that they have put into place.
If I can just say I commended them. When the COVID pandemic
was sort of at its start, all the African countries were
competing against each other to try to get vaccines for their
people, and then finding that because others could outbid them
on the market and it was sort of the wild, wild, west was going
on out there, so they would order. They would not get any and
they were competing against each other.
When they put that platform together under the African
Union, they were then able to say, okay, what are all the needs
and then they said, okay, who can supply, and only people who
could supply at the right prices and deliver within 2 weeks, I
believe they gave them, were then contracted to be a part of
that.
So collaboration is important across the continent,
collaboration between government and private sector. For
example, in Ghana, the Government is supporting an effort with
the private sector where the private sector, like banks and
other institutions, are saying we will buy vaccine for our
workers and for every one vaccine we buy for a worker we will
donate one vaccine to the Government, because COVAX has been,
largely, focused on just the health workers.
So the average workers, the average people in African
nations, have not had access. So the private sector has to work
with the Government to say, how can we do better on this?
So that is one of the things that they are doing now is
private sector, basically, boosting the Government's ability to
supply vaccine while also getting vaccine to people that they
need to come to work and to be able to reopen their businesses
because we all know that they took a double hit, not just the
health impact but the collapse of their economies, no tourism,
airlines not functioning, et cetera.
So I would just say that that is the key for government and
private sector working together and then for the U.S. working
with the African Union and with individual countries to supply
vaccine.
Senator Kaine. Thank you.
Senator Hagerty, would you allow me to have the other two
witnesses weighing in on this? I have hit the end of my time,
but I think it is an important topic.
Senator Hagerty. Absolutely. Absolutely, Senator Kaine.
Senator Kaine. Please.
Dr. Signe. Thank you very much for the question. According
to the Africa Centers for Disease Control and Prevention, only
about 3.19 percent of Africans had received at least one dose
of COVID-19 vaccines as of July 21st. So that is an extremely
important question, and thank you very much for asking this.
A few elements are important here. Africans are now moving
towards trade and investment and less aid, although under the
current circumstances (COVID-19 Pandemic) aid is important and
should be acknowledged.
However, the U.S. can build on areas of strengths and
distinguish itself from other players by contributing to
investment in Africa in the pharmaceutical sector, in the
vaccine industry, and should also provide broad technical and
financial support to the new African Union, Africa CDC
initiative, the Partnership for the African Vaccine
Manufacturing, which aims to build five vaccine manufacturing
research centers over the next 10 to 15 years.
So here again, we have seen China donating vaccines
extensively to many countries on the continent, so yes, it is
important the U.S. is doing so as well.
But, really, the element of sustained competitive advantage
here will be to partner with African countries, partner at the
continental level, at the subregional level, at the national
level, with strategies which will allow Africa to produce
COVID-19 vaccines, but even more, to produce other vaccines
which are much needed in the continent. We have already seen
some of those partnerships with Pfizer, for example, in South
Africa.
So those are the types of initiatives which should be
accelerated.
Ms. Hruby. I will be brief, Senator. I think we do a couple
things. In the nearest term, we continue to donate as much as
we possibly can.
We also have many are unvaccinated in this country, so have
to balance that. In the medium term, we do deals as the DFC has
done with, for example, the Aspen deal that Landry just
mentioned, which is to produce J&J, and then there was recently
another one with Pfizer and Biovac in Cape Town, and then there
is the partnerships in Dakar, Senegal.
So those are the medium term, which is to try to get the
supply chains working to produce some of the vaccine inputs and
vaccines on the continent.
Longer term, it is research partnerships because this is
not the last pandemic we will see, and their need to ensure
that no one is left behind when designing new medicines and
thinking about the discoveries that will keep us all safe in
the future.
Senator Kaine. Thank you very much. I yield back.
Appreciate it.
Senator Van Hollen. Thank you, Senator Kaine.
Senator Young, I think, is joining us virtually here.
Senator Young. Well, thank you, Chairman, and I thank all
of our witnesses for appearing before the subcommittee.
We have seen how Chinese aid, investment, and trade in the
region have grown in the past decade. These large numbers often
over inflate the value of China's engagement and mask the true
costs that various countries face.
A recent report by Aid Data shows that African countries
that borrow from the PRC have had to sign confidentiality
clauses, set up offshore revenue accounts, and agree to many
burdensome conditions.
To put it indelicately, you might say China sometimes acts
like a loan shark rather than a true partner of various
countries. This is all the more apparent now as countries
struggle to recover from the COVID-19 pandemic, and Communist
China continues to balk at participating fully in debt relief
measures.
Now with that said, I do not doubt that PRC resources can
do some good and are doing some good in the region. So I would
just like to hear from our witnesses what your assessment is of
how, on balance, the effect of Chinese official lending in the
region is impacting the region and actually promoting
development and sustainable infrastructure.
If you can touch on how countries are responding to Chinese
assistance now that some of the true costs of these
arrangements are coming to light.
I would appreciate it. Thank you.
Ms. Hruby. I am happy to start. I would think this speaks
to another question we had earlier about infrastructure, and
the need that is dire on the continent to fill the
infrastructure financing gap.
Many African countries are looking at financing solutions
from China because they have not many other options that make
sense in a political timeline that you all understand and we
understand here in Washington.
You get elected, you need to bring power and roads and rail
to the people and you do not have time to wait 8 years for
long-term processes by multinational institutions.
So China brings a fast solution to that. African partners
are not naive in that process. They understand that there are
tradeoffs to be made, and often they come to that because there
are not many alternatives.
You had asked earlier, Senator, where are American
companies on infrastructure, and I think outside of the digital
space most of them are missing. They are not there, right.
If you look at the largest EPCs, engineering, procurement,
and construction companies, in the world, of the top 10, seven
are Chinese. There are the Bechtels every once in a while.
There are a few, but we are not rapidly looking for these type
of opportunities to build transport infrastructure on the
continent.
I think we have to look at areas where we are. Look at what
Google and Facebook are building when it comes to undersea
broadband cables. Look at the potential the transformative
potential of SpaceX's Starlink, which could do last-mile
internet at a way that completely leaps over the Huawei and
ZTE-built 2G, 3G infrastructure. It is going to be direct from
satellite.
I think we have to look at those opportunities. I think to
the senator's question about an assessment, an honest
assessment, listen, those roads that are built by Chinese
companies sometimes they carry Coca Cola and sometimes they
carry PNG products, and they allow people to get to clinics
faster and they allow people to go to school.
So those roads and transport infrastructure has a positive
impact. The question is, is the debt worth it? Is the debt
worth it at the terms that it is being given, and is it being
used to actually be efficient in terms of generating growth?
Debt is not a problem in and of itself. Bad debt is taken
on when you cannot afford it and when it is used for the wrong
ways. I think we have to break down the issue of indebtedness
in African markets. Many, many African countries are not even
at their limits in terms of the GDP debt ratio.
We are talking about specific countries. Zambia is,
obviously, one where indebtedness is an issue. Not all African
countries are in that boat.
I think we always have to be aware of averages, right? The
average African country is the size of Montana. But talking
about it that way does not make sense when you have a Nigeria
that is 200 million person versus a Namibia, which is 2
million, right.
Averages are a challenge and regional kind of
generalizations can be a challenge as well. So I think the
Chinese footprint in African markets when it comes to
infrastructure is a mixed bag.
It has gotten better over time. You do not see the crazy
projects that you saw of the kind of white elephant in the
stadiums that we saw 10, 15 years ago. It has made a march
towards the market. So I will stop there.
Senator Young. Could I top off with you, briefly? I am
grateful for your response there, for your fulsome response.
Do we see multinationals--the IMF comes to mind, maybe the
World Bank--bringing more transparency to the terms or
encouraging these countries to learn from lessons that the
multinational institutions have learned?
I am not suggesting that all the countries or leaders are
unsophisticated, but sometimes they are new to these
arrangements.
So have multinational institutions been helpful in
improving the terms that we are seeing across the continent of
Africa as it relates to infrastructure investment from
Communist China?
Ms. Hruby. Those institutions, certainly, bring with them
high levels of ESG standards. So environmental, social,
governmental, community engagement, conversations need to be
had to ensure that an infrastructure project has long-term
sustainability.
Those processes have a downside. We understand that. The
more you inject consultation and transparency in something,
sometimes it takes longer.
You know how that is in the Senate. Think about when you
try to go to a dinner and you have to show that it is less than
$35 or whatever the limit is because there is rules and things
take time.
So when countries look for fast mobilization of resources
when it comes to infrastructure, they look to entities and
partners like China, like Turkey. China is not the only one
that can move quickly on infrastructure.
So I do think it is a situation whereby they do bring
higher standards. Sometimes those standards take longer to
implement the projects.
Senator Young. Thank you. Anyone else, if I have remaining
time? I think there is 1 minute left.
Senator Van Hollen. Yes, please.
Senator Young. I will just ask a related question. What has
been the impact of the G-20 debt service suspension initiative
and the common framework in terms of promoting sustainable
investment and economic recovery in Africa, and what are the
consequences of China not participating fully in these
initiatives?
Ms. Liser. I wanted to actually just add two quick points
on your previous question, Senator.
Senator Young. Please.
Ms. Liser. One of them is on the fact that a lot of people,
including in Africa, do not often give the U.S. credit for what
we are doing in infrastructure through the Millennium Challenge
Corporation.
We have invested, I think it is over $11 billion in
infrastructure, in ports and roads, in energy production on the
continent, and we have the highest standards for it.
I serve on the MCC Advisory Committee, and so African
countries, when they qualify, they do the right things, they
will have all the transparency criteria that are there, and I
think that one of the things we need to do more of is to
encourage Africans to meet the MCC criteria so that this
infrastructure gap that they have can be met with U.S. dollars
and U.S. companies that can provide that infrastructure.
I think the other point is that in the past, the Africans
would be pushed and urged by international institutions to take
the lowest priced bids. That has now shifted.
There are new rules in place which talk about dollar for
value and lifecycle cost, where just because somebody gives an
offer and a bid that is the cheapest does not really mean that
it is the best for you.
Maybe you get that road and 3 years later it has fallen
apart, and there has been some experiences of that in Africa.
So if you get quality of roads and airports and others that
are built, that is critical.
The last point I will make is that, and Aubrey touched on
this, our companies are probably far more competitive in
providing the engineering services and the high technologies,
the GPS, and so forth, that are needed at airports, the kinds
of products that should be used when you are building roads in
Africa.
We do that better. We do not actually, though, construct
the roads.
So I would just say that we need to, again, lean to our own
strengths. Our companies are strong. Then we need to make sure
that African countries know that they have the room to choose
bids that are not the least expensive, the cheapest ones.
Senator Young. Thank you.
Dr. Signe. Thank you very much for the extremely important
question. I will try to address both.
First, debt is not the problem. What is important is
whether we have a productive use of resources (debt) or not,
and I think that is where we have some challenges.
The second point is also the question of transparency. One
of the challenges with some partners is the lack of
transparency in large infrastructure deals, where when engaging
with companies, especially from the U.S. and many of the
European companies, we have more transparency.
Now, what do Africans think? At least with many engagement,
including at the head of state level, there is an
infrastructure gap and many Africans leaders are willing to
work with any of the partners who could help in bridging that
gap.
I think that is a consideration for the U.S. in the
strategy for investment engagement with Africa to take into
consideration the fact that Africans leaders in the private
sector really prefer working with the U.S. when possible, as
shown by Afrobarometer surveys, and also African citizens
prefer, for example, 7 out of 10 Africans prefer democratic and
accountable governance, among others.
Those are values and areas of strength in the United
States. Now when it comes to investing in infrastructure, it is
important to simplify processes, so that the U.S. could act
with the level of agility and of speed that we see in some of
the emerging countries or some of the competitors.
If processes cannot be simplified or if the level of
agility remains asymmetric, I think that partnering with other
players will be critical.
It is extremely important to have the U.S. engage because
when the U.S. is engaged we have better quality, we have more
accountability, and sustainable development will also follow.
Thank you.
Senator Van Hollen. Thank you, Senator Young.
Just to follow up, Dr. Signe, because you have written
previously that attention to African preferences and policy
priorities should be of heightened attention if the United
States is serious about successfully countering the $10 billion
Chinese soft power initiative and better competing with other
global players.
Is that--your response to the last question seemed to sort
of flesh out that idea. Do you want to add anything else to
what you meant in this statement?
Dr. Signe. Absolutely. I mentioned some of these elements
when you went to vote.
So very simply, first, African citizens prefer the U.S.
model of development over the Chinese one and over the European
ones as well. So that is the first element.
Second, African citizens prefer deep democracy, accountable
governance over other forms of governance. So those are clear
areas of strong competitive advantage of alignment with the
U.S.
So African citizens also want their governments to address
some priorities, questions related to unemployment, to
infrastructure, to education, among other.
Those are also, especially on the digital sphere but also
in terms of education, those are areas where the U.S. is
leading around the world.
So we have this unique advantage that the U.S. has. On the
African side, Africa is also offering with the African
Continental Free Trade Area, the largest free trade area for a
number of countries since the creation of the World Trade
Organization, and the Secretary General, I think, intervened
today during the event with the Corporate Council on Africa.
So those are clear opportunities for the U.S. to engage
with Africa at the continental level, at the national level, at
the subregional level, and to have a conversation.
I think the key words here are partnerships, conversation,
and building on those to develop a strategy to capitalize on
U.S.-Africa trade and investment and generate shared
prosperity.
Senator Van Hollen. Thank you. I just have one last
question for you and the panel, because one of your
recommendations is the United States should capitalize on the
African diaspora which is representative and very active in the
United States, including in my state of Maryland, and it is an
incredibly dynamic community, and as you point out, also a huge
opportunity for the United States to engage with Africa.
The challenge is, how would you organize that? How would
you actually provide a framework for input? The diaspora, of
course, comes from many, many different countries.
We have talked about different sectors. Do you have ideas,
and then I just would ask the other two as well, on how the
U.S. Government might want to frame that input.
Dr. Signe. Thank you very much for the question.
Definitely, the diaspora plays an incredibly important role
building bridges, representing, facilitating transaction,
technology transfer, also in public service.
In fact, at the Brookings Institution we organized
recently, and I think that was in partnership with USAID, we
organized a convening with various members of the diaspora to
discuss, engage, and strategize on how the diaspora could be
better involved in the policymaking process, but also in
investment and trade.
I think one of the ways to create a diaspora commercial
diplomacy is to have a council of the diaspora, to have
specific tools including in terms of investment because the
diaspora has been involved with many countries, mostly their
countries of origin, but some of them are many generations--for
many--after many generations.
So it will really be important to create a space for
conversation. So a conversation will really be important, to
have a conversation with many representative of diaspora, the
association, among other, to have a diaspora council and to
have a very proactive commercial diplomacy or what I call
diaspora commercial diplomacy to make sure that the U.S.
capitalize on the assets, on the unique contributions that
those members of the diaspora will provide.
Some countries have even provided financial resources, in
the case of Canada, for example, where they have specific funds
where some member coming from the diaspora are also eligible to
support their business operations, among other.
We can have a broader framework, and the current
Administration has also distinguished itself before the
election by having a diaspora platform.
I think that a diaspora policy can build on the diaspora
platform, on the campaign diaspora platform. Of course,
building and continuing the incredibly important bipartisan
work on engagement that this subcommittee has been known for
and for which we are very grateful. So showing an illustration
on how politics could be done to serve the greater good.
Senator Van Hollen. Do our other two witnesses have
anything to quickly add to that before I turn it over to
Senator Hagerty, who also has some additional questions?
Ms. Hruby. Sure. I will jump in and be brief.
Honestly, Senator, I do not think you are going to organize
the diaspora into a way that is easy to engage with. My
suggestion is, instead, on focusing on higher education. That
is what brought a lot of the diaspora here. That is what keeps
them here, and if you know that the African diaspora,
particularly Nigerian diaspora, is one of the most highly
educated diaspora groups in the United States.
Today, if you look at African leaders, 20 percent of
current African leaders, presidents and heads of state, studied
in the United States. In 2015, we lost out that position of
hosting the most English-speaking African students to China.
Now they go there.
So 25 years from now, where will they have studied? So I
think it is very important to focus on education as one of the
key areas in which to engage the diaspora, because many of them
are organized. Every one of the business schools has an African
kind of diaspora business club. There is ways to do it through
education.
Senator Van Hollen. Thank you.
Ms. Liser. I would like to just add actually some specific
things that I think can be done in terms of promoting U.S.
diaspora trade with Africa.
The Minority Business Development Agency has a way to reach
small diaspora-owned businesses in the U.S. SBA has a program
focused on Africa, and I think if you are looking to link the
U.S. diaspora to the continent, you are looking at products
that they import and export regularly.
This is something that they do informally most of the time,
and that one of the things that we can do is to try to support
formalizing that kind of trade and engagement between small
diaspora-owned, women-owned businesses here in the U.S. with
women-owned businesses and small enterprises on the African
side.
I think that there is room for us to support those small
businesses more. They are the ones who get the least amount of
support in terms of our institutions like the Export-Import
Bank, DFC, et cetera.
I support fully what DFC and Export-Import Bank and others
do. But these kinds of small companies, diaspora-owned
businesses, do not get that kind of support.
So we need to see how we can use the SBA and the Minority
Business Development Agency to work on identifying those groups
and helping them with trading with Africa.
Senator Van Hollen. Well, thank you.
I want to thank all of you for your testimony today. It is,
obviously, a very broad and deep subject, and in a hearing even
a few hours you only begin to scratch the surface.
I think you gave us a lot of really good leads and I
appreciate the specific recommendations that each of you have
made and I know my colleagues do as well. If there are issues
that you think sort of we glaringly left out, we welcome you to
submit any follow-up testimony to the committee.
I also, before closing, want to ask the consent of my
colleagues to enter into the record two additional materials.
The first is a report by the Labor Advisory Committee on
trade negotiations and trade policy on a potential U.S.-Kenya
trade agreement.
The second is a letter from the AFL-CIO director of
government affairs addressing the topics of today's hearings,
and I urge my colleagues to review those materials.
[Editor's note.--The information referred to above can be found
in the ``Additional Material Submitted for the Record'' section
at the end of this hearing.]
Senator Van Hollen. The record in this hearing will be open
until the close of business Thursday.
Without any other statements, this hearing is adjourned.
Thank you all very much.
[Whereupon, at 3:57 p.m., the hearing was adjourned.]
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Additional Material Submitted for the Record
Report by the Labor Advisory Committee on Trade Negotiations and Trade
Policy on U.S.-Kenya Trade Agreement
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______
Letter From AFL-CIO Director of Government Affairs Dated July 27, 2021
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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