By Virusha Subban
This week, the United States (US) Vice President Kamala Harris is visiting Ghana, Tanzania and Zambia to discuss, among other things, increasing investment between the US and African countries, the economic empowerment of women, girls and young businesspeople, digital inclusion and food security. On her arrival in Ghana earlier this week, Vice President Harris noted that she was “very excited about the impact of the future of Africa on the rest of the world”.
For some time, the United States (US) and countries in Africa have been focused on building strong partnerships that boost sustainability, empower local communities with a focus on opportunities for women and youth, and provide benefits for both African and US citizens.
In August 2022, a fact sheet issued by the US White House noted that sub-Saharan Africa (SSA) played “a critical role in advancing global priorities to the benefit of Africans and Americans. It has one of the world’s fastest-growing populations, largest free trade areas, most diverse ecosystems, and one of the largest regional voting groups in the United Nations. It is impossible to meet today’s defining challenges without African contributions and leadership”.
The White House further noted that its Africa strategy articulated the new US vision for a 21st-century US-African Partnership and the “tremendous, positive opportunities that exist to advance shared interests alongside our African partners.”
To further cement this partnership between the US and African countries, a memorandum of understanding (MoU) was signed between the US Trade Representative and the African Continental Free Trade Area (AfCFTA) Secretariat at the US-Africa Leaders’ Summit (Summit) in December 2022.
The MoU outlined expanded engagement and the promotion of equitable, sustainable and inclusive trade, the boosting of competitiveness and attracting investment to the continent. It was also announced that the US intended to invest USD 55 billion in Africa over the next three years and that USD 15 billion would be deployed in “two-way trade and investment commitments, deals, and partnerships that advance key priorities, including sustainable energy, health systems, agribusiness, digital connectivity, infrastructure, and finance.”
Under the Biden Administration, US engagement with African countries has focused on strengthening these trade and investment relationships in a strategic, cooperative and reciprocal way, under the vision of shared prosperity between Africa and the US.
In July 2021, the Biden Administration announced that it would renew the US Prosper Africa initiative, which started in 2019, with a focus on increasing reciprocal trade and investment between the US and African countries. At the time, the US said that the initiative would focus on sectors such as infrastructure, energy and climate solutions, healthcare and technology.
Seventeen US government agencies working as part of this initiative were given a mandate to, among other things, empower African businesses, offer deal support and connect investors from the US with those in Africa.
At the renewed Prosper Africa launch in 2021, it was noted was the intention was to focus on projects that supported women and small and medium enterprises in Africa.
At the December 2022 Summit, Prosper Africa announced plans to boost African exports to the United States by USD 1 billion through investments and partnerships and to mobilize an additional USD 1 billion in US investment in Africa.
In December 2022, the Biden Administration also noted that since 2021, the US Government has assisted in closing more than 800 two-way trade and investment deals worth around USD 18 billion across 47 African countries. In addition, the value of private investment deals from the US into Africa since 2021 was USD 8.6 billion.
According to the United States Census Bureau, the value of goods exported by the US into Africa in 2022 totalled USD 30.7 billion in 2022. The US imported goods worth USD 41.9 billion from African countries in 2022. This was an increase from 2021, which saw USD 26.7 billion worth of goods exported from the US into Africa and goods valued at USD 37.6 imported from Africa into the US.
The US has often expressed its support for AfCFTA, the Africa-wide free trade zone, stating that it wants to see the growth of Africa’s economic power in the world. All future trade agreements signed between the US and African countries are likely to align with AfCFTA’s trade stipulations, and, considering the Biden Administration’s environmental stance, new agreements will likely also include climate change provisions and tariffs on high-carbon imports.
The numerous reciprocal US-Africa initiatives and partnerships recently announced as part of the US’s renewed, sustainable and reciprocal approach to Africa are leading to a plethora of opportunities for both regions. This strong partnership will assist in ensuring that Africa’s future impact will indeed shape the world.
Virusha Subban is the Partner specialising in Customs and Trade, and Head of Tax at Baker McKenzie Johannesburg
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