Monday, 8 July 2013

Open Letter to President Barak Obama- a Partnership for Africa to build Africa, for Africans

Dear Mr President,

The United States has and will be a major strategic partner of Africa for a long time.
In that context your recent visit is a good opportunity to analyse how the mutual interests of the USA and Africa can best be served.

You will have noticed that not everyone in Africa was happy to see you. In addition, certain factions operating on this continent represent a threat to your security interests. Those who are deprived (especially the young) see the United States as an oppressor whilst those who have, or are aspiring to, a better life find great inspiration in the American Way. 

Trade between USA and Africa is characterised by the export of commodities (mainly oil) from Africa to the USA and the import of manufactured goods and intellectual property in the opposite direction. This is not sustainable because it is heavily imbalanced, not in terms of value, but in terms of value added.

A striking feature of the post 2008 downturn is the path of the US recovery. Since 2009 the US has added 7 million jobs to the payroll, is now only 2 million jobs below the all-time 2008 peak, and is steadily raising employment levels monthly in excess of its labour force growth. The way in which this has happened represents a lesson for Africa in particular.

Despite an adverse investment climate, small to medium enterprises (SME’s) in post 2008 USA contribute just over 50% of your country’s GDP. Significantly, SMEs provide important opportunities for US citizens to develop entrepreneurial skills. In the USA the SME is a realisation of the American Dream for millions and SMEs are celebrated for their contribution to the development and growth of efficiency in the country, particularly where innovation, job generation, and international competitiveness are concerned.

Compare this to Africa where SMEs and the informal sector cannot participate in local, intra Africa, and international trade. On a continent where half or more of the population is under 25 years of age, in which Africa remains at 2.7 % of global trade whilst about 15% of the world's human population live here, this is a socio economic powder keg.

It is the extent to which the African economy is capacitated to celebrate, nurture and grow SMEs that will determine whether that powder keg can be defused.

And this, Mr President, is where you come in. The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of the African economy in a competitive and challenging environment is inarguable. Growth in African employment leads to increasing markets for your country’s products and decreasing threats to your security. Key to this growth is the type of “yes we can” entrepreneurship which the hallmark of American SME’s. The abundance of African natural resources indicates that entrepreneurial efforts on this continent should be focussed on beneficiation. 

Whilst the African Growth and Opportunity Act (AGOA) is significant, what it vividly reveals is the need for greater trade capacity assistance and the need to address "supply side" issues in Africa. The greatest potential to build local economic capacity which the US could make is in sharing technology through training to empower young entrepreneurs to convert our raw materials into products needed by American businesses to better serve their markets. This means that the AGOA ship needs to change course in the direction of business to business partnerships based on capacity building.

How about it, Mr President?