It seems that America has just woken up to realise that Africa is the next destination in terms of growth, development, investment and economic opportunity. Where China has been making strong inroads into the continent, America has been playing a much lesser role. The start of the US-Africa Summit marks the US’s acknowledgment of beginning to play a bigger role in Africa, so that it too can benefit from building the foundations of long-term relationships. Alec Hogg was joined in the CNBC Africa studio by Christopher Wood from the South African Institute of International Affairs. Chris lends some fascinating insights into the burgeoning symbiosis and what America’s involvement signals for Africa and South Africa. – LFÂ
ALEC HOGG: The US-Africa Leader Summit kicks off in Washington today. What does it mean for the transformation of Africa? Christopher Wood, Researcher of Economic Diplomacy at the South African Institute of International Affairs joins us in the studio. Yes, it’s a big day, isn’t it? It’s the first time that America’s given us an indication that it’s aware now that the Chinese – and I suppose, to a greater extent even, the Europeans – have been making the running in Africa.
CHRISTOPHER WOOD: Yes, absolutely. In particular, the forum or style that they’ve chosen to have a Leader Summit speaks to the fact that they’re trying to catch up with their competitors. The Chinese have a pre-existing forum that they host every two years. The EU have their Summit, which they host every few years – it’s irregular – and even the Japanese and the Turkish are getting into that type of game, so I think this is competitive pressure. The Americans realise they need to work hard to keep their foothold in Africa.
ALEC HOGG: It’s about time.
CHRISTOPHER WOOD: Yes, I think so. Look, America is very involved in the continent, but I think their involvement could really be deepened in a number of areas. They’re still very involved in a military/security type of way, but they’re only just getting into the game of investing in hard infrastructure and really redoubling their efforts to solidify trade links, and I think this is a good forum to help advance that.
ALEC HOGG: Christopher, what about democracy, because you do have that war waging at the moment. The Chinese, clearly, have their version of democracy and the Americans – a very different one. Is this part of the outreach of maybe, the good side of America, to say ‘let’s try to engender further democracy on the continent’?
CHRISTOPHER WOOD: I think to an extent… Democracy is, of course, always important to the American agenda. No American lawmaker can go and say that we’re going to deal very easily with a dictatorship without justifying why they’re doing it. I think this is first and foremost, America realising that it’s in their interest to get more involved in the continent. Their involvement thus far, has been quite centred around getting resources as the Chinese and the Europeans are as well, but increasingly, these international actors are thinking about Africa 20 years down the line. They realise that if they can build strong ties now, then as the continent develops, as the middle class and as companies become more dynamic, then you really can have opportunities for trade and investment on the continent that are going to be very important. Africa’s the last investment frontier and when it reaches its potential, you want to make sure you have the diplomatic ties in place to take advantage of that.
ALEC HOGG: They haven’t really used the African relationship that they have in the White House.
CHRISTOPHER WOOD: Not particularly. The White House is in a difficult position of course, because they are stuck with a Congress that is not very friendly and make it difficult to do anything, really. I think the cornerstone effort they’ve had thus far, is the African Growth and Opportunity Act, which gives about 43 African countries access to the U.S. market based on certain conditions, but it gives you duty-free access without having to give up anything in return.
ALEC HOGG: Tell me about this AGOA. We’re sitting in South Africa. We have quite a lot of first world types of operations, we are very close to China, and we have a Government that wants to get ever closer to it – in fact, to the degree that there’s often criticism of the way the United States does things and yet, the U.S. are the ones who are giving us duty-free access. Is there likely to be any kickback, or is it just the wrong timing right now, for the U.S. to pull South Africa into line?
CHRISTOPHER WOOD: Well, it’s a good question. It is being debated whether South Africa should be graduated out of AGOA. The deal as originally envisioned when it came out in the early 2000’s, was for low, very poorly developed countries that were growing at negative rates, to try to rekindle their development. South Africa doesn’t fit that image anymore. We’re a middle-income country that is going in the right direction. There is debate and there’s pressure to perhaps graduate South Africa, but I don’t see it happening anytime soon. It will be difficult, I think, for the United States to justify removing South Africa, particularly since we’re so interconnected with our neighbours. It’s unreasonable to expect Botswana or Namibia to export processed goods to the United States, unless they can do it through South Africa’s manufacturing capacity.
ALEC HOGG: I’m sure many people are relieved to hear that the practicalities thereof, will work. I was in China, probably five or six years ago, at either the inaugural (immediately after the inaugural), or the second summit between Africa and China. For 25 kilometres from Beijing International Airport through to Beijing, you had African murals on the side of the roads. They really, really went aggressively to make the leaders feel happy. Do you think the Americans would be doing something similar (I don’t mean the murals), but to make them feel welcome?
CHRISTOPHER WOOD: I think that meeting with President Obama is a nice, symbolic card that the Americans can play because he still does have that gravitas as being the leader of the Free World, particularly this President. I don’t think they’ll be quite as outward or quite as grandiose as the Chinese were but then again, I think the fundamentals of the relationship are perhaps even better with the United States. Chinese trade is primarily natural resources. It’s about getting access to the types of things that would drive Chinese development, but there isn’t much scope of African manufacturers to enter the market very easily whereas with the United States you have, increasingly, more manufactured goods being sent to the U.S. They’re increasingly open to those types of trades, so perhaps their reasoning is that they don’t have to work as hard on the image because the fundamentals are relatively strong.
ALEC HOGG: So it’s a really good thing that this is happening, at last.
CHRISTOPHER WOOD: I think so. It’s good in that the leaders get to discuss the way the relationship works and take it forward in a way that’s useful, but it creates soft linkages as well. You just had an interview with someone from Redefine Properties who was talking about seeking American investors, and this is the type of opportunity where you can really build better relationships that lead to those investment deals.
ALEC HOGG: From a South African perspective, what do you think Zuma wants to bring home from this?
CHRISTOPHER WOOD: I think the first priority for South Africa is assuring that we remain in AGOA and that AGOA is renewed when it comes up for expiry at the end of next year, particularly since our motor industry sends a lot of goods to the United States. It’s one of our biggest trading partners for automotive parts so in order to protect that vital industry; I think they’re going to work very hard to make sure AGOA is renewed.
ALEC HOGG: Hopefully, this time around it indeed will occur. Well, that was Christopher Wood. He’s a Researcher of Economic Diplomacy at the SAIIA. That’s all from us here in South Africa. We’re holding thumbs for all the manufacturers in this country, that AGOA indeed, is renewed (of course it will be renewed), but that South Africa remains a part of it. Its interesting Gugu, these international developments that can have such a big impact even when you’re running a relatively small manufacturing business. Just say for instance, the Americans got the ‘hell in’ with us and cut us out of AGOA, it would have a devastating impact on the little bit of manufacturing that we seem to have left here.
GUGULETHU MFUPHI:Â It does seem as though it would potentially be a significant blow Alec, and one that we certainly hope will not happen.
ALEC HOGG: Well, I’m glad to see that you’re off to your other job now, with SAA. Just look after the people and don’t let those lecherous old men do things that they aren’t supposed to, when they move out of their seats.
GUGULETHU MFUPHI:Â Chicken or beef, Alec?
ALEC HOGG: Definitely, always beef, thank you.
GUGULETHU MFUPHI: Well, we’ll leave it on that note.
