JULY/AUGUST 1996 · VOLUME 17 · NUMBERS 7 & 8
E D I T O R I A L
JULY/AUGUST 1996 · VOLUME 17 · NUMBERS 7 & 8
E D I T O R I A L
Although the proposal comes from a bipartisan group in Congress that includes liberals such as Representative Jim McDermott, D-Washington, who are probably genuinely concerned about improving the lives of Africans, it reads as if it came from an African desk at the U.S. Chamber of Congress, or maybe from the World Bank.
"We propose a radical shift in emphasis from sustainable development strategies to a private sector and market incentives approach to stimulating economic growth and reducing poverty in those countries in sub-Saharan Africa who are committed to economic reform," reads a draft policy statement from the African Trade and Investment Caucus.
Central to the Caucus' plan is the creation of a U.S.-Africa Free Trade Area by 2020. The plan also calls for eliminating most quotas on African-made textiles and apparel immediately, before the international phase-out of the global textile quota system (the Multi-Fiber Agreement) in 2005; diverting $300 million annually from aid programs to a U.S.-Africa Trade and Investment Partnership which would support privately managed equity funds for Africa; and expanding the U.S. Export-Import Bank's coverage in Africa, a move designed to increase U.S. investment in Africa.
The various elements of the Caucus plan would do far more to promote U.S. business interests than it would to facilitate economic development in Africa. The explicit goal of the Investment Partnership and expansion of the Ex-Im Bank's role in Africa is to promote U.S. private investment and joint ventures in Africa with various sorts of investment guarantees and subsidies.
But by far the worst element of the Caucus plan is the creation of a U.S.-African free trade area. Linking the world's richest and poorest nations in a free trade area is an idea so outlandish that even the U.S. Trade Representative suggests it is premature.
To the extent that African nations possess a market with enough purchasing power to interest U.S. companies, U.S. imports would completely overwhelm African manufacturers and service providers. Already, goods produced in newly liberated South Africa are flooding into African shops, displacing locally made products; that problem would be exacerbated by several orders of magnitude were a U.S.-Africa free trade agreement put into place.
Compounding the disastrous consequences of a free trade agreement, the Caucus draft policy statement proposes that only African countries having "established or making continual progress towards establishing a market-based economy" would be eligible for participation in the new U.S.-Africa economic institutions and agreements. To determine eligibility, the Caucus would have the U.S. Agency for International Development grade African countries on trade policy, property rights protections, tax and regulation policies and privatization.
To place additional pressure on African countries -- beyond that already exerted by the International Monetary Fund and World Bank -- to liberalize their economies is a reckless and irresponsible act. Coming from those who claim to be friends of Africa, it is inexcusable.
The draft policy statement says the results of structural adjustment policies "have been mixed." In fact, they have been disastrous, setting Africa back decades. Per capita income in Africa fell by 10 percent during the structural adjustment-dominated 1980s. Uganda is the sole African country of any size to attain its highest per capita income in the 1990s; in contrast, more than a dozen African countries first reached their present per capita income in the 1960s or earlier, according to the UN Development Program.
What Africa needs is not the private sector, market-driven approach advocated by the Caucus, but a much deeper, internally driven version of the so-called sustainable development approach the Caucus now proposes to abandon.
Politically, such an approach would involve supporting the growth of non-governmental groups and civic organizations as part as the nurturing of a democratic and participatory political culture.
Economically, it would stress investing in people (human capital, in economists' terms), especially by making healthcare and education widely accessible. In its agricultural policy, it would promote food self-reliance, first among rural families and then among entire countries, through land reform, support of cooperatives and democratization of credit. Similarly, in urban areas, governments would lend special support to micro-enterprises, promote cooperatives, provide widespread access to credit, protect businesses producing for local needs and generally approach involvement in the economy, including through ownership of productive enterprises, pragmatically.
Any kind of serious development strategy for Africa will require debt relief, so that countries are not forced to promote exports and can spend earnings on domestic needs. While there is a role for citizen-to-citizen contact in sharing skills, exchanging information and reporting prior experiences in working toward sustainable societies in Africa, the primary contribution industrialized countries such as the United States can make is to write off African countries' crushing foreign debt of $150 billion.
Although unlikely, such an approach is still possible. The best news about the Caucus plan is that it is still in discussion stages. Its initial proponents still have time to abandon it.