Trade between the U.S. and Africa has continued to grow for several years. The Africa Growth and Opportunity Act (AGOA) has primarily influenced this trade partnership since 2000. The Act gave African countries a competitive edge by providing duty-free export of 6,500 products from Africa to the U.S.
Africa is home to some of the world's fastest-growing economies, which are playing an increasingly important role on the global stage. With a median age of 19.7 years and a potential population of 1.7 billion by 2030, this continent is well-positioned for investments from U.S. businesses that seek opportunities to meet the growing demands of modern products and services.
The Strategic Move from Biden Administration
Early this year, President Joe Biden kicked off the Prosper Africa Build Together Initiative with a goal to "substantially increase two-way trade and investments between the U.S. and Africa by connecting U.S. and African businesses and investors with tangible deals and opportunities."
The Biden administration aims to make this campaign the "centerpiece of U.S. economic engagement with Africa." The main goal is to work with the African diaspora living in the U.S. to bolster trade with Africa. The African Continental Free Trade Area (AfCFTA), which is seeking to connect a continental market of $3.4 trillion and 1.3 billion people, also provides an excellent opportunity for the U.S. to strengthen its economic ties with Africa.
Working with diaspora-owned businesses in Africa is thus an integral part of this initiative. According to a U.S. official, Prosper Africa Build Together is a push to work with individuals who understand "social nuances" on the continent.
At the recent US-Africa business summit, Don Graves, the U.S. Deputy Secretary of Commerce, said, "African diaspora has a tremendous advantage in African markets relative to their peers because they understand the market dynamics and social nuances better."
Opportunities and Challenges
The opportunities for U.S. export to Africa span several sectors and countries. These include aerospace and defense, apparel, automotive, machinery and equipment, medical supplies and devices, digital services, and chemicals.
However, the Prosper Africa plan will focus on clean energy, agribusiness, health, and transportation infrastructure. The government requested about $80 million for this initiative in the president's budget proposal in May. Primarily, the aim is to focus on women and equity, and by extension, small and medium-sized enterprises (SMEs).
On the flip side, there's a need to address some challenges. As the U.S. looks to leverage the African diaspora in trade with Africa, African countries may need to effectively engage their diaspora in the U.S. to harness human, social, and financial capital.
Increasing U.S. exports to Africa will also provide countries across the continent with a viable alternative to other markets that don't adhere to the highest quality, transparency, and social responsibility standards.
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