Where Is the Go in AGOA? Some Ideas for Promoting U.S.-African Investment

This is a joint post with Ben Leo.It’s the season for trade talks with Africa again. The annual AGOA Forum, which opens today, is one of those ideas that sound terrific:  assemble all of the relevant U.S. and African policymakers to discuss ways of generating greater commerce.  Last year the forum was in Nairobi; this year it’s two days in Washington and then three days in Kansas City (consistent with the administration’s food security focus).Under The African Growth and Opportunity Act (AGOA), nearly all African goods gain duty-free access to the U.S. market.  It is partly responsible for the solid, yet not overwhelming, growth in non-oil trade over the last decade.  As originally envisioned, the AGOA Forum should catalyze additional programs, initiatives, or trade access reforms that will increase trade and investment flows.In practice, it’s turned out to be little more than a high-powered talkfest.  Every year, U.S. cabinet and sub-cabinet officials stand at a podium and deliver more or less the same speech (surprise theme:  trade and investment are important).  What’s missing are modest yet concrete actions that could take the U.S.-Africa economic relationship to the next level.Some ideas that we’ve been cooking at CGD (and possible “deliverables” for the next AGOA Forum) include:

1. Launch an Africa Doing Business Facility based on the MCC model of using third-party data to identify a handful of real reformers and then concentrating business climate reforms in those countries.  The U.S. has a lot of excellent one-off projects in this area; they could be deployed in a more strategic fashion that creates a much bigger incentive and signaling effect.
2. Negotiate investment treaties with a handful of African countries.  Providing U.S. investors with key protections will lead to greater private financial flows and help support private sector led development in Africa.  Investment treaties have been almost entirely absent from the USG’s engagement with African countries over the last 20 years.  It’s time to deploy this underutilized tool. (See Ben Leo's new paper.)

Both of these suggestions are fairly low-cost in terms of budget and political capital.  But they could make a real difference to Africa’s burgeoning private sector?and help to put some meat on the stale bones of the AGOA Forum and U.S. trade and investment policy overall.