In testimony last week before the Senate Foreign Relations Subcommittee on Africa and Global Health Policy, CGD’s Ben Leo called upon Congress to modernize how the United States supports economic growth in sub-Saharan Africa. The hearing was called to reflect on the progress since the August 2014 US-Africa Leaders Summit in Washington and to address obstacles that continue to discourage greater private-sector engagement in the region.
While noting that America had finally “awoken to the growing economic opportunity and importance of sub-Saharan Africa,” Ben provided the subcommittee with three low-cost recommendations to make US engagement in Africa more in line with a relationship increasingly focused on private investment and trade:
1. Pass legislation to expand energy access in Africa.
Roughly 600 million Africans lack access to any form of modern electricity. Energy poverty is a staggering challenge that drastically hinders economic growth and harms health and education. The Administration’s commitment to Power Africa is an important start, but authorizing legislation is key to ensuring continued momentum.
2. Modernize US development finance tools by creating a US Development Finance Corporation.
You can read the full proposal here. The bottom line is that when it comes to development finance, the United States has fallen far behind. The Overseas Private Investment Corporation (OPIC) does important work but remains constrained by an outdated model. Meanwhile other investment-related tools are scattered across a variety of agencies. Consolidation of these authorities into a single US institution would ensure greater coordination and boost effectiveness. Should a new agency be out of reach, Congress should take steps to unleash OPIC.
3. Urge the Administration to pursue bilateral investment treaties.
Bilateral investment treaties encourage private investment by providing foreign investors with protections against certain forms of risk. But despite the benefits and extremely low-costs associated with BITs, the Obama Administration has focused resources on pursuing nonbinding trade and investment framework agreements (TIFAs). These “talk-shops” have nothing on BITs. A nudge from Congress could encourage the Administration to redirect its negotiating efforts appropriately.
You can read Ben’s full testimony here or watch the hearing here, which includes smart questions from the senators in attendance: Chairman Flake (R-AZ), Ranking Member Markey (D-MA), Senator Isakson (R-GA), and Senator Coons (D-DE).