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Investing in Africa: How the U.S. Can Play Catch-Up

Author: Jendayi Frazer, Adjunct Senior Fellow for Africa Studies
August 12, 2014
Fortune.com

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Despite America's pledge to invest $33 billion in Africa's economies, federal trade laws must change to further improve U.S.-Africa trade relations.

President Obama recently announced that the U.S. government, World Bank and businesses would invest a combined $33 billion in Africa's economies. In a historic Africa Leaders Summit last week that brought 50 African heads of state to Washington, the pledge also included another $12 billion in funding for Obama's Power Africa energy initiative.

While these commitments are indeed significant, the president must do more to strengthen trade relations with Africa and catch up with other major economies to make the continent a strategic priority.

U.S.-Africa trade has decreased from a high of $125 billion in 2011 to $85 billion last year, down 32%. By contrast, trade between African countries and China has increased nearly every year over the past decade. Between 2011 and 2013, Africa-China trade increased from $166 billion to $210 billion, or nearly two-and-a-half times more than U.S. trade with Africa.

The President can increase investment in Africa and improve U.S.-Africa trade by taking action in five key areas:

First, the President should push for permanent authorization of the Africa Growth and Opportunity Act (AGOA), a law Congress struck in 2000 to improve U.S.-Africa economic ties. During the Summit, the President called for the legislation to be renewed and strengthened; this needs to be followed through with action by the President and Congress to help incentivize long-term investment.

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