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US can manufacture support in Africa

Investing in the industrialisation and technological advancement of the continent will go a long way

Gulf News

It was perhaps typical of US President Barack Obama: Plenty of symbolism, not enough to show for it. During his African safari — to Senegal, South Africa and Tanzania — Obama spoke about the rise of African nations, whose natural resources are increasingly in demand and who are experiencing increased economic growth, in part because of improved governance and communication technology.

Africa needs a better trade deal with the US, the world’s largest economy. The US needs to open its markets to, particularly, manufactured goods from the continent. Manufacturing and value-added products create the jobs and economic growth, which is essential to sustainable development that will reduce Africa’s reliance on the export of its raw materials. This is the importance of the announcement of a $7 billion initiative over five years to double access to power in sub-Saharan Africa. Access to cheap and reliable power has the potential to transform Africa from an exporter of raw material to a producer of finished goods.

Also, the African Growth and Opportunities Act, which is aimed at developing the economies of sub-Saharan Africa by improving their commercial relationship with the US, must be extended and expanded, as Obama promised during his stop in South Africa. The act is due to expire in 2015 and the sooner it is renewed the better for business confidence and investment in the continent.

Beyond opening its markets, the US should reduce its subsidies to its agricultural industry, which by lowing their production costs effectively keep African goods out of its own and other international markets. The abuse of subsidies in developed countries is the cause of the deadlock at the World Trade Organisation, which has prevented a global trade deal that would benefit all.

China has stolen a march on the US by investing in extractive industries and infrastructure development in Africa, but if the US is able to invest in the industrialisation and technological advancement of the continent, it will be able to make up some of the lost ground.