"There is perhaps more reason for well-grounded optimism about economic development in sub-Saharan Africa than at any time in a generation," U.S. Deputy Treasury Secretary Lawrence H. Summers commented during a visit to the continent in May '97.
With the U.S. voting public no longer supportive of large aid budgets, policy makers are turning to trade and investment policies as a way of reinforcing free-market reforms that have spread through much of the African continent since the end of the Cold War. Many African states have embraced reforms attractive to foreign and domestic investors. The World Bank says 37 of 48 sub-Saharan African countries are undertaking economic reforms, including liberalization of trade barriers, privatization of state enterprises and easing of investment laws. Nations -- including Kenya, Ghana, Ivory Coast, Benin, and Uganda -- show impressive economic performances.
The International Monetary Fund forecasts 4.7% growth for Africa as a whole this year and 4.8% in 1988. U.S. imports from sub-Saharan Africa jumped more than 20% last year to $15.2 billion. The European Union, with its colonial ties has the bulk of African trade, but the U.S. is the single largest national market for African exports. Africa accounts for 1% of U.S. trade.
The economic reformers -- the top 12 or 15 -- are the focus of the U.S. proposals which have attracted bipartisan support. A congressional bill authored by Democratic Rep. James McDermott of Washington and Illinois GOP Rep. Philip M. Crane, has drawn support from Newt Gingrich. President Bill Clinton has his own version. There is a critical difference between the two proposals. The McDermott plan would allow quota-free imports of up to $1.2 billion annually in African textiles and apparel. That is 3% of the U.S. market. President Clinton, more wary of domestic textile producers, has left the provision out of his plan. Africa's exports to the U.S. consist mainly of oil and minerals from Nigeria, Angola, Gabon and South Africa. Textiles and other light manufacturing offer a path to development for countries lacking raw-material wealth.
The new U.S. proposals, which address only sub-Saharan countries, reward Africa's most prominent reformers with perks to encourage business-led development. The plans would open a path toward U.S. African free-trade agreements while expanding duty-free access to U.S. markets for thousands of African goods. They also would provide for an African equity-investment fund and for infrastructure financing. Rep. Crane expects the House to take up the bill in October '97.
-- Posted the week of June 2, 1997
Source: The Wall Street Journal The Outlook June 2, 1997 pg. A1