US-Africa Economic Relations at the State Level

On November 6th, 2019, the Wilson Center Africa Program held the fifth annual Signature Event of the Brown Capital Management Africa Forum, “U.S.-Africa Economic Relations at the State Level.” Dr. Monde Muyangwa, Director, Wilson Center Africa Program and Mr. Keith A. Lee, President, Brown Capital Management gave opening and welcoming remarks at a pre-event brunch discussion for speakers, state representatives, U.S. federal and Congressional officials, African officials and civil society and private sector stakeholders.  Dr. Witney Schneidman, Senior International Advisor for Africa, Covington and Burling LLP and Member of the Wilson Center’s Africa Program Advisory Council delivered the keynote address assessing Africa’s importance and the current state of play in U.S.-Africa economic relations. Dr. Schneidman identified four key reasons why Africa matters to the U.S. and the world: demographics, governance, economics, and the perception gap (the gap between the realities on the continent and how many perceive the continent). He also noted the long-standing trend of U.S. engagement moving from aid to trade including new initiatives such as the Better Utilization of Investments Leading to Development (BUILD) Act and Prosper Africa, and the durability of bipartisan support for U.S. policy in Africa across several administrations, while noting some missed opportunities, including the fact that that senior-level engagement between the U.S. and African partners has not kept pace with other U.S. initiatives or with other major international actors.

The brunch was followed by a public discussion during which, Congresswoman Jane Harman, Director, President, and CEO, Wilson Center, welcomed guests and Mr. Keith A. Lee, President, Brown Capital Management introduced the Africa Forum. The event consisted of two panels. The first panel focused on African and U.S. federal perspectives on why Africa matters and on the current state of U.S.-Africa economic engagement, and featured Mr. Abdoul Salam Bello, Adviser to the Executive Director, The World Bank Group; and Ms. Robyn Kessler, Executive Director, Middle East and Africa, International Trade Administration, U.S. Department of Commerce. The second panel focused on U.S.-Africa economic engagement from the perspectives of five U.S. states, and featured Mr. Joseph Bell, Regional Manager, International Trade Development, Enterprise Florida; Mr. John Elink-Schuurman, Manager, Virginia Leaders in Export Trade (VALET) Program, Virginia Economic Development Partnership (VEDP); Mr. Abdiwahab Mohamed, Regional Trade Manager, Africa, Middle East, and India, Minnesota Trade Office, Minnesota Department of Employment and Economic Development (DEED); Dr. Alain Mortha, Manager, Business Attraction and Retention, Office of International Business Development, Pennsylvania Department of Community and Economic Development; and Ms. Jessica Reynolds, Senior Director, Office of International Investment and Trade, Maryland Department of Commerce. Dr. Muyangwa moderated both panels.

Mr. Bello opened by assessing why Africa matters. He noted the increasing presence and engagement of other international actors in Africa, including India, Japan, China, and Russia, who recognize the enormous opportunities the continent offers. He highlighted Africa’s rapid population growth and increasing economic integration through the African Continental Free Trade Agreement as key opportunities, while emphasizing that these dynamics also pose challenges to African countries. Assessing the current state of U.S. engagement with Africa, he noted that the U.S. is a good partner for the continent, which offers a different way of doing business than other countries, especially through its strong accountability mechanisms. He cited the World Bank’s Doing Business report, and noted that many African countries are among the top performers in regulatory reform, for which he credits strong leadership committed to reform and taking the private sector seriously. He recommended leveraging diaspora populations to build bridges between U.S. states and African economies and to develop an investment platform, increasing engagement between U.S. state chambers of commerce and their African counterparts, as well as consideration of more platforms (or better leveraging existing platforms) to enhance on-the-ground capacity—such as establishing a “Peace Corps for business” or the Mandela Fellowship Program.

Ms. Kessler described how the U.S. Department of Commerce, and the U.S. federal government as a whole, works to support and enhance U.S.-Africa economic ties. She highlighted the work of the U.S. Export Assistance Centers, which are the first point of contact at the federal level for American companies looking to do business overseas. The Department of Commerce also has a network of Foreign Commercial Service Officers serving at U.S. embassies, who provide on-the-ground information and perspectives for companies looking to enter foreign markets. She discussed several major federal initiatives, including the recently-passed Better Utilization of Investments Leading to Development (BUILD) Act, which created the U.S. International Development Finance Corporation (DFC) and aims to boost federal support for investment opportunities in Africa. Ms. Kessler outlined some of the government’s other key initiatives, including the African Growth and Opportunity Act (AGOA), the President’s Advisory Council on Doing Business in Africa (PAC-DBIA), and Prosper Africa. She emphasized that the federal government is focused on engaging with the private sector and helping develop a more level playing field for companies by identifying risks and working with African governments to identify and resolve issues in order to improve the investment climate. Ms. Kessler underscored that the objective of Prosper Africa is to increase bilateral trade between the U.S. and African countries by synchronizing the capabilities and initiatives of all U.S. government agencies, facilitating transactions, and building long-term African capacity in order to establish stronger business climates and reduce trade barriers for mutual benefit.

The second panel featured state representatives from Virginia, Minnesota, Maryland, Florida, and Pennsylvania. Each of the speakers was asked to speak to five issues:  1)What is the profile, scope, and trajectory of their state’s economic engagement with the continent (including key sectors and value) and which are the top three African countries with whom their state is most economically engaged? How many jobs have been created through these economic relations? 2) What are the key policies, programs, and infrastructures underpinning their state’s economic engagement with Africa? 3) How has their state leveraged the African diaspora to facilitate economic engagement with Africa? 4) What are the top two challenges that their state has faced in trying to foster economic engagement with Africa? 5) What are their top 2-3 recommendations for expanding and deepening U.S.-Africa economic relations?

The panel began with remarks by Mr. Elink-Schuurman from the Virginia Economic Development Partnership (VEDP). VEDP is Virginia’s economic development agency, with a $6 million annual budget to help Virginia companies export. The VEDP international trade team includes around 20 people stationed in 5-6 field offices around the Commonwealth. In FY18, the international trade team helped around 330 Virginia exporters, who generated approximately $794 million in export sales, resulting in about 7,200 trade-supported jobs. The top three markets for Virginia exporters in Africa are South Africa, Morocco, and Nigeria. He explained that VEDP supports Virginia companies looking to export their products through initiatives such as organizing travel for companies to potential markets—including group trade delegations, independent visits, and trade shows. They also conduct extensive market research to help companies understand the barriers to entry, and have conducted 145 research projects over the past decade. VEDP achieves this by utilizing a global network of in-country consultants and private sector experts based in 60 countries—including in South Africa. Other VEDP programs include the Virginia Leaders in Export Trade (VALET) Program, a two-year export acceleration program that helps companies write an export strategy by identifying priority markets, determining entry strategies, finding potential partners, conducting due diligence, and building a strong business case. The Global Defense Program helps Virginia-based defense firms export internationally, and facilitates participation in AFRICOM’s annual “Africa Endeavor” symposium. VEDP has also worked with the diaspora through the Africa Network Initiative. Mr. Elink-Schuurman observed that the key challenges for companies looking to do business in Africa are developing a market entry strategy and conducting due diligence. To enhance U.S.-Africa economic ties, he recommended improving education and awareness of the opportunities available in Africa, and developing better long-term market data from African economies.

Mr. Abdiwahab Mohamed, from the Minnesota Trade Office, Minnesota Department of Employment and Economic Development (DEED), followed with his remarks. The Minnesota Trade Office has six regional trade managers, with Mr. Mohamed responsible for both Africa and the Middle East. The mission of the Minnesota Trade Office, is to “bring the world to Minnesota, and Minnesota to the world,” and employs about 12 people. Mr. Mohamed noted that while Minnesota has a dynamic export industry, with over $33 billion worth of exports worldwide, only about $178 million went to Africa (less than 1 percent). The top three African markets for Minnesota’s exports were South Africa, Algeria, and Morocco. However, the state hopes to expand that figure, and Mr. Mohamed and the Minnesota Trade Office are developing a strategy for leveraging Minnesota’s large African diaspora population to increase Minnesota-Africa trade and investment. Thanks to the diaspora’s presence, several African countries have already established honorary consulates in Minnesota, and they are helping to attract business to and from Africa. Mr. Mohamed noted that remittances have already established a clear line between Minnesota and Africa, which could be leveraged for investment (as some fintech companies are already doing). Importantly, Mr. Mohamed clarified that Minnesota views trade as a two-way street, and the state is also very interested in attracting investment from the continent. He identified the key challenges to enhanced Minnesota-Africa economic relations as familiarity, distance, and trust. Mr. Mohamed recommended leveraging the diaspora to help to address the issue of trust by building bridges between the state and Africa. He also recommended using the “reverse pitch,” wherein the U.S. Commercial Service or others hold an event for an African country that has identified a specific need, U.S. companies pitch their proposed solutions, and the Millennium Challenge Corporation or Prosper Africa can help the companies finance their investment. He also noted the importance of state and federal export assistance, including through the State Trade and Export Promotion (STEP) Grant Initiative. Mr. Mohamed closed by noting the importance of sustainability—with investments creating new jobs and opportunities that help lift up communities.

Ms. Reynolds, from the Office of International Investment and Trade, Maryland Department of Commerce, then offered her remarks. She explained that the Office of International Investment and Trade is responsible for promoting exports, attracting investment, and marketing Maryland internationally, which it carries out with 9 staff members. Ms. Reynolds observed that in recent years Maryland has had a renewed focus on Africa, opening the state’s first foreign commercial office on the continent in 2012, and sending its first delegation to an African trade show in 2016. She noted that Maryland has a significant African diaspora population, including the second largest Nigerian diaspora in the United States, and that the diaspora has helped to drive the state’s strategy. She observed that some key challenges for U.S. companies looking to do business in Africa are a lack of familiarity with and insufficient knowledge about African markets. Ms. Reynolds noted that Maryland exports $709 million in goods and services to Africa annually, while importing over $1 billion in goods and services from Africa. The top three African markets for Maryland’s exports are Egypt, Nigeria, and South Africa—primarily transportation equipment and machinery, as well as computers and electronics. Maryland’s top three partners for imports from Africa are South Africa, Madagascar, and Egypt—principally primary metals and agricultural products. The Office of International Trade and Investment works to address this through its ExportMD program, which offers resources to Maryland companies and jurisdictions to support export marketing. They partner with the University of Maryland Robert H. Smith School of Business to match student teams with companies in order to conduct in-depth market research. Ms. Reynolds’ office has led delegations to the Africa Aerospace and Defense (AAD) expo in South Africa, and has hosted delegations from African countries to Maryland. There is a partnership with states in Nigeria and Liberia through the Maryland Sister States Program. Ms. Reynolds underlined the importance of the federal STEP program, which provides the Office of International Trade and Investment with resources that help to enhance their presence and effect. She closed by recommending continued support to federal export assistance programs, including the U.S. Export Assistance Centers, OPIC/DFC, and STEP. Ms. Reynolds also called on the members of the African diplomatic corps present to bring delegations from their countries to the U.S., or to hold informational sessions at their embassies, noting that it is easier to attract companies to sector-specific events that do not require them to travel to the continent.

Mr. Joseph Bell, from the International Trade Development department of Enterprise Florida, explained that Florida is an important global hub for trade and commerce, especially with the Caribbean, Central America, and South America. Trade is a core aspect of Florida’s economy, with a two-way merchandise trade of $153 billion, supporting 2.4 million jobs, or 1 in 5 jobs, in Florida. However, current trade between Florida and Africa accounts for less than $1 billion of this total. He underlined the importance of economic engagement with Africa, saying that Africa’s position today is comparable to that of China 25 years ago. Florida hopes to take advantage of its proximity to the continent, and is one of the few U.S. states with a longstanding trade office in Africa (and has recently opened several more). Enterprise Florida works to provide market information via trade shows, industry sector analysis, and information on government agencies and governing dynamics. Their Africa Trade Program is focused on bilateral trade—both supporting Florida companies wanting to do business in Africa, as well as showing African governments and companies how they can do business in Florida and use the state’s position to move and sell products across the Western Hemisphere. To this end, Florida is helping African countries develop manufacturing capacity, so that they can develop products which Florida can then help move and sell. Mr. Bell stressed the importance of developing air links with the continent, observing that Florida’s trade with Morocco and Ethiopia increased following the establishment of non-stop flights between those countries and Miami. One of the challenges that Mr. Bell has noticed is that the “low-hanging fruit” of trade with the Caribbean, Central, and South America have already been developed, and his office now faces more of a challenge getting companies to look to Africa. Another challenge is the lack of education about Africa, and getting U.S. companies to understand the difference between the popular perception of Africa and the reality on the ground. Mr. Bell’s recommendations included doing more to help African governments diversify their economies away from primary commodities and toward industry, having more events and dialogues that come down to the state level, and increasing the number of U.S. trade officials and commercial officers based in Africa.

The second panel rounded off with Dr. Alain Mortha, from the Office of International Business Development, Pennsylvania Department of Community and Economic Development. The Department’s international business efforts are split across two key offices: the Investment Office, which has offices around the world focused on promoting investment in Pennsylvania; and the Trade Office, which has 15 offices worldwide and covers activities in about 51 countries, which helps Pennsylvania companies to trade internationally. Dr. Mortha noted that Pennsylvania has a strong trade connection with Africa. The top three African trade partners for Pennsylvania are Nigeria ($45 million in exports, $2.2 billion in imports), Algeria, and South Africa. In total, Pennsylvania exported $624 million in goods to Africa, while importing $6.7 billion of commodities from the continent—at least 19% of total U.S. imports from Africa. Several African countries invest in Pennsylvania, most notably Mauritius, creating over 4,000 jobs in the state. The state has several programs aimed at attracting investment, including “Keystone Opportunity Zones,” “Keystone Innovation Zones,” workforce development incentives, job creation incentives, financial assistance for technology investments, and a tax credit for research and development. The Office of International Business Development supports Pennsylvania companies looking to invest overseas by conducting trade missions, and also hosts trade delegations from other countries—including many from Africa. To this end, the Office of International Business Development has engaged with the diaspora, including working closely with the African-Caribbean Business Council. Dr. Mortha identified two key challenges facing Pennsylvania-Africa economic relations: cultural differences and differing expectations between American and African businesspeople, and the need to identify African companies with solid business plans. He recommended that the diaspora be bold, noting that even small-scale entrepreneurs can export to the U.S. and that Pennsylvania can support them, and that American and African businesses do more to understand each other’s culture and expectations.

After the event’s conclusion, Mr. Eddie C. Brown, Founder, Chairman, and CEO, Brown Capital Management and Member, Wilson National Cabinet, gave closing remarks on “What Five Years of the Brown Capital Management Africa Forum shows about the Future of U.S.-Africa Economic Relations.” Mr. Brown noted that the Africa Forum was conceived after the 2014 United States-Africa Leaders Summit as a first-in-class platform for looking at over-the-horizon and under-explored questions in U.S.-Africa economic engagement. A key priority of the Africa Forum has been to reframe the conversation around Africa. Mr. Brown quoted Mr. Keith A. Lee, saying “The narrative that we hear about Africa is one of poverty, war, and ineffective or failed states… This has never been the entire story, and today, more than ever, Africa is undergoing enormous transformations that challenge this narrative.” Core to reframing this narrative was ensuring that Africans were engaged as full partners, and represented on the panels of all Africa Forum events. Looking back on five years of the Africa Forum, Mr. Brown summarized some of the key lessons learned. First, Africa is important beyond the context of security risks and humanitarian crises. The continent’s economic dynamism, population growth, business and regulatory reforms, and economic integration highlight its status as a key economic partner in its own right. Second, Africans are driving this agenda. The Africa Forum has looked closely at how African governments and citizens are leading the charge in advancing the economic development agenda on the continent, including through key advances like the African Continental Free Trade Agreement and innovative tools like sovereign wealth funds. Third, public-private cooperation is essential. The Africa Forum itself is an example of a public-private partnership that has brought together differing perspectives on complex issues facing the continent. Mr. Brown observed that the big questions around trade, investment, and development in Africa require an open dialogue between all the involved parties—public and private—to find a shared vision for the way forward. Finally, there is more work to be done to strengthen and deepen U.S.-Africa economic relations. Mr. Brown closed his remarks by expressing Brown Capital Management’s pride in the Africa Forum’s accomplishments, and their great expectations for the future. 

Launched in September 2015, the Brown Capital Management Africa Forum provides a premier platform for substantive and solutions-oriented dialogue on key trade, investment, and development issues in Africa, and in U.S.-Africa relations. Convening business leaders and policymakers, as well as subject matter experts from the United States and Africa, the Brown Capital Management Africa Forum sponsors a series of public events designed to support the development of economic engagement and policy options that advance mutually beneficial economic relations between Africa and the United States. The Brown Capital Management Africa Forum is made possible by the generous support of Brown Capital Management.