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Africa in focus

Africa in the news: AGOA forum held, Zimbabwe asks for international economic support, South Africa fears recession, and South Sudan peace deal signed

 

AGOA forum highlights measures to deepen U.S.-Africa trade partnership

 

At a pivotal moment in the U.S.-Africa trade partnership—and in light of the recent reauthorization of the African Growth and Opportunity Act (AGOA)—U.S. and African government officials, private sector actors, and civil society leaders met in Libreville, Gabon for the annual AGOA forum from August 24 to 27. The summit provided a unique opportunity for African and U.S. leaders to review the past performance of their mutual trade relations and discuss the future of the U.S.-Africa trade strategy, of which AGOA is a central feature. AGOA, which provides 39 African countries tariff-free access to U.S. markets, was implemented in 2000. By 2014, the preference system had contributed to a 250 percent increase in non-oil trade between the U.S. and its African partners, up to $4.4 billion. Yet, as many analysts note, more than two-thirds of African imports to the U.S. under AGOA are still energy-related products (including oil), and major oil- and mineral-exporting countries have largely failed to diversify their exports away from extractives during this time. Non-oil exports under AGOA are dominated by South Africa (60 percent) while Kenya, Lesotho, Mauritius, and Swaziland also comprise sizable shares. Furthermore, U.S. officials observed that challenges like weak transport and electricity infrastructure, lack of credit, corruption, and complicated bureaucracy still hamper African countries in achieving their full trade potential.

U.S. Trade Representative Ambassador Michael Froman stated at the forum’s opening ceremony that to overcome the supply-side factors limiting African exports, “tariff preferences alone are not sufficient,” and that the future of U.S.-African trade will increasingly depend on “programs that can support Africa’s own priorities and help build the continent’s capacity to trade competitively in the 21st century global economy.”

 

Zimbabwe welcomes Western re-engagement in the economy

 

During his state of the nation address on Tuesday, Zimbabwean President Robert Mugabe presented a 10-point plan for the economy. The plan, also known as ZIMASSET, includes boosting agricultural growth, encouraging private sector investment, and fighting graft. Mugabe pinned his hopes on projects signed with China to help spur the economy. He further promised to repeal laws that hamper business and tackle corruption. More importantly, in sharp contrast to his usual disdain for the West, Mugabe called for Western support and assistance from the International Monetary Fund and the World Bank for the ailing Zimbabwean economy. Improving relations with these international organizations would lead to the “opening up of new financing avenues, for long overdue reforms and development cooperation,” he stated.

The parliament, however, questioned his economic policies and openly jeered him during the address, calling his plans insufficient for reviving the deteriorating economy. Over the last few weeks, more than 20,000 workers have lost their jobs in Zimbabwe, and its earlier 3.2 percent economic growth forecast for 2015 has been cut to just 1.5 percent. The country is also suffering from severe food insecurity due to drought and crop failures. According to the United Nations World Food Program, around 16 percent of the country’s population will lack reliable access to sufficient food later this year. The Harare-based Mass Public Opinion Institute’s survey results released on Tuesday suggested that the general public thinks that economic conditions in Zimbabwe remain “gloomy” and do not believe in the president’s promise of economic take-off.

 

Slowdown in agriculture, mining, and manufacturing trigger concerns of recession in South Africa

 

South Africa’s second quarter GDP figures were released this week, indicating a decline by 1.3 percent from last quarter, driven by contractions in agriculture (17 percent), as well as mining (6.8 percent), and manufacturing (6.3 percent). According to Agence France-Presse, the decrease in agriculture stems from severe droughts in the first quarter, which reduced output during the harvest season in the second quarter. The mining industry has also suffered shocks due to tensions with the government and significant job losses. Both the mining and manufacturing sectors have been subjected to 99 days of load-shedding (power outages) in the first quarter, which severely decreased output. Some analysts predict that further economic slowdown in China could exacerbate South Africa’s downturn by decreasing demand for its commodities from its top trading partner.

 

South Sudan’s President Salva Kiir signs peace deal amid international pressure

Author

Amy Copley

Research Analyst and Project Coordinator - Africa Growth Initiative

 

Confronted with widespread international pressure, South Sudanese President Salva Kiir signed a long-awaited peace deal on Wednesday but with several reservations, including the mandate to demilitarize Juba, a stipulation that he consult the vice president on policy matters, and reports of ongoing fighting between government and rebel forces. While the U.S. and United Nations have welcomed the peace deal, some analysts have stated that the deal is unlikely to last given Kiir’s statement suggesting that he doesn’t view the deal with the rebels as final and that the rebels have repeatedly breached prior agreements.

Last week, Kiir had walked away from signing the peace accord in Addis Ababa, condemning it as unfair and unsustainable. Since then, the country had faced threats of “immediate action” by the United Nations, further international sanctions, and the imposition of an arms embargo from the U.S. and other regional leaders if the peace deal was not signed.

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