Many of Africa’s biggest obstacles to development transcend national boundaries: High transport costs and infrastructure gaps between countries are major hindrances to trade, investment, and humanitarian interventions. So, in recent years, African governments and multiple U.S. federal agencies have made regional integration a top priority. The latest U.S. initiative, H.R. 2571 or “Millennium Compacts for Regional Economic Integration Act,” seeks to open up Millennium Challenge Corporation (MCC) Compacts to regional projects in addition to national ones. Other currently proposed pieces of legislation—including H.R. 2845 or the “AGOA Enhancement Act of 2015”—also seek to provide the agency with a comparable ability to support regional initiatives in sub-Saharan Africa.
On Monday, July 13, the Brookings Institution and The Chicago Council on Global Affairs co-hosted a lunch briefing on the impact of regional integration and how a regional approach by MCC might affect poverty reduction and U.S. interests in sub-Saharan Africa. Panelists included Casey Dunning, senior policy analyst at the Center for Global Development; Ambassador Robert Perry, vice president for international programs at the Corporate Council on Africa; Vera Songwe, nonresident senior fellow at the Brookings Africa Growth Initiative; and Kyeh Kim, principal deputy vice president at the Millennium Challenge Corporation. Nilmini Rubin, senior advisor for global economic competitiveness at the U.S. House Foreign Affairs Committee, moderated the discussion.
Throughout the discussion, panelists emphasized the increasing importance of regional integration to African development challenges and U.S. interests in the region. All too often, African challenges cross borders, and panelists specifically noted the spread of the Ebola virus across West Africa as a particularly tragic example of this trend.
It was also widely noted that significant opportunities also exist at the regional level—unified regulatory environments and easing transit requirements for products between countries could allow American companies to consider large-scale investment opportunities that currently do not always exist at the country-level.
It was also widely noted that significant opportunities also exist at the regional level—unified regulatory environments and easing transit requirements for products between countries could allow American companies to consider large-scale investment opportunities that currently do not always exist at the country-level. These efforts also seem to be gaining momentum—panelists cited the recent enactment of the Tripartite Free Trade Agreement, which proposes to create a free trade area among almost half of all the African Union member states, with a combined population of 600 million people and an integrated domestic product of almost $1 trillion.
Presently, however, restrictions on the MCC’s authorization prevent the agency from fully supporting regional initiatives, and panelists discussed the utility of providing flexibility to support projects at this level.
In particular, panelists felt that MCC could be particularly well positioned to engage with cross-border initiatives given the agency’s track record for supporting infrastructural projects: For example, lack of intra-African infrastructure is seen as one of the greatest obstacles regional commerce and trade.
In particular, panelists felt that MCC could be particularly well positioned to engage with cross-border initiatives given the agency’s track record for supporting infrastructural projects: For example, lack of intra-African infrastructure is seen as one of the greatest obstacles regional commerce and trade. Moreover, MCC has long been seen as a catalyst for policy change, so incorporating regional integration into the agency’s mandate might lend new support to efforts to address some of the bureaucratic obstacles that inhibit the continent’s progress on regional policy commitments.
Panelists also noted some of the obstacles to the proposed MCC’s regional integration portfolio—in particular, several implementation challenges were discussed: For example, MCC compacts currently support development projects that are identified by participating countries, so participating governments would not necessarily chose to prioritize regional initiatives over those that might more directly benefit domestic constituencies. Moreover, the MCC currently has the option to stop its projects should a participating country violate agency rules. Panelist discussed how removing a specific country from a multi-party, regional project could occur without jeopardizing the viability of the initiative. Additionally, the MCC might encounter challenges to working regionally given the seemingly limited scope for cooperation between several of its current partner countries. Panelists also highlighted the role that U.S. businesses could play in MCC-supported projects and encouraged efforts to support increased collaboration with the American private sector.
This session was held in coordination with the office of Congressmember Karen Bass (D-CA), ranking member of the House Subcommittee on Africa. George Ingram, senior fellow at Brookings Global Economy and Development Program provided introductory remarks, and Erik Pederson, director of congressional relations at The Chicago Council on Global Affairs made concluding remarks. The event followed Chatham House Rules. The session was part of the Africa Policy Dialogue on the Hill, a regular congressional briefing series hosted by the Brookings Africa Growth Initiative on topical issues relevant to U.S. and African economic policy.