Sub-Saharan Africa is now home to 11 of the world’s 20 fastest growing economies. Economic growth in the entire region is expected to be strong – between five and six percent – in the next few years, and it will be led by the private sector; foreign direct investment now dwarfs foreign aid in Africa.
Yet, a recent World Bank report noted that regional trade barriers are cost African countries billions of dollars in potential revenue every year. Trade among African countries makes up only 10 percent of the region’s total trade volume. In East Africa, it costs 50 percent more to move freight one kilometer than it does in the United States or Europe, and in landlocked countries transport costs can be as high as 75 percent of the value of the goods they are trying to export.
On March 29, I participated in an economic growth roundtable with the Presidents of Malawi, Senegal, and Sierra Leone and the Prime Minister of Cape Verde to discuss these challenges and to examine ways to strengthen trade and investment, enhance regional integration, and improve the four countries’ business environments.
The four African leaders called attention to a major impediment to trade and investment in Africa: poor infrastructure, which inhibits both regional and global trade. That is why USAID is working with governments to assess and prioritize critical infrastructure needs. For example, in South Sudan, USAID helped build a 192-kilometer-long Juba-Nimule Road, the largest infrastructure project ever built in South Sudan, and the young nation’s first paved highway. The road has reduced travel time between Nimule and Juba from eight hours to less than three, linking Juba with Uganda and providing the shortest, most efficient route to the Port of Mombasa in Kenya. The road has generated economic activities along the route, and created employment and training opportunities for South Sudanese communities, thereby enhancing stability.
Meeting with the four leaders allowed me to reaffirm USAID’s commitment to work with both the governments and private sector in all four countries to improve export readiness, and reduce the time and cost to trade. In Cape Verde, Senegal, and Sierra Leone, USAID has helped establish Resource Centers to assist local businesses take advantage of the provisions of the African Growth and Opportunity Act (AGOA), which offers duty free entry for 6,400 products from qualifying African countries into the United States.
We are also supporting three regional Trade Hubs designed to help sub-Saharan African governments and businesses reduce the time and cost of trade, harmonize trade and regulatory requirements, and work directly with African firms to identify export opportunities. In Malawi, our Southern Africa Trade Hub has helped to streamline customs procedures and develop a national single window system, which allows traders to submit all required data into a single electronic system accessible to all border agencies. Systems like this one significantly reduce the time and cost of moving goods across borders and increase customs revenue.
We have also helped Malawi and Sierra Leone develop export strategies and stand ready to support strategy implementation and the crafting of similar strategies in Senegal and Cape Verde. When developed and implemented in consultation with the private sector, the strategies serve as an invaluable tool to facilitate trade and improve economic growth.
By working to reduce barriers to trade in African markets, USAID supports sustained growth in the region and improves bilateral trade and investment opportunities for both African and U.S. firms.