https://kenopalo.substack.com/p/on-americas-structural-inability

On America's structural inability to effectively compete with China in Africa

Institutions and policy tools at the core of US Africa Policy are ill-suited for the times

March 27, 2023

I: Turning over a new leaf?

After nearly a decade without high-level visits, 2023 is shaping to be a year in which American officialdom pays public diplomatic attention to African States. President Joe Biden will visit later this year, while Vice President Kamala Harris is visiting Ghana, Tanzania, and Zambia this week. This follows recent visits by First Lady Jill Biden to Kenya, UN Ambassador Linda Thomas-Greenfield (Somalia, Ghana, Kenya, and Mozambique), Treasury Secretary Janet Yellen (Senegal, Zambia, and South Africa), and Secretary of State Antony Blinken (Ethiopia and Niger).

The diplomatic charm offensive seems designed to build on the US-Africa Leaders Summit last December during which Washington showcased its intention to reset US-Africa relations from aid to trade. The reset was sorely needed. As I argued before, the history of US-African relations has so far been decidedly underwhelming.

Most African attendees of the December Summit that I have spoken with were pleasantly surprised by the substance of its agenda. The profile of US government who showed up (Biden, Harris, cabinet-level officials, etc) signaled the seriousness of the Summit to the administration. There was also a lot less of the usual preachy democracy/corruption/humanitarian speak, and more serious attention to strengthening commercial relations. The US made $55b in commitments over the next three years, albeit much of it being recycled cash (here’s a good summary).

Throughout the summit China was the proverbial elephant in the room, despite the administration’s best efforts to avoid coming off as using the region as a means to and end in its geopolitical competition against Beijing. This is because the relatively more (commercially) successful Africa-China relations is the yardstick against which Africa-US relations will be measured moving forward.

This raises two important questions: 1) how is the reset going? and 2) will the reset enable the United States to effectively compete with China across Africa over the coming decades?

On the first question, preliminary anecdata suggest that the money is yet to start flowing due to a lack of sufficient specificity in the commitments, stretched US government personnel, lack of interest from the US private sector, and inability to find committed partners in African states. Perhaps this year’s high-level attention will unlock the jam before the 2024 elections or other issues on Biden’s in-tray knock Africa off the priority list. On the second question, a recent tweet by Zambian economist Dr. Grieve Chelwa says it all:

It is as simple as that. The many negative aspects of Africa-China relations notwithstanding, the fact of the matter is that if you want to do anything serious in the region within a tight political business cycle and need financing, calling Beijing is typically the smart option. This is especially true if you happen to be an incumbent in a competitive electoral democracy like Kenya or Zambia (I hope Washington sees the irony here). According to Nikkei Asia, China has invested 2.5 times more in African infrastructure development than all Western countries combined. The same dynamics obtain in the private sector. Whether you are looking for machinery or cheap imports (and increasingly markets), China is often the best option. Trends in trade volumes demonstrate this fact (see below). In 2022 Africa-US trade (under $40b) was less than a fifth of Africa-China volumes.

Trends in the share of African trade with different major powers. Author’s calculations based on World Bank data.

From an African perspective, this is not optimal. Whilst the rise of China has had an unambiguous net positive effect on African economies, it is also true that, if managed well, real competition between the US and China would incentivize faster improvements in the quality of African countries’ bilateral commercial relations with either power. The fact that Washington has not yet bothered to compete with reference to African priorities means that Beijing has little incentive to pull up its socks and offer its African partners better terms.

II: So why can’t the US compete?

China’s advantage in Africa lies in the policy tools at its disposal and structural incentives that have forced Beijing to prioritize Africa-China relations. In addition to direct government-to-government dealings, Beijing can lean on state-owned policy banks to lend money to Africa governments for projects on condition that they work with Chinese implementing firms. Chinese private firms and privateers, like Tecno Mobile or Huawei, have excelled in African markets by showing up and selling cheaper but reliable enough products. Finally, as a rising revisionist power, China has been hungrier for African support at the United Nations and other multilateral forums; and therefore made Africa a diplomatic priority. You see this not just in trade statistics but also in the manner in which Chinese officialdom treats their African counterparts at a personal level.

The same cannot be said of the United States. America’s alliances in Europe and Asia-Pacific, as well as interests in Middle East typically gobble up all the attention in Washington. Americans who want to rise up in the foreign policy establishment or academia/commentariat face strong incentives to focus on those regions; or pivot away from Africa once they reach a certain rank. These patterns are mirrored in the private sector, where very few politically influential businesses (outside of petroleum and aerospace) have any important interests in African countries. American firms seem able to only think of one thing when it comes to Africa: risk.

Consequently, despite the growing number of younger American Africanists that understand the region and genuinely want to see improvements in Africa-US relations, Washington lacks institutionally influential senior Africanists within the Executive and Congress that can sustainably align US policy with African priorities. In addition, the dearth of large firms doing business in Africa means that America does not have strong private sector links that it can leverage to build stronger relations with African countries (especially since the petroleum exporters tend to not provide good PR on account of their regime types and well-documented corruption).

To compound matters, the standard post-Cold War official policy toolkit (some of it laundered through multilateral institutions) of sanctions/conditionalities, democracy promotion, humanitarian aid, and military assistance simply cannot compete against what China is offering. African politicians in the business of demonstrating visible and attributable effort to very demanding voters within tight political business cycles want to build stuff and create jobs. America’s official policy toolkit offers little on both dimensions.

Faced with the fact that so far it has a losing hand in a region whose geopolitical importance is about to explode, Washington likes to hide behind all manner of convenient coping strategies — including decrying the quality of Chinese infrastructure (which have substantially improved since 2000), China’s alleged debt trap diplomacy (China [public + private] only accounts for 12% of African debt), China’s agnosticism over African regime types (Beijing is just better at understanding African priorities), or China’s deplorable human rights record at home (Washington presumably knows that Africans can easily figure out Beijing’s biggest trade partner).

III: USAID, the weakest link?

A quick look at the operations of the US Agency for International Development (USAID) illustrates the organizational foundations of America’s inability to effectively compete. USAID is by far the main agency through which America channels its engagements with African countries (see below). The agency almost exclusively spends all of its Africa budget on humanitarian assistance and public health, both laudable efforts to save lives (see PEPFAR!). For example, in 2022 these two categories represented 85% of total assistance to Nigeria (total, $1.07b), 92% in Ethiopia ($1.766b), and 78% in Kenya ($795.7m).

Source: foreignassistance.gov

Yet the fact that USAID focuses primarily on healthcare and humanitarian assistance comes with a number of drawbacks, from the perspective of trying to compete against China. First, both sectors lend themselves to America’s favorite mode of helping others — by overpaying itself. Despite headline figures in the billions, the legally mandated practice of tied aid, whereby aid spending must be through American entities (consultants, vendors, etc), severely limits the impact of Washington’s “generosity” abroad. For example, American food aid with grain from Iowa acts as a one off exchange that does little to boost African agricultural markets. China also does tied aid, but with different effects. When China requires that its concessional loans be spent on Chinese construction firms and engineers, actual visible and attributable roads get built in African countries.

Second, humanitarian assistance and public health focus on politically marginal or marginalized groups — i.e., groups that are not core to the calculus of elites or national narratives about economic development. For example, only 1.3% of Nigeria’s adult population is HIV positive. Neither HIV nor malaria prevalence rates were particularly salient topics of discussion in last month’s election. In the same vein, populations that receive food aid in the modal African country are typically not pivotal voters that shape public opinion. Politicians are usually likely to pay more attention to road users, consumers of electricity, or those concerned about prices of essential goods (imported from China).

This is not a case for abolishing these programs (again, see PEPFAR’s success!). It is a reminder to not overplay their actual effects in recipient countries. A way out of this problem might be for the US to exclusively buy food aid from African farmers; while also investing in training more African health workers, construction of medical infrastructure, and supporting pharmaceutical manufacturing in the region. However, I doubt that the interest groups that benefit from the current arrangement and Congressional delegations from the American heartland would entertain this line of thinking. Recall that USAID’s localization initiative only seeks to spend at least 25% of funds through recipient country organizations by 2025. Why not the reverse (with a generous helping of budget support)?

Third, the onerous paperwork and monitoring that comes with USAID programs mean that African politicians and their campaign funders typically have little opportunity to directly benefit from specific projects (capture and corruption definitely happens at the margins). It follows that if you are an ambitious politician that wants to make friends with campaign donors (something Washington should be familiar with), you typically have a better chance betting on Chinese projects. For better or worse, their projects tend to be a lot more amenable to the standard politics of project implementation — both in terms of fully capturing the benefits of attribution and being able to cultivate support among businesspeople.

Interestingly, America’s sizable philanthropic sector (another potential policy lever) largely replicates the same “circular referencing” model characterized by American experts in charge, projecting their own faddist priorities, and spending handsome amounts of cash (in America) in the name of helping Africans.

Finally, the top down design of USAID programming and reliance on American vendors creates an environment in which African countries face virtually no incentive to influence policy stateside (e.g., through smart lobbying) or take ownership of specific projects. This is a problem because it has resulted in African capitals not investing in the knowledge needed to take full advantage of the full range of American offerings. Beyond aid, there are multiple commercial programs that are woefully underutilized by both sides. Perhaps the best example out there is the astonishing underperformance of AGOA, a program that affords African countries duty free access to the American market. When it comes to America, African capitals also seem to be permanently in aid mode.

III: Conclusion

If you are sitting in Dakar, Lagos, or Nairobi wondering why the United States doesn’t get African priorities in its competition against China, you should know that the problem goes well beyond differential attitudinal perceptions of Africa and Africans (which is itself a non-trivial barrier to America’s willingness to show up). It is also institutional. The fact that Africa is not a priority in Washington means that career incentives work against dedicated Africanists in both Congress and the Executive; America conducts its foreign policy with a very inward bias, both in terms of spending and the issues politicians think sell well with voters; and the specific agencies that implement policies have their own organizational logics that reinforce the inward bias in American foreign policy and leave little room for African input.

Therefore, it should not be a surprise if, as is likely, Vice President Harris does not have a single ribbon cutting ceremony lined up in Ghana, Tanzania, or Zambia. In Dr. Chelwa’s Zambia, she’ll likely see news reports of the 750MW Kafue Gorge Power Station commissioned last week (and built by China’s Sinohydro Corporation) and not much about America’s Power Africa initiative. Her host President Hakainde Hichilema understands the political and economic importance of reliable grid power supply, and has been scouring for projects wherever he can get them. One hopes that HH will be forthright about his and Zambians’ real priorities, and not just tell the American delegation what they want to hear.