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The Future of the U.S.-Africa Economic Relationship

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Last week Washington hosted nearly 50 African heads of state at the first-ever U.S.-Africa Leaders Summit. Countless meetings and conversations that took place not just among government officials but businesses, international organizations, and non-profits (including CIPE and Freedom House) brought Africa into the spotlight. Yet the most important aspect of the Summit is still ahead: what did we learn and how can this knowledge guide the way forward?

One of the most informative outcomes of the Summit to me was the launch of a report Africa and the United States: A defining relationship of the 21st century at the U.S. Chamber of Commerce’s Presidential Plenary. The report was jointly produces by the U.S. Chamber and Investec Asset Management (IAM), a global investment management firm founded in 1991 in South Africa. Hendrik du Toit, Investec’s CEO, unveiled the report and discussed its findings with a panel of corporate leaders. Continue reading

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The Role of Business in Advancing Political and Economic Freedom in Africa

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This week nearly 50 heads of state will attend President Obama’s U.S.-Africa Leaders Summit in Washington, DC to discuss trade and investment, security, democratic development, and how to achieve a better quality of life for all Africans. The summit will bring together government representatives, business people from the U.S. and Africa, and leaders of civil society groups.

In many ways this summit will be the beginning of a hopefully much larger conversation on how the United States and 54 African countries can increase economic ties, strengthen democratic development, and create new economic opportunities and freedoms for Africans.

To help start this conversation, CIPE and Freedom House brought together several U.S. and African thought leaders to offer their insights on how to advance political and economic freedom in Africa at an event August 1. The purpose of the event was to reinforce the case that good governance and democratic values are closely linked to sustained economic growth, and to offer some actionable ideas on how to strengthen the U.S.-Africa partnership.

The panelists included: Kim Davis, Managing Director and Co-Chairman at Charlesbank, Hon. Donald Gips, Co-Chairman of the U.S. Chamber of Commerce Africa Business Initiative, Betty Maina, Chief Executive of the Kenya Association of Manufacturers (KAM), and Aniket Shah, Global Investment Strategist from Investec.

As Hon. Gips mentioned, many American firms are not even at the “starting line” with regards to expanding their business into Africa. There is no doubt that there are plenty of opportunities and that different countries on the continent are experiencing economic growth and a growing middle class of consumers that offer both African and international companies new opportunities to expand their markets. But for many reasons, few U.S. firms outside of the extractive industries are investing in Africa.

At the same time, Freedom House’s Freedom in the World Index shows that many African countries are not advancing political and economic freedoms, and in some parts of Africa are reversing previous gains. As Betty Maina from KAM pointed out, after the fall of the Berlin Wall there was a great promise “for a better life and democratic opportunity,” but Africans have not built the underlying institutions necessary for democracy to succeed – instead focusing almost solely on conducting elections.

“There is currently a despair about democracy and the fundamental ingredient to change this is the building of proper institutions,” Maina said.  As former Ambassador to South Africa, Hon. Gips, put it: “the hard part is what comes after the elections.”

So what can the business community do about the current state of affairs? Kim Davis emphasized that business has a deep interest in the rule of law. African countries need judiciary systems that work and business climates where contracts can be enforced. Keeping the system accountable requires freedom of the press, and African businesses need to push for greater press freedoms. Continue reading

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The Way Forward in Afghanistan: Looking Beyond 2014

pajcciBy Huzaifa Shabbir Hussain and Hammad Siddiqui

As neighbors, Pakistan and Afghanistan have a number of commonalities. Both are predominantly Muslim countries and share similar values, culture, and civilization — as well as a long history of trade through both formal and informal channels. The signing of a new transit trade agreement between Afghanistan and Pakistan in 2010 has been termed as a major diplomatic accomplishment for both countries given the current geo-political environment. However, problems persist, especially in terms ensuring stability and growth in cross border trade and investment.

To help deal with these challenges, members of the business community from both countries formed the Pakistan and Afghanistan Joint Chamber of Commerce & Industry in February 2012, with support from the British High Commission (BHC) and CIPE.

The core objective of the chamber is to facilitate peace prospects and strengthen economic and trade ties between the two countries. Since its establishment, PAJCCI has been aggressively pursuing its goal to ensure linkages between the business communities on both sides of the border.

The exchange of delegations, B2B and matchmaking sessions, circulation of trade and business opportunities, and annual  conference have become vital avenues for enhancing bilateral ties between the two countries. The platform has also provided an opportunity to raise the voice of business community on both  sides of the border, encouraging government officials to make changes that enhance cross-border trade and investment. Continue reading

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Why Trade is Vital for International Development

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We live in a globalized world where goods and services are traded across international borders and consumers are able to purchase products with components produced in several countries. What is the role then of international trade in development?

Economists such as Adam Smith and David Ricardo articulated the economic advantage of free trade, which was primarily driven by the idea of “comparative advantage.” A country with a comparative advantage can produce certain goods and services more efficiently and cheaply than others. In terms of international trade, countries with comparative advantage will export goods and services they can produce more efficiently, while importing those they produce relatively less efficiently. Continue reading

The Afghan-Pakistan border. (Photo: EPA)

Afghanistan and Pakistan Seek Greater Economic Cooperation

The Afghan-Pakistan border. (Photo: EPA)

The Afghan-Pakistan border. (Photo: EPA)

While most of the coverage of today’s summit meeting in Islamabad between Pakistan’s Prime Minister Nawaz Sharif and Afghan President Hamid Karzai focused on crucial issues of security and the peace process, the two leaders also covered one of the key drivers of long-run regional stability: enhanced trade and economic relations between the two countries.

According to press reports, the sides discussed cooperation on infrastructure, power, and transportation projects. In particular, Pakistan promised to follow through on its pledges under the Afghanistan-Pakistan Transit Trade Agreement (APTTA), which is designed to facilitate the flow of goods from Afghanistan and for export via Pakistan, as well as through customs into Afghanistan, among other provisions. While the agreement is signed and in place, it has long faced an extensive range of issues in practical application.

CIPE has been working with the Pakistan-Afghanistan Joint Chamber of Commerce and Industry on joint advocacy efforts between business leaders in both countries to try to unblock APTTA implementation. Now that such public, high-level support has been given to the process, it will be up to the private sector to maintain the pressure to realize the APTTA vision of free-flowing trade between these neighbors.

Marc Schleifer is Senior Program Officer for South Asia at CIPE.