U.S.-Sub-Saharan Africa Trade and Investment: Programs and Policy Direction

U.S.-Sub-Saharan Africa Trade and Investment: Programs and Policy Direction

Order Code RS20063
Updated June 20, 2001
CRS Report for Congress
Received through the CRS Web
U.S.-Sub-Saharan Africa Trade and
Investment: Programs and Policy Direction
Lenore Sek
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
U.S. trade with sub-Saharan Africa, like investment, is a small share of U.S. world
totals. Several government programs promote U.S. trade and investment through loan
guarantees, preferential tariffs for foreign products, credit insurance, and other means,
and although these programs assist commercial transactions with sub-Saharan Africa,
they are not exclusive to the region. The Clinton Administration took several major
initiatives to improve U.S. economic relations with sub-Saharan Africa. In May 2000,
the African Growth and Opportunity Act (Title I of P.L. 106-200, the Trade and
Development Act of 2000), which offers economic benefits to sub-Saharan countries,
was enacted. This report will be updated periodically.
In 2000, U.S. imports from sub-Saharan Africa were $23.5 billion, an increase of
67% over the 1999 level of $14.0 billion. Imports from sub-Saharan Africa were 2% of
all U.S. imports. U.S. exports in 2000 were $5.9 billion, almost the same as the 1999 level
of $5.7 billion. Exports to sub-Saharan were less than 1% of total U.S. exports (see Table
1). The share of total U.S. trade that is conducted with sub-Saharan Africa has declined
over the last 5 years. From 1996 to 2000, U.S. imports from sub-Saharan Africa grew at
an average annual rate of 11.5%, compared to 11.4% for all U.S. imports, but U.S.
exports to sub-Saharan Africa were basically flat, with an average annual growth rate of
-0.8%, compared to 5.8% for all U.S. exports. A comparison of U.S. trade with selected
regions shows that in 2000, U.S. total trade (exports plus imports) was $20.8 billion with
the Central American Common Market (CACM), $29.4 billion with sub-Saharan Africa,
$38.4 billion with Mercosur, and $135.3 billion with ASEAN.1
1 Data from U.S. Departments of Commerce and the Treasury, reported in Tariff and Trade Data
Web of the U.S. International Trade Commission. Central American Common Market countries
are Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Mercosur countries are
Argentina, Brazil, Paraguay, and Uruguay. ASEAN countries are Brunei, Indonesia, Malaysia,
Philippines, Singapore, Thailand, Vietnam, Burma/Myanmar, Cambodia, and Laos.
Congressional Research Service ˜ The Library of Congress

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Most U.S. trade with sub-Saharan Africa is with only a few countries. In 2000, 87%
of U.S. imports from the region came from 4 countries: Nigeria (45% of U.S. imports
from the region), South Africa (18%), Angola (15%), and Gabon (9%). Similarly, 64%
of U.S. exports to the region went to only 2 countries: South Africa (52% of U.S. exports
to the region) and Nigeria (12%).
The United States imported mostly basic commodities from the region. The leading
imports by far were petroleum and petroleum products, accounting for 74% of imports
from the region in 2000, followed by nonferrous metals, apparel and clothing, and iron and
steel. Major U.S. exports to the region were aircraft and parts, mining machinery, wheat,
general industrial machinery, and road vehicles.
As seen with trade, very little U.S. foreign direct investment goes to sub-Saharan
Africa. During the year 1999, $1.2 billion in U.S. direct investment, or almost 1% of total
U.S. direct investment abroad that year, went to sub-Saharan Africa.2 Major flows of
direct investment during 1999 went into South Africa’s finance, insurance and real estate
sectors and came out of Nigeria’s petroleum sector.
U.S. Programs
The U.S. government promotes U.S. trade and investment through preferential tariffs
for certain imports of foreign products, support for U.S. sales abroad, assistance to U.S.
investors in foreign projects, development assistance, and other programs. These
programs are not exclusive to sub-Saharan Africa.3
Under the U.S. Generalized System of Preferences (GSP), designated developing
countries may receive duty-free treatment for eligible products that enter the United
States.4 In 2000, GSP duty-free imports from sub-Saharan Africa were $3.9 billion, or
18% of U.S. imports from the region. Almost one-fourth of all U.S. duty-free imports
under GSP came from sub-Saharan Africa, twice the share in the preceding year. The
increase in the sub-Saharan share of GSP imports is probably linked to price increases for
crude oil, which accounts for 77% of GSP imports from sub-Saharan Africa. Almost all
of that oil comes from Angola. GSP benefits were expanded for sub-Saharan African
countries under the African Growth and Opportunity Act (Title I of P.L. 106-200), which
was enacted in 1999 (discussed below).
The Export-Import (Ex-Im) Bank offers support for the sale of U.S. products in
foreign markets. Its programs include (1) guarantees of commercial loans to U.S.
exporters; (2) credit insurance against default by a foreign buyer; (3) guarantees of
2 Investment data from U.S. Department of Commerce. Bureau of Economic Analysis. Web site
at [http://www.bea.doc.gov/bea/di/dia-ctry.htm].
3 For more information on U.S. programs and trade and investment with sub-Saharan Africa, see
U.S. International Trade Commission. U.S. Trade and Investment with Sub-Saharan Africa.
Investigation No. 332-415. First Annual Report. Publication 3371. December 2000. Web Site
at [http://www.usitc.gov/wais/reports/arc/w3371.htm]. Site includes quarterly updated tables.
4 For further information on GSP, see Congressional Research Service. Generalized System of
Preferences. CRS Report 97-389, by William H. Cooper.

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commercial loans to foreign buyers for purchase of U.S. exports; and (4) direct loans to
foreign buyers of U.S. exports.5 During fiscal year (FY) 2000, the sub-Saharan market
accounted for none of the new Ex-Im Bank authorizations for loans, 3.5% of new
authorizations for guarantees, and 2.6% of new authorizations for credit insurance.6 In
FY2000, the Ex-Im Bank authorized a total of $326 million for U.S. exports to sub-
Saharan Africa, or 3% of its total authorizations. (It also authorized $402 million for
exports to four North African countries.) Among major Ex-Im Bank projects in sub-
Saharan Africa were guarantees for U.S. exports for an oil pipeline from Chad through
Cameroon to the Atlantic coast ($200 million), transmitter equipment for the Zimbabwe
Broadcasting Corporation ($35 million), and a fiber optic cable system in Mauritius ($28
million).7 Ex-Im Bank programs are available to 47 of the 48 sub-Saharan countries
(Sudan is excluded), but program availability varies widely among countries. In FY2000,
the Ex-Im Bank provided $1 billion in financing for sales of U.S. HIV/AIDS medicine and
equipment in 23 sub-Saharan African countries. It also has an Africa Pilot Program,
which offers short-term export credit in 12 countries of sub-Saharan Africa.
The Overseas Private Investment Corporation (OPIC) assists U.S. businesses to
invest in developing countries, newly emerging democracies, and free market economies.
Its main activities are (1) loans and loan guarantees; (2) support for equity funds for U.S.
companies that invest overseas; (3) insurance against political risk; and (4) information for
U.S. businesses on investment opportunities overseas.8 In FY2000, OPIC provided
financing and/or political risk insurance for six projects in sub-Saharan Africa. Projects
included $1 million in financing for a micro-lending facility for small businesses in Ghana,
$173 million in financing for a methanol plant in Equatorial Guinea, and $1 million in risk
insurance for a toothpaste manufacturing facility in Zimbabwe.9 OPIC also offers
financing support for regional funds for Africa. Its portfolio distribution, as reported in
its FY2000 annual report, was North Africa and the Middle East-4%, sub-Saharan Africa-
6%, Caribbean and Central America-9%, Europe (including Turkey)-11%, New
Independent States-13%, Asia and the Pacific-17%, South America-37%, and worldwide
funds-4%.
The U.S. Trade and Development Agency (TDA) provides planning assistance for
foreign development projects that might offer sales opportunities for U.S. exporters. The
TDA reports that expenditures vary from year to year, but it calculates that since FY1981,
annual expenditures for the Africa region have averaged $3.3 million, and funding in
5 For information on the Ex-Im Bank, see Congressional Research Service. Export-Import Bank:
Background and Legislative Issues. CRS Report 98-568, by James K. Jackson.
6 Calculated by CRS from table “FY 2000 Authorizations by Market” in FY2000 annual report
of Ex-Im Bank at [http://www.exim.gov/annrpt/index.html].
7 Information on Ex-Im Bank programs from the agency Web page at [http://www.exim.gov].
8 For more information on OPIC, see Congressional Research Service. The Overseas Private
Investment Corporation: Background and Legislative Issues. CRS Report 98-567, by James K.
Jackson.
9 U.S. Overseas Private Investment Corporation. 1999 Annual Report. [http://www.opic.gov]

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Africa has been approximately 12% of all TDA expenditures .10 In FY2000, the TDA
assisted with 15 projects in 8 sub-Saharan countries. Projects included a $157,000
training grant to the Botswana Department of Civil Aviation for radar data processing, a
$149,095 grant for a feasibility study of proposed hydroelectric power plants in Guinea,
and a $400,000 grant for a feasibility study of domestic gas utilization in Nigeria.
Several other federal programs are important to U.S. trade and investment in sub-
Saharan Africa. The Assistant U.S. Trade Representative for African Affairs has been
active in promoting U.S. trade and investment with the region. The U.S. Agency for
International Development (USAID) supports foreign economic development projects and
administers numerous economic programs in sub-Saharan Africa. In addition to domestic
programs, the government participates in multilateral programs through the World Bank,
the International Monetary Fund, and the World Trade Organization.
Policy Direction
Important measures to improve U.S. economic relations with sub-Saharan Africa
began in the mid-1990s. In 1994, the Uruguay Round Agreements Act (P.L. 103-465)
directed the Administration to develop an Africa trade and development policy and report
on this policy to Congress annually for 5 years. In Congress, there was strong bipartisan
interest in legislation to enhance African economic growth and to improve U.S.-sub-
Saharan economic relations. This interest was in response to the Administration’s first
report and what some Members saw as a lack of real trade policy for Africa.
In 1997, President Clinton announced the Partnership for Economic Growth and
Opportunity in Africa (Partnership Initiative), which included some proposals Congress
was already considering. The Partnership Initiative supported economic reforms in Africa
and encouraged closer economic ties between the United States and Africa. In 1998,
President Clinton visited Africa, and in 1999, the United States hosted a ministerial
meeting between U.S. and African officials. In December 1999, the Administration
submitted the last of its five annual reports on Africa trade policy that were required under
the Uruguay Round Agreements Act. The report restated the Administration’s support
for the Partnership Initiative and for the African Growth and Opportunity Act, which was
then under consideration in Congress.
The African Growth and Opportunity Act (P.L. 106-200, Title I) was enacted May
18, 2000. It offers trade and other economic benefits to sub-Saharan countries that are
committed to economic reform. It establishes annual high-level government meetings and
requires a report on the possibility of future free-trade talks. It expands the benefits
available under the GSP program by adding to the list of products that can enter duty-free
and eliminating some provisions that restricted the levels of goods that could enter duty-
free. It establishes requirements that beneficiary countries have adequate visa systems to
protect against transshipment of textiles or apparel. It also establishes positions on sub-
Saharan African affairs in the USTR, the Ex-Im Bank, and OPIC. Officials in sub-Saharan
Africa supported passage of the legislation.
10 Information on TDA programs from the agency Web page at [http://www.tda.gov].

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Not everyone expects the African Growth and Opportunity Act (AGOA) to lead to
improved economic conditions in sub-Saharan Africa or economic benefits for U.S.
businesses. Development experts stress that the programs will have little effect unless a
country pursues appropriate macroeconomic policies and has a stable financial sector.
U.S. textile and apparel producers predict transshipment from non-African countries could
occur if the safeguards do not prevent illegal imports.11 At the same time, some observers
say that the measure’s rules of origin for apparel are so restrictive, there will be little
increase in U.S. imports and few benefits for African producers.12
In May 2001, President Bush submitted a report to Congress on the U.S. trade and
investment policy for sub-Saharan Africa and on implementation of AGOA.13 This is the
first of eight reports required under section 106 of AGOA. The report states that during
the first year of AGOA, 35 sub-Saharan African countries were designated as beneficiary
countries, an additional 1,835 products from beneficiary countries were designated for
duty-free access, and five countries were designated eligible for apparel benefits (with
another eight countries in the process of qualifying).14 It describes implementation efforts
by the Administration such as regional and national implementation seminars, an AGOA
implementation guide and video, and technical assistance for customs officials in sub-
Saharan African countries. The report describes other effects of AGOA such as greater
communication among ministries in sub-Saharan Africa and between African government
officials and the private sector. It asserts that AGOA has been a tool to encourage and
support greater African economic and political reform.
The Bush Administration stated in its May report that implementation of AGOA was
a “priority.” President Bush has set an October date for the first annual meeting of the
U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, a ministerial meeting
among high-level U.S. and sub-Saharan African officials of sub-Saharan Africa. As tariffs
are lowered on products from sub-Saharan Africa, and U.S. and African officials meet in
a more structured forum, economic relations are likely to improve. The full effects of
changes under AGOA, however, will not be seen for at least several years.
11 The International Trade Commission (ITC) found that the effect of quota-free and duty-free
treatment of U.S. imports of textiles from sub-Saharan Africa would be quite small, but the effect
on U.S. imports of apparel would be greater. See ITC. Likely Impact of Providing Quota-Free
and Duty-Free Entry to Textiles and Apparel From Sub-Saharan Africa. Publication 3056.
September 1997. 103 pgs. with appendices. U.S. apparel manufacturers and the ITC disagree on
whether the study adequately addresses possible increases in investment.
12 See Nitschke, Lori. Third World Trade Bill Likely to Have Limited Impact. CQ Weekly. May
6, 2000. Pgs. 1020-1027.
13 USTR. 2001 Comprehensive Report of the President of the United States on U.S. Trade and
Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and
Opportunity Act. A Report Submitted by the President of the United States to the United States
Congress. The First of Eight Annual Reports May 2001. (Hereafter called 2001 Comprehensive
Report. Located on the USTR web site at: [http://www.ustr.gov/reports/index.shtml].
14 Information on AGOA is available at [http://www.agoa.gov/].

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Table 1. U.S. Trade with Sub-Saharan Africa, 1998-2000
Country
U.S. Imports ($ thousand)
U.S. Exports ($ thousand)
1998
1999
2000
1998
1999
2000
Angola
2,251,542
2,424,813
3,557,023
354,303
252,173
226,006
Benin
3,604
17,830
2,440
43,633
31,292
26,393
Botswana
19,670
16,895
40,949
35,591
33,403
31,492
Burkina Faso
597
2,771
2,472
16,089
10,892
15,773
Burundi
7,658
6,135
7,995
4,742
2,646
1,672
Cameroon
53,348
76,765
155,117
75,174
37,044
59,170
Cape Verde
190
111
4,214
9,552
7,537
7,235
Central African Rep.
2,798
2,896
2,965
4,471
3,727
1,769
Chad
7,311
6,911
4,780
3,464
2,687
10,819
Comoros
822
1,747
3,513
613
243
704
Congo (B)
315,420
414,717
509,707
92,020
47,046
82,150
Congo (Zaire)
171,561
229,217
212,239
34,036
21,087
9,997
Cote d’Ivoire
417,637
347,160
383,949
151,555
103,981
94,897
Djibouti
530
110
419
20,061
26,726
16,816
Equatorial Guinea
66,642
43,257
154,717
86,727
221,147
94,934
Eritrea
736
486
196
25,125
3,870
16,604
Ethiopia
52,278
30,211
28,660
88,379
164,656
165,153
Gabon
1,268,302
1,519,527
2,208,933
62,420
45,360
63,441
Gambia
2,043
186
379
9,279
9,602
9,090
Ghana
144,411
208,637
204,513
223,379
235,121
190,751
Guinea
115,620
116,948
88,378
65,440
54,571
67,411
Guinea-Bissau
173
72
535
950
816
284
Kenya
98,522
106,415
109,544
199,029
189,126
237,989
Lesotho
100,133
110,826
140,316
1,437
733
866
Liberia
25,148
30,280
45,417
50,037
44,734
43,226
Madagascar
71,395
80,233
157,804
14,611
106,112
15,453
Malawi
60,455
72,462
55,380
14,497
7,402
13,708
Mali
3,353
8,899
9,690
25,410
29,761
32,046
Mauritania
393
771
354
19,541
25,183
16,155
Mauritius
271,618
258,933
286,057
23,256
39,000
24,346
Mozambique
25,762
10,322
24,394
45,736
33,864
57,981
Namibia
51,780
29,687
42,254
51,202
195,633
80,227
Niger
1,731
12,121
7,026
18,160
18,517
36,190
Nigeria
4,194,647
4,361,098
10,548,544
819,619
628,337
718,474
Rwanda
3,955
3,686
5,064
21,783
47,490
19,050
Sao Tome & Principe
678
2,696
513
9,380
510
993
Senegal
5,181
9,160
4,231
59,175
63,429
81,798
Seychelles
2,198
5,168
8,097
10,021
7,641
7,185
Sierra Leone
12,279
10,315
3,824
23,463
13,159
18,678
Somalia
593
169
443
2,697
2,813
4,862
South Africa
3,055,477
3,195,065
4,204,199
3,626,112
2,582,328
3,084,711
Sudan
3,090
57
1,808
6,790
8,821
16,897
Swaziland
25,083
37,884
52,577
8,197
9,412
67,128
Tanzania
31,564
35,381
33,652
66,867
68,375
44,866
Togo
2,203
3,170
5,991
25,482
25,703
10,623
Uganda
15,154
20,256
29,064
29,795
24,955
27,424
Zambia
47,267
37,661
17,727
21,618
19,893
19,063
Zimbabwe
127,013
132,789
112,382
93,090
59,959
53,268
Total
13,139,566
14,042,906
23,480,445
6,694,009
5,568,520
5,925,769
Source: Data from the U.S. Departments of Commerce and the Treasury, reported in Tariff and Trade Data Web of
the U.S. International Trade Commission (general imports, Customs value; total exports, fas).