With AGOA In Place, Charity Can Become A Factor Of Production
Attorney Aloy Ejimakor
Habitat & Health International Fund
Washington, DC United States
The new philosophy currently preferred by Western powers, especially the United States, on aid to Africa from one of freebies to deploying the engine of trade, has received less than the attention it deserves from that other compassionate half of traditional aid to Africa: the super-funded American public charities and foundations. Of the many measures so far taken in the efforts to give traction to this policy shift, one that stands out as potentially most effective and sustainable is AGOA - African Growth and Opportunities Act. This discourse will be devoted to this law and its genre, explore any present impediments to its sustainable implementation, and finally, enunciate some simple initiatives American public charities and foundations can fund to assist in achieving the goals set by the law. AGOA is a fine law enacted by the United States Congress to accord special trade and tariff status on a select, but numerous varieties of raw material and consumable imports from some African countries. A plain reading of the black letter law, as it presently stands reveals an uncommon intent on the part of the US Congress to wax extraterritorial by using its powers under the Commerce Clause of the US Constitution to touch lives in the remote reaches of African villages and hamlets. And the Bush Administration fully supports what the law stands for partly because it comports with Bush’s conservative policy on foreign assistance. Therefore, it is a law that makes a lot of sense to a lot of people. In the main, AGOA comes across as both a tool of international trade as well as a new legislative instrument for curbing poverty amongst Africa's disadvantaged and underprivileged peoples, who constitute the vast majority of stakeholders in the product sub-sectors delineated by AGOA for special treatment. It is, therefore an effective piece of legislation that can be deployed as the front engine to propel a resurgence of transnational commerce with a too often ignored African poor and lower middle class, and free its cottage constituency from previous burdens brought by an unfavorable tariff structure, scarcity of hard currency, and lack of a prior legislative climate to involve and galvanize the grassroots. The myriad methods to attaining the goals set forth under AGOA carry some good teeth and they are as complementary as they are interwoven.
First, is geared towards unprecedented dismantling of pre-existing trade barriers between the United States and the designated African countries by fostering an environment of “favored" access of "common" African products, such as agricultural produce and textiles to the vast US market. These products comprise mostly of import items that are prone to the likelihood of countervailing duties when imported or sourced from nations traditionally profiled as complicit in dumping practices, such as the “musical chair” case of China. In other words, AGOA saves these products from the usual pitfalls of countervailing duties even when they are known to be priced too cheaply, provided the named products are actually sourced from the African countries within the protective purview of the statute. Besides these primary thrusts of the Act, the secondary ones and their impacts are legion.
Second, is that, without doubt, AGOA can be counted as amongst the most benign form of a unilateral conferment of “most favored nations” status outside any treaty obligations imposed on the United States to do so by a multilateral treaty with Africa. And contrary to some fringe claims, AGOA was hardly driven by any guilt, because the United States is widely acknowledged to be committed to an institutional policy of open, fair, and relatively nondiscriminatory trade in all manners of goods and services from any where in the world, but AGOA went beyond that to create a unique set of new trading privileges that other non-African emerging markets economies are wont to envy. And the eligible commodities are “common” to boot, because they comprised of ones unarguably known to be native to these African countries and thus within their potential capacity to produce in exportable quantity. Therefore, through deft and thoughtful legislating, the U.S. Congress created an implicit exclusion of identical exports originating from non-eligible third countries. And possible abuse of the locale of the AGOA-designated countries as glorified transit points for goods actually originating from elsewhere is keenly scrutinized, and will be stiffly penalized accordingly, if there is credible evidence that it occurred. And perhaps, most importantly, quite a good number of the enumerated items are those upon which Africans have some realistic hope of garnering a competitive edge over time; or in which they have a near “benign” monopoly, as for instance, a few of the agricultural crops known to grow or flourish only in the Sub Saharan region. Thus, as enacted, this law is, if you will, a paradigm shift in trade policy that well surpasses the advantages normally accorded to nations making the tough list of "Most Favored Nations" under the rules of World Trade Organization WTO (formerly GATT), and much more illustratively, within the best models of modern common markets epitomized by EU and to a less, NAFTA and even Africa’s own ECOWAS.
Thirdly, AGOA rides high on the enabling climate fostered by the US Export-Import Bank's long standing credit and financing facility made available on soft terms to both Americans and Africans to either export to, or import from one another. Under this facility, imports from, and exports to Africa can be financed through credit insurance or guarantees, and low interest loans coming from various banks, but all impliedly backed by the full faith and credit of the United States. This is besides the ‘structured’ financing package powered by US-EXIM to fund privately-held projects in Africa on generous terms unknown to any other comparable law or policy of note by Western Europe or Japan. Considered from the standpoint that the “small business” African exporter can be trusted by US banks to directly obtain start-up or expansion credit under these schemes without the usual recourse to his government as a potentially obstructing go-between, strengthens the view that these laws, without more, have come to represent one of the most revolutionary transnational credit creation and guarantee regimes of our time. It does not distract from the impact of these laws that America wishes to use them to leverage out competition with EU for a piece of the same pie with Africa since in the end, Africa and its citizens will surely benefit and still stand tall with pride that no free lunch was involved this time around.
Therefore, the black letter laws and their legislative histories can be said to represent a bold and new congressional policy of approaching foreign assistance to Africa from the free market point of view, instead of the arguably failed policies of the past that saw much of the government-bound aids embarrassingly making its way back to some Western banks as seedy "flight capital", and not as part of the public foreign reserve but as fruits of corrupt enrichment of some officials at the helm. Unwittingly, therefore, part of the intent of these policies and the effect they already garnered in their wake, is to bypass the traditional channels of dispensing foreign aid by bringing private citizens and businesses in Africa into direct and beneficial commercial intercourse with potential American customers in an atmosphere that does not admit of bureaucratic let and hindrance. So, on this score, AGOA, as implemented is expected to have as less the imprint of red tape of African governments and officialdom in all its ramifications, if it is ever going to flourish as intended. It should remain what it is meant to be: a purely free trade and poverty alleviation law promulgated to spur a new entrepreneurial spirit amongst African private citizens, and ginger a sharp but sustained rise in overall productivity.
The downside, though, is that AGOA along with other measures corollary to it is not working the way it was initially intended for myriad reasons. A casual observer may be too quick to attribute this to the inevitable complexities likely to be encountered in the ordinary course of international trade, especially within an environment of mild cultural shocks as wont to exist between the United States and Africa. Is it really? Anyone will probably think not, if he as much goes beyond the veneer and cares to conduct an open-minded critical and empirical study of the snail pace that has become AGOA’s lot since implementation began in earnest. That is when you begin to observe that AGOA is in reality, mainly hamstrung by the typical institutional apathy of African governments of the day towards any policy that is beyond their absolute control to see through. It may not be a state policy per se, but there seems to be this passively obstructionist attitude adopted by some African governments towards citizen-targeted foreign-originated measures that they deem to carry the potential to “sideline” them to reach their citizens directly. Suffice it to say that the traditional American notion of empowering citizens through private enterprise-driven programs may not exactly comport with the social methods and policies usually preferred by African governments in their approach to such matters, most especially where lucrative foreign trade is concerned, and potential for profit is high. It is an idea struggle of sorts - of one in which African governments prefer to chaperon their citizens to commercial success within their own terms and another, as aptly represented by AGOA that contemplates a direct relationship between American and Africans in a trade environment unfettered by government meddling. And there seems to be more escalation to all these than a let-up, evidenced by the failures that greeted less significant, but similar measures of the past. Some examples come to mind. Today, much as one would want to take the view for granted that privatization has finally gained momentum as the preeminent order of the day around the world, the sale of public enterprises in many African countries is far from transparent and is often prone to the most egregious forms of insider trading, besides other avoidable inanities. There have been documented instances where a perfectly good and credible offer may be scuttled on the sheer whims of those at the helm who may be driven by factors other than public good and profitability, only for the same set of officials to turn around and “purchase” the enterprise through the back door. Nigeria tried to be an exception as her privatization managers labored against graft and other corrupt influences, yet, tried as they did; scandals still trailed some of the lucrative sales. So, any major trade or economic opportunity not exclusively favoring or controlled by those in power is less likely to receive the wholehearted support of officials critical to making success of such opportunity. AGOA may already be steeped in the same quagmire, which becomes more apparent as you begin to observe that a few stumbling steps so far taken by some of the AGOA-eligible countries are at best, typically elitist and at worst, half-hearted and counter-productive. Rather sadly, the very manufacturing but less empowered majority AGOA seeks to ginger has been sidelined, if not completely redlined by default or design. And in the very unlikely event that any of these governments suddenly acts of character to promote AGOA as it should, expectations are dim that such measures will hardly be enough. But there is a third way out of this, and it is to be led by American charities and foundations, which are willing to commit their grants to funding nongovernmental initiatives to be directly implemented by American-based nonprofits with a natural flair and enduring empathy for African affairs. Core program implementation will targeted to capture the cottage majority that was intended to make the most out of AGOA. And the concept must have a strong education and public awareness aspects as well as efforts to assist commodity trading blocks, comprised of small farmers, cottage industrialists and allied sectors. For instance, farmers and trading companies need the basic skills and equipment for simple and cost-effective methods of packaging and preservation of perishable items to meet USDA and other US federal agencies standards.
Of all other options, if any at all, this “charity” approach seems to be the next best alternative that will give AGOA the much needed shot in the arm, if you will. And this needs to be done as soon as possible because if AGOA failed to work by apathy or sunsets by legislative commission, it may be decades before a similar interest or fervor is ignited in America. And this might spill over and become true of other similar trade and credit policies promulgated by the United States as part this whole new strategy of turning to trade to alleviate poverty in Africa. And the picture of what is to come, if failure were to become the reality is not pretty, especially in this era of decreasing Western donor interest in social welfare funding. Gargantuan amounts of aid in hard currency to Africans for public, and especially recurrent spending through their governments is now almost history, as Western governments continue to marvel at the enormous growth powering through the Asian "tigers" largely due to the resurgence of private enterprise initially driven from the West through trade policies similar to AGOA, but not even coming close to it in its reach and novelty. And to think that "donor fatigue" has set in is an understatement, if not realizing it too late. Therefore, since AGOA and others like it have come to represent a fundamental shift in policy from the Western standpoint, every hand needs to be on deck to see it through. This, in addition to other similarly intended measures may ultimately help to douse the social and economic tensions left in the aftermath of dwindling direct foreign assistance of note to Africa in an age of globalization occurring in a fiercely competitive climate. And, recognizing that AGOA is a cardinal part of this new American public policy and strategy of assisting Africa, demands the stark realization that it is a matter of time before the organized private donors in the United States begin to experience a similar institutional shift towards the same direction led by the American government.
If funded, intermediate non-profits which have taken interest and time to study and came to understand this scenario can be trusted to be on the frontline of implementing any well tailored program designed to assist Africans at all levels, including most importantly, those at the grassroots level to have a better grasp of how they can put AGOA to truly create new windows of opportunity. Foundations, corporations, interested members of the public, and even government units can assist by making targeted charitable grants to American nonprofits with bonafide concern for this issue and background knowledge of Africa to pay for programs aimed at equipping Africans with the practical orientation and awareness imperative to the overall successful implementation of AGOA. The program purview should be liberal enough to target all stakeholders including small-to-medium scale farmers, cottage industrialists, customs and excise officers and agents, policy makers and implementers, and the general public. The program can begin with a pilot to be implemented in tranches in a given African country, such as Nigeria, both for its population and unique position in the Sub-Saharan region. And as program success becomes clearer, extension and replications can then be considered for other countries in piecemeal. For the limited purposes of this commentary, a few specific examples of basic program highlights will suffice. For instance, subject to adequate funding, any well run American-based nonprofit can conduct country-wide symposium and workshops in addition to the use of other public information strategies, including the use of audio and visual aids, speaker's programs, conferences, community forum, and other mass media projects to enhance public awareness of how to put AGOA to work for all. The media and public education campaigns are important but when taken alone, merely constitute an infinitesimal part of the overall thrust and elements of the program design in its entirety. But whatever real form it may later assume, the program is to been seen as representing both a safety net and a secondary launching pad for optimization of all options available under the law, all to the greater advantage of the teeming manufacturing poor. Everyone might agree that this will also promote the common good at the end of the day on both sides of the Atlantic. Just count some of the blessings – poverty alleviation, reduction of unemployment, fair prices, and of course, some aggregate impact on the GDP. Therefore, it is to be expected that the program will not necessarily be a hard sell to sophisticated American charities and foundations that have an abiding interest in assisting Africa. Consider for once that when social and economic chaos erupts in Africa, American tax payers indirectly bear one of the greatest financial brunt of it. And helping to avoid catastrophes and human suffering everywhere including Africa is one of the main purposes that motivate and underpin the founding of many public charities and foundations in the United States. Thus, as far as poverty alleviation and the like are the ultimate goals, the objectives of these charities and foundations cannot agree more with what AGOA sets out to achieve.
And with AGOA in place as the enabling instrument, the program will gain ground and impact positively on the lives of disadvantaged people in Africa; and help to stimulate a renewed environment of energized manufacturing and agricultural capacity driven by exports to the United States. Ultimately, contributions made by the program can create the lasting impact of reducing the dependency of Sub-Saharan Africa on emergency aids from the people of the United States and their charities; further the policy of global economic security, and most importantly, help in strengthening nascent democracies. Peace is much more likely when citizens everywhere are preoccupied with new opportunities for prosperity and honest profit. Further, imports to the US from Africa will increase manifold, more jobs will be created in Africa by new centers of export-driven commercial enterprises, and farmers will receive international price for their produce. It will strengthen the congressional policy of engendering inflow of seed American capital to the African poor through liberalized trade instead of by means of emergency assistance in times of national distress; and reduce social tensions and other conflicts fed by continuing abject poverty and runaway unemployment. Little wonder then that AGOA found easy and bipartisan support on both sides of the American political divide. Therefore, any nongovernmental initiative geared towards lending extra muscle to AGOA is likely to attract widespread public support and credibility because charities are widely acknowledged to be the “next best friend” for providing relief to poor, disadvantaged and underprivileged people, especially when governments have not been up to par. What better way to do this than to show the poor and all disadvantaged people how to take matters in hand to fend for themselves through the instrumentality of a popular trade policy.
A charity-funded program of this nature can become an integral part of a larger new strategy of irrigating the flow of charitable energy and directing it towards the stimulation of greater productivity in "charity hot spots" in Africa. This is a better way of assisting Africa and a sure bet to forestall yet another sense of collective guilt often felt by many, including charities and foundations whenever calamities occur in Africa from matters that could have been avoided through timely acts of human intervention. You can call it "Charity To Work", but considerable care should be taken to ensure that only those Afro-centric American intermediate nonprofits, partnering with some African-based ones and with commensurate staff expertise will be invited and funded to lead the way. Some of what is required may comprise of a senior staff with graduate training and cognate experience in both American and international trade law; flair for the matter at hand; fluency in a native African language (which will be the medium for conduct of a significant portion of the project because majority of Africa's producers of all but few of the items enumerated under AGOA would prefer the clarity carried by their native tongues); and thorough knowledge of the local terrains of Africa. Additionally, it will be essential for such an American nonprofit to partner with African nongovernmental organizations (NGO's) on the ground, cooperatives, community groups, neighborhood groups, farmer’s groups, textile and other trade associations to assist on matters of logistics customary to the locale. Any such nonprofit should be able to articulate the details in a proposal format that must include the projected budget, and address questions of replication, as well as practicability, novelty, and what not. But the central theme will revolve around how the potential grantmakers can get “charity value” for their money by funding a program that aims at equipping the poor with the skills to better their lot by exploiting a window of opportunity created by a trade law. The “selling point”, if you will, is to prove to interested grantmakers how their grants can become part of a small step that might make “charity one of the factors of production.”
Attorney Aloy Ejimakor
Washington, DC United States