MCC's strategic approach to African trade and infrastructure

U.S. President Barack Obama hopes the summer of 2014 will go down in history as a defining chapter in U.S.-Africa relations. Buzz is building around the U.S.-African Leaders Summit, which will, for the first time in U.S. history, convene nearly all of the African heads of state in Washington, D.C. — only those countries currently suspended from the African Union (the Central African Republic, Egypt, Madagascar and Guinea-Bissau) or under U.S./U.N. economic sanctions (Eritrea, Sudan and Zimbabwe) have been excluded. “During the last week of July and first week of August, rely on public transportation” in Washington, Gayle Smith, senior director at the White House National Security Council, told attendees at a recent discussion about the summit — alluding to the expected increase in traffic congestion due to motorcades and street closings. The meeting will provide African leaders and American CEOs with opportunities to discuss investment and trade. Firmly on that agenda is renewal of the African Growth and Opportunities Act, a piece of legislation that grants trade preferences to African countries and allows them to export duty-free to the United States a long list of products, including oil, apparel and textiles. AGOA expires in 2015, and many African trade and development experts are hashing out the particulars and improvements that could be made to “AGOA 2.0” before it goes into law. While the legislation is popular in development circles, many feel current law has failed to fully capitalize on its potential and suffers from underuse in a number of African nations and sectors. After moderating the Africa-America Institute’s forum on Capitol Hill Thursday, we spoke with Kamran Khan, vice president for compact operations at the Millennium Challenge Corp., to learn how MCC is working to support a more robust implementation strategy for AGOA and what that means for MCC’s partners. Here are a few highlights from our conversation: As the MCC begins to look at AGOA 2.0 and the contribution you can make to boosting trade and looking at the infrastructure-related issues behind trade, what do you expect to be changes to the roles or demands placed on your partners as you look at developing compacts? Are there different types of partners that you’ll be engaging or different ways you’ll be engaging with your partners? I think we engage already in a very strategic way. We may need to expand the number of agencies on our partner side that are involved. For example, the trade ministers maybe need to be involved in a more meaningful way than they had been involved. We’ve already started to restructure and rethink and retool our compact development process. It’s already a lot more strategic. A lot of things that we would have looked at downstream, we’re looking at those issues much earlier. It’s a much more strategic approach. It looks at … the engineering issues, the construction-related preparation, which is necessary to be successful, since you have five years to do whatever you’re going to do. But also now we are looking a lot more at policy issues early on. We’re making a transition from an agency that used to build and help build and finance infrastructure and create an environment for private investment in infrastructure, to an agency that does all of those things but looks at it as a system, which then also requires you to think about utilization of that infrastructure for trade and economic growth in a much more deep and strategic manner than perhaps we would have done in the beginning. When you say “strategic,” what’s that strategy you’re referring to? The strategy is to look at the connections between infrastructure and various different things that are important for economic growth, whether it’s trade, whether it’s foreign investments, whether it is improving efficiency of public operations, whether it’s establishing public-private partnerships, whether it is involving social groups that are not given access, women, all of those things that are important for a system. You can build a road, but how the road is used and who uses it and how it’s monitored and who’s accountable, and all of those things make it a road system, so that’s what I mean by a strategy — the whole map. What were the biggest takeaways for you from this discussion, in terms of the challenges going forward on AGOA reauthorization and then ensuring that it’s used effectively, and how MCC can play a role in overcoming those challenges? I think the one key thing that comes out is: AGOA is a tool. It has parameters around what it does and what it does not do. I think people have expectations for AGOA in the past that may have been a little bit unrealistic, and this is why these dialogues are very important, as we think about AGOA 2.0 or whatever you want to call it ... It’s a trade preference system. But there’s a lot more that needs to be done to make sure that Africa is ready to utilize that system. It seems like a big part of ensuring this gets on the U.S. political agenda is changing the rhetoric around what AGOA is, and I mean by that not just an assistance tool for Africa, but a means of implementing a new form of partnership. Absolutely, and this is where the role of organizations like MCC comes into play in a much more meaningful way than I think people may have realized when AGOA was first launched. You hear a lot of discussion about the need for infrastructure to empower trade to build trade capacity. The ask is on both sides — on the part of organizations like MCC to think about trade when we are designing compacts so that the infrastructure we’re building is going to support trade — think about it strategically, think about it ahead of time, don’t think about it as an afterthought. At the same time, there is a need to connect it to [the Office of the U.S. Trade Representative] and think about how all of these trade hubs we were talking about establishing and how all of the trade arrangements we’re establishing — how do they connect back into government policies? — so that they are moving forward on the policy reforms and building the infrastructure to enable those policy reforms to deliver trade at the same time. In between there is technical assistance and training as well, and we shouldn’t forget that. What do you want to see in AGOA 2.0? Have your say by leaving a comment below. 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