Obama’s Homecoming

by Jun 3, 2013

President Obama has announced that he will be making a homecoming African tour and hopefully this is the beginning of a series of such tours. Africa’s son and the most powerful man on the planet will crisscross the continent from Senegal in the west to South Africa in the south and Tanzania in the east, a grand safari. The choice of countries is possibly based on the criteria outlined in my previous paper on how Obama can engage Africa, namely, size of countries and their importance to the US; the long term relationship as an ally or foe; economic interests; security interests; how aligned are these countries with the values of America and; the needs of these countries, namely, their need for foreign aid. A major criterion must be added to this list, namely, the China factor. Since I wrote the paper the Chinese leader has made visits to the continent and America is realizing that China is making a major effort to engage Africa. Obama’s visit is no doubt an effort to emphasise that America is a major player on the continent and wants to be a partner in developing the resources of the continent. What should be the wish list for the countries visited and what are the implications for the rest of the continent, other countries which will obviously look forward to a visit by the President? In particular, what should they do to merit a visit? The exposure that it gives the countries visited and in particular, the opportunities in terms of investment and tourism cannot be underestimated. In this paper the emphasis is on business opportunities on the continent and the benefits of the visits will be maximized if countries can demonstrate that they are good destinations for investment.

Why Senegal, South Africa and Tanzania?

Why were these three countries chosen? A quick review demonstrates how the criteria noted above played a significant role in Obama’s choice. Senegal is a regional hub, playing an increasing role in security issues in Mali and the Sahel region as a whole. The bitterly fought recent election which saw a siting president accept defeat to a challenger established the democratic credential of that country. Senegal has been stable since independence albeit with a long running insurgency in the Cassamance region. The US has economic presence; it is among the top five destinations for Senegal’s exports, with the US accounting for 4.8% of that country’s exports, the fifth largest destination. South Africa is the guardian of the Cape of Good Hope where a significant proportion of American trade is routed through. South Africa, the continent’s largest economy conducts significant trade with America, with the US being the second largest destination (8.6%) for South African exports, after China the leading destination. The US, accounting for 8% of South Africa’s imports is the third largest source after China and Germany. Tanzania’s position in the group has security implications in the still volatile region, notably Somalia and Yemen. The country which has also made strides in governance and economic liberalization has seen impressive economic growth rates for over a decade. It is a richly endowed country with vast potential in oil, uranium, gas, agriculture and tourism. Obama may also be sending a message to Kenya, the neighbouring country where his father hails from, notably, that Kenya should get its act together to merit a visit. Tanzania which has borders with eight countries is in a good position as a regional hub. It does not have significant trade relationship with the America, at the moment; the US does not feature among the top five countries in terms of destination for exports or source of imports.

The wish list and implications for other countries

All three countries possess resources that would be of interest to the US, are of interest to US security concerns and are within Obama’s stated views on making the world a better place. What should be the wish list of these countries and how should they prepare for Obama’s visit? The overall objective should be to market their countries with regard to governance, opportunities for US investors and the market for goods and services in those countries and the US. A key consideration should be on how the US should assist in the development of the infrastructure, a major impediment to economic development and trade.

Senegal must emphasise its position as a regional hub and base for US investment and security projects. It’s relatively good (particularly compared to neighbouring countries) infrastructure and links with countries in the region gives it a strong edge. The Senegalese President stated in a speech in July 2012 that his government wanted an optimal energy mix, with a view to reducing supply costs over the medium and long term through diversification—natural gas, hydropower, and renewable energies—as well as through regional integration. American companies should be well placed to play an important role in energy projects. Senegal has vast solar energy potential and American companies who have pioneered shale gas franking techniques should be invited to make explorations and investment. Other opportunities that should be explored include investment in fertilizer production and other downstream activities for the country’s phosphates. Investment opportunities should also be explored for manufacturing using cotton, groundnuts and fish, commodities where Senegal has abundant raw materials. US investment and markets can also be explored for the country’s ship construction and repair industry. The country’s tourism industry could benefit from US investment and visitors. Senegal still has a lot to do to make the country attractive to investors. The World Bank ranked the country 166th with regard to ease of doing business in 2012, having slipped by four places in the index from 2011. The country’s five worst rankings in terms of individual indicators are: getting electricity; registering property; paying taxes; protecting investors and enforcing contracts. In the run up to Obama’s visit the country needs to do a lot to make it an attractive destination for investors.

South Africa will be looking for acknowledgement and concrete measures to develop and expand its position as the largest, most developed and diversified economy on the continent. It should be looking at getting US companies to invest in production for the home market and exports to the rest of Africa and the world. US investment in power generation and support in marketing South Africa as a tourist destination should be areas to stress. US support for regional integration would also be appreciated. Of particular importance is US help in addressing the dichotomy in the country, a first world advanced economy and a third world developing economy existing side by side. Despite steady but relatively low economic growth and sound macroeconomic and fiscal policies the economy has a daunting problem of skill shortages co-existing with very high unemployment. The World Bank stated that “the potential for faster growth has been held back by industrial concentration, skill shortages, labour market rigidities, chronically low savings and investment rates and spatial barriers from the former apartheid system.” US help in revamping the educational sector with emphasis on math, science and technical skills and assistance in the regulatory and delivery framework of the industrial and labour markets should be a priority. The country scores quite high, 39th, in terms of the World Bank’s ranking on ease of doing business. The worst individual rankings are: getting electricity; trading across borders; resolving insolvency, enforcing contracts and registering property. South Africa needs to do a lot to rise up in rankings in these areas where it currently lags behind. In addition, there are two areas which are not covered by the rankings, namely, availability of skilled labour and crime, two very important issues that the country needs to address to demonstrate that it is a good destination for investment. American help, possibly modelled on the New York City experience in crime reduction should be considered.

Tanzania is well endowed in minerals, agriculture and tourism potential. The country will be looking for US investment in a wide range of sectors and in particular, in mining and processing and manufacturing the plethora of raw materials for the domestic, regional and world market. It would be looking to develop its huge tourist potential in terms of investment in facilities and marketing the country to US tourists. Investment in the agricultural sector in a country with a huge area and a wide range of agro-climatic conditions would be welcomed. Agricultural production has been stagnant because of low yields even with this huge potential and US support and investment should be considered. Tanzania is ranked 134th in terms of ease of doing business. In terms of the individual indicators the country ranks lowest in: dealing with construction permits; registering property, paying taxes; resolving insolvency and; getting credit. The country needs to take measures to improve these and other indicators to demonstrate that it is open for business. It has identified bottlenecks in the infrastructure as priority in its development plan. Efforts would need to be made to continue and escalate the fight against corruption and in training to ensure that a skilled workforce is available if it is to continue its rapid economic growth.

All three countries need to make preparation for Obama’s visit so that they can get the maximum benefits. They must prepare an agenda long before the visit to ensure that Obama’s team is made up of the relevant staff and potential investors. They need to highlight the sound macroeconomic and fiscal policies that all of these countries have put in place and measures that they are taking to make them more attractive to investors. They need to highlight their importance in terms of security issues.

This trip will hopefully be the start of other African tours and countries should try to gear up for future visits by Obama. Countries which could be next on the list need to closely monitor developments in the three countries and prepare for visits. Obama as a “change” President is likely to visit countries that meet his progressive agenda and America’s interests. Other countries need to find out what are the prime motivators for Obama to come calling. A country with democratic, legal, press and economic freedom, sensible macroeconomic policies is likely to attract Obama’s attention and if he decides to pay a visit it could give that country an opportunity to sell its attributes to the world and attract investors and tourists.

Concluding remarks

Obama is star attraction and countries he visits need to make use of the brand. Senegal, South Africa and Tanzania must do their best to get value from the brand. This means doing an Obama on Obama, who would have done considerable research on countries he is visiting. They should do their homework by letting him, members of his team and business executives know what their countries priorities are; do media campaigns involving print, broadcast or digital slot to engage a wider pool of potential investors and policy makers and; and get the home team aware and prepared for the opportunities before and when they meet with the American team. As noted in my previous paper, the emphasis must be on the infrastructure, including physical, governance and education and regional projects. Obama is keen on infrastructure projects and so he should be eager to discuss how America can help build and maintain Africa’s infrastructure. Obviously, he and his team and business executives accompanying them would need to be convinced of the viability of proposals, benefits to the US and the position of the competition. African countries must emphasise that America is losing out in the current scramble for the continent’s resources and that the US needs to up its game. Africa has got resources that are in strong demand and other countries, including China, India and Brazil are taking a keen interest in the continent. For Africa the competition is good and it would welcome America taking an active role in developing its resources. The US has certain attributes that make the country a good partner in aid, investment, trade and security. The emphasis must be on investment and trade, to explore, discuss and decide on areas, projects and business deals by African and American participants in meetings. Other African countries must take note and try to be next on the list which will give them a spotlight and opportunities.

J Boima Rogers is the principal consultant at Media and Event Management Oxford (MEMO). MEMO provides policy, marketing, media and event management services. http://www.oxfordmemo.co.uk.