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Analysts: US-Africa Trade Initiative Still Has Far To Go

Secretary of State Condoleezza Rice this week wrapped up a forum on a Washington program to boost trade ties between Africa and the U.S., the world's largest economy. But analysts say the program has serious pitfalls for Africa, which suffers from poor infrastructure and a lack of financial help for businesses trying to crack U.S. markets.

Ms. Rice paid a visit to Dakar, Senegal to talk up the U.S.-Africa trade deal that she said could help lift Africa out of poverty.

At a meeting with 37 countries, Secretary Rice reiterated Washington's support for the trade agreement, known as the African Growth and Opportunity Act, or AGOA. "Not only is America giving new money, we are revolutionizing how much of that money is given together with Africans who believe in good governance, democracy and open society," she said.

Enacted by the U.S. Congress in 2000, AGOA is essentially a preferential trade program covering nearly 6,400 products, from apparel to automobiles, which can be exported duty-free from Africa to the United States until 2015.

Secretary Rice said the United States will provide $1 million in grants to West African nations to improve transportation safety and infrastructure. She said these improvements are intended to help those countries move goods for trade in the U.S. "AGOA benefits everyone. African businesses create more, better paying jobs and American consumers receive more goods at lower prices," she said.

The United States is urging African producers to diversify the kinds of goods they sell abroad. The U.S. already buys large amounts of oil from Africa, but U.S officials at the conference this week said both sides would benefit from increased trade in an array of other goods, especially agricultural products.

But some experts say, while AGOA does have potential benefits for Africa, poor infrastructure and a serious lack of investment dollars will make it almost impossible for African businesses to get into the U.S. market.

"When you open your market, you need to have in front of you economies and markets that can provide you with a product that will be competitive within your market. But if those economies do not have the production capacity; you are not really able to take those opportunities that the U.S. is offering," said Mouhamet Ndiaye, head of Oxfam's Free Trade Campaign in West Africa.

He says while there is a potential for Africa to succeed, the AGOA framework as it stands, provides no guarantees that Africa as a whole will benefit from the program.

One issue Mr. Ndiaye says will be key to Africa's success is the continent's ability to diversify its export base. Some countries, he says, are highly dependent on a single export product and when international prices drop for that product, they cannot compete.

Stephen Hayes, president of the Corporate Council on Africa, says that while AGOA was initially perceived as an answer to a lot of economic problems in Africa, there are several other issues that still need to be addressed. "I think we are really going to have to look at the mechanisms for really financing the development of those small and medium size businesses throughout Africa," he said.

But one of Africa's biggest problems, Mr. Hayes says, is one that is not so easy to resolve: the belief that investing in Africa is not safe. "The problem I think that we have as Americans with Africa is the perception of Africa. It does not mean that the perception is wrong at all times. It's not right at all times either. And there are some very good places that you can invest in Africa and use that as a base to build from,'' he said.

Mr. Hayes names Botswana, Mozambique, and Ghana among Africa's safe bets for investment.