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How Can the U.S. Spur Economic Growth in Africa?

Last month, African leaders made their way to Washington, D.C., for the first U.S.-Africa Leaders Summit since 2014. The three-day event came at a crucial time for the United States as American foreign policy experts have grown increasingly nervous about Chinese and Russian engagement in Sub-Saharan Africa in recent years.

The conference primarily focused on combatting the effects of climate change, ensuring Africa’s food security, and deepening the trade relationship between America and Africa. Yet, for all the talk from the Biden Administration about their desire to strengthen U.S.-Africa ties, one key topic went virtually unmentioned: the devastating impact of the U.S.’ domestic agricultural subsidies on African producers.

By artificially lowering the global price of a range of goods, American agricultural subsidies harm African producers. Doling out huge sums of money to American farmers means millions of Africans remain impoverished. The case of U.S. cotton subsidies illustrates this point well.

In West Africa, four countries (Benin, Burkina Faso, Chad, and Mali) have a significant interest in the global cotton trade because about 60 percent of their total crop revenue comes directly from cotton. A 2007 Oxfam study found that if the United States eliminated just cotton subsidies, which amount to $700 million annually, the global price of cotton would rise between 6 and 14 percent. The end of this price distortion would mean millions of African producers receive more money for their crops.

What makes matters worse is that the American government gives this money to farmers who are already fairly wealthy compared to their fellow citizens. In 2016, the median household income for U.S. farmers was $76,000 – 29 percent higher than the median income for all U.S. households. Even more shocking is that American commercial family farms, with a median household income of a whopping $167,000, receive almost 70 percent of commodity payments! These funds are not going to help struggling smallhold farmers.

African leaders know that these price-distorting subsidies hurt their people. The Biden Administration could have scored a substantial geopolitical victory by using the summit explore ways to reduce the assistance American farmers receive. Doing so would have helped convince African leaders that America has Africa’s best interests in mind at a time when great-power competition is occurring in the developing world.

Since 2009, China has been Africa’s largest trading partner, and since 2013, the CCP has poured tens of billions of dollars into Africa through Xi Jinping’s Belt and Road Initiative. In addition, China opened its first overseas military base in East Africa a few years ago, and there has been talk that they may attempt to build another in West Africa (most likely in Equatorial Guinea).

Russia’s engagement in Africa has been less explicit but nonetheless worrisome. Russian mercenaries remain stationed in Africa under the guise of helping governments quell terrorist insurgencies. However, these guns-for-hire have helped Russia gain military influence in strategic regions like the Suez Canal. While Russia’s commercial engagement with Africa has not been significant historically, the Putin regime is keen to deepen economic ties. A Russia-Africa summit was held in Sochi in 2019, and another is scheduled in mid-2023.

With this increased competition in mind, the United States needs to convince African leaders that America recognizes the continent’s growing importance in global politics and wants to help Africa enjoy sustainable economic growth going forward. While the summit has passed, increasing bipartisan support for reducing handouts to American farmers means the Biden Administration could still bring the issue to light. With the prosperity of millions of Africans at stake, let’s hope they act soon.

This article first appeared in the Rational Standard.

Alexander Jelloian is the Research and Project Manager at the Initiative for African Trade and Prosperity.