East Africa’s growth has captured the solid interest of the United States, who’ve proposed a trading bloc with the region. What does it mean for Africa?

NAIROBI (Reuters) – The United States has proposed a new trade deal with the East African Community (EAC) common market, underscoring the growing interest of American businesses in investing in Africa, a senior adviser to President Barack Obama said on Wednesday.

The five-nation African bloc of 130 million people has doubled intra-regional trade in the five years after it introduced a customs union in 2005.

Trade between the EAC – which includes Kenya, Tanzania, Uganda, Rwanda and Burundi – and the United States rose 34 percent in 2011 from the previous year, said Michael Froman, assistant to Obama and deputy national security adviser for international economic affairs.

“The trends are all headed in the right direction, and increasingly U.S. and international companies and investors are making Sub-Saharan Africa, and East Africa in particular, a priority,” Froman told a luncheon held by the American Chamber of Commerce in Kenya.

Froman said the proposal by Obama for a new trade deal was meant to encourage this trend and support further EAC integration. The deal would seek to guarantee American investors that they would be treated fairly and that their investments would be secure.

“It calls for a focus on trade facilitation to reduce the bottlenecks at the border, such as moving to a single border clearance and harmonising customs documentation, to reduce delays and unnecessary costs,” he said.

American firms that have chosen to base their Africa operations in Nairobi in recent years include Coca-Cola Co., Google Inc. and General Electric.

Froman is on a tour of Africa that included stops in Tanzania and Ethiopia and will end in Nigeria this week; he has been meeting with government officials and private-sector business leaders.

Although East African economies are growing faster than others on the continent, border delays and the harassment of small traders by police have drawn criticism and held back further economic growth.

EAC officials have been holding up the doubling of trade in the region over half a decade as a sign of clear progress.

Next year’s general election in Kenya, the region’s largest economy, has also raised concern after the last vote in 2007 was marred by deadly violence.

“The eyes of the region, the continent and the world are on Kenya as it prepares for elections next year,” Froman said, adding that the U.S. would work in the country to promote a free and fair vote.

What does it mean for Africa?

The move seems to be both strategic as well as economic. Given China’s ever-growing influence in the region, the US wants to ensure its stake in East Africa remains stable, and expands, if at all possible.

China is touting its close relations with Africa to anyone who’ll listen. In a China Daily newspaper article this week, China’s Commerce Minister Chen Deming stated that total trade between China and Africa hit a record high of US$166 billion ($256 billion) last year.

Chen said direct Chinese investment in Africa reached US$14.7 billion by the end of 2011, a 60 per cent increase from two years earlier. “The trade and economic co-operation has witnessed faster growth across wider areas in more diversified forms, bringing more tangible benefits to the Chinese and African people.”

China has emerged as Africa’s main trading partner and a major source of investment for infrastructure development, pouring billions of dollars into roads and developing the energy sector across the continent. But its presence has also sparked concerns about labour abuses and corruption, while some African countries have grumbled about problems arising from being locked in a tight embrace with the resource-hungry Asian economic power – issues America (and their African counterparts) would be wise to counter as much as possible.

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Sources:

Reuters – www.Reuters.com

The New Zealand Herald - http://www.nzherald.co.nz

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