February 1, 2023

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US trade with Africa is declining, but aid remains stable

Africa accounts for less than 2% of all US merchandise exports and imports. The total value of US exports to the continent fell from $32.9 billion in 2011 to $26.7 billion in 2021, while imports fell from $93 billion in 2011 to $37.6 billion in 2021. According to the US Census Bureau.

South Africa has become the largest trading partner of the United States on the continent. Its exports to the United States rose to $15.7 billion in 2021, the most in at least 10 years. Separate data from the UN COMTRADE database shows total exports of stones, glass, metals and pearls at $7.3 billion.

The gold and diamond trade in particular fluctuates significantly from year to year. South African imports from the US are more stable in terms of value and more diversified. The same source estimates imports of machines, reactors and boilers at $1 billion in 2021, printed books, newspapers and pictures at $700 million, and fuel and mineral oils at $600 million.

US imports of crude oil have fallen by a total of 26% over the past decade, due to accelerating production from the domestic shale oil industry. Even more striking is that imports from OPEC members last year were less than a quarter of their 2011 level, as successive administrations pursued a policy of strengthening energy security.

Iran, Iraq, Libya and Venezuela were particularly unreliable sources of OPEC crude. Russia’s share will now also be redistributed. In contrast, neighboring Canada now supplies more than 50% of all crude oil imports.

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Reduced US imports under AGOA
The Africa Growth and Opportunity Act (AGOA) of 2000 provides duty-free access to the United States for approximately 6,500 eligible tariff lines to select countries in Sub-Saharan Africa (SSA).

Selection requires compliance with human rights, rule of law, and similar criteria. The law adds to incentives already in place under the United States’ Generalized System of Preferences (GSP), which is currently in effect through 2025. US imports under AGOA have declined over the past decade, although, with the exception of oil and gas, they have remained broadly stable.

Aid remains stable
When we turn to foreign aid figures, we find what appears to be a reasonable separation between trade and aid. Detailed data is based on loan commitments and approvals, not payments. While US exports to Africa have declined over the past decade and imports have declined due to changes in the pattern of US oil trade, aid has remained stable at +/- $13 billion annually.

Aid to sub-Saharan Africa accounts for about 27% of the total. The military component is currently 5%, compared to 30% globally. Global health programs accounted for 43% of spending in sub-Saharan Africa in 2020, disaster and famine relief 20%, and development assistance only 9%.

The latter category includes the US International Development Finance Corporation (DFC), which has absorbed the Overseas Private Investment Corporation (OPIC). DFC has invested more than $9 billion in the subregion.

It’s not the only tool for US foreign aid: second place belongs to the Millennium Challenge Corporation, an independent agency founded in 2004 with a preference for five-year “agreements” with countries that meet third-party criteria for democratic governance, investment in people and economic freedom. The total commitments and mandates of the Foundation to date are $7.6 billion.

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