The US’s drive to wrest global supply chains away from China, fuelling a US-centric green manufacturing boom, risks undervaluing African countries’ huge potential as economic and strategic partners, leading experts have warned.
In the last year, the US has unveiled a new strategy towards sub-Saharan Africa, in which economic opportunity is a key component. It has also enacted the Inflation Reduction Act, hailed as the most transformational piece of climate legislation in US history.
But little thought has been given to how these two policies work together.
Africa has deposits of many minerals critical to the green transition. “African countries can be key suppliers of essential inputs into clean energy hardware, whether it’s electric vehicles, EV electric batteries, solar panels or wind turbines,” Zainab Usman, director of the Africa programme at the Carnegie Endowment for International Peace, told GlobalMarkets. “But African countries also need investments to be able to develop some of those raw materials, so that they’re not just exporting unprocessed commodities.”
African leaders are well aware of the opportunity. “The crux of the matter is that there can be no green future without Africa’s minerals,” said Gwede Mantashe, South Africa’s mineral resources and energy minister, at the inaugural African Critical Minerals Summit in August. “We must therefore insist on the creation of value in countries of origin, to change the status quo on the African continent.”
Namibia this year banned the export of unprocessed critical minerals. Zimbabwe has done the same for lithium.
Need for FTA
The US has made selective progress in approaching African states, signing memorandums of understanding with the Democratic Republic of Congo and Zambia in December last year, to strengthen supply chains for EV batteries, “ranging from raw material extraction to processing, manufacturing and assembly”.
But EV batteries are a prime example of the Inflation Reduction Act’s exclusivity. To benefit from the IRA’s lucrative tax incentives, EV battery minerals and components must be processed in or sourced from either the US or a country with which it has a free trade agreement.
Only one country in Africa — Morocco — has an FTA with the US. That means the IRA itself bars the rest of the continent from benefiting from the surge in manufacturing it will engender.
There could be ways round the problem. The IRA is flexible in how it defines an FTA.
The US does not have an FTA with Japan — a major source of battery materials — but managed to satisfy the IRA by signing a specific critical minerals agreement with Japan.
Usman said the US could do something similar by bolting on a section to the African Growth and Opportunity Act. It grants duty-free access to the US market and is due to be reauthorised in 2025.
The US could also invite African countries to join its new Minerals Security Partnership — a collection of 13 countries and the EU, designed to foster public and private investment in responsible critical minerals supply chains.
“The complaint we’ve heard over the past couple of years is that the West is very focused on outlining norms and standards and less around investments,” said Usman. “So there need to be concrete investments going into these countries to help them develop the mineral value chain.”
But norms and standards are likely to cause complications. As Carnegie research notes, the number of AGOA-eligible countries has declined.
Mali — an important source of lithium — lost its privileges after the coup in 2021. Gabon, which once supplied manganese to the US, suffered a coup in August.
Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, said issues like human rights, governance and corruption would continue to impede the US in sourcing critical minerals.
“In the aftermath of the Trump administration the US realised it didn’t really have an African strategy — it had a China-in-Africa engagement strategy,” he said.
Bringing African states into the new clean tech supply chains should form part of a more serious US policy of engaging with Africa. But Hendrix said: “I don’t know how much political capital [the Biden administration] is willing to expend on that issue.”