Bang for the buck: U.S. aid to South Africa

Out of $4 trillion dollars in the U.S. federal budget, how much is spent on foreign aid?  While most people in a recent poll thought it was around a quarter of the annual budget, the true answer is around one percent.  In this post, I want to explain two key programs that have impacted my new home country: PEPFAR and AGOA.  The United States plays a substantial role in making the future of South Africa brighter!

PEPFAR: Curtailing the epidemic of HIV/AIDS

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During the first eight years of the millennium, I rarely had anything positive to say about the President of the United States.  President George W. Bush, though, signed into law the “U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003,” which transformed medical care in southern Africa.  His name is still respected in South Africa because of this law; it yielded the President’s Emergency Plan for AIDS Relief (PEPFAR).  This program has been renewed twice by bipartisan vote, in 2008 and 2014.  In the thirteenth year of the program, PEPFAR supported anti-retroviral treatment (ART) for 11.5 million people living with the Human Immunodeficiency Virus (HIV), with that number having climbed by 50% since 2014.  Some two million babies have been born without HIV from mothers who carry the virus.  This is an amazing accomplishment, and it couldn’t have come at a more critical time.

The HIV crisis in South Africa began as it did in the United States, with AIDS appearing in the community of gay men during the early 1980s.  Cases were documented in the heterosexual community in 1987.  By 1990, the crisis had begun to grow rapidly.  It is worth noting that South Africa was coping with tremendous changes during this period as the Apartheid government was compelled to cede power; Nelson Mandela was released from prison in February of 1990.  When he became President in 1994, however, the new government was unable to do much about the growing epidemic.  1996 was a watershed year for HIV as ART was announced, and the first drugs became publicly available (though expensive).  In 1999, Thabo Mbeki was elected President, and the public thought that HIV prevention and treatment might become a priority under his leadership.  His Presidential AIDS Advisory Panel, however, was dominated by HIV denialists / “AIDS dissidents” who claimed the virus had nothing to do with AIDS.  Not only were ART drugs not made available widely, but ART was withheld from pregnant women carrying the virus.  Nelson Mandela re-entered the debate in 2000 by a powerful closing speech at a Durban international conference on AIDS.  The topic became even more personal to him when his son died of AIDS in 2005.  Against this complex historical background, the prevalence of heterosexually transmitted HIV-AIDS was surging.  “By 1994, this had risen to 7.6%, and by 2005 was 30.2%, with an estimated 5.5 million of South Africa’s 47 million people infected.  An estimated 1000 new HIV infections and 900 AIDS deaths occurred each day” [Giliomee and Mbenga, p. 418].

PEPFAR has a tremendous role to play in today’s South Africa.  The program currently estimates that 7,000,000 people in the country are living with HIV, with approximately half protected by ART.  180,000 people die of AIDS each year in South Africa. “South Africa now has the largest number of patients on anti-retroviral drugs in the world, and South African life expectancy has increased by more than a decade.” [Bekker et al.]  Just imagine the impact if PEPFAR were no longer paying for HIV treatment!

Please be aware that there have been changes in the Trump Administration that suggest this program may be in trouble.  It is no exaggeration to say that real people will die without PEPFAR.

AGOA: “Trade, not Aid!”

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Debate may never end over the best way for wealthy nations to support the growth of poor nations.  When wealthy countries give food aid to poor nations, those efforts can undermine the economic growth of agriculture in those countries.  The African Growth and Opportunity Act (AGOA) was enacted in 2000, the last year of Bill Clinton’s presidency.  You may be thinking, “gosh, another economic treaty I need to know about!”  In fact, AGOA is not a treaty.  AGOA is a unilateral decision by the United States to drop taxes and quotas on imports of particular goods from countries in sub-Saharan Africa.  The program began by including 34 countries and soon expanded to 40.  After the first fifteen-year run of the program, the U.S. Congress decided to renew AGOA for an additional ten years in 2015.  Each year, the President decides exactly which countries will be extended these benefits.

The metrics for AGOA success paint a somewhat equivocal picture.  The 2016 biennial report shows $23.5 billion in exports from Sub-Saharan Africa in the year 2000.  This number grew to $86.1 billion in the year 2008 before falling back to $18.5 billion in 2015.  This might seem an abject failure, but much of the decline reflects reduced oil exports to the United States and the worldwide recession of 2009.  Most Sub-Saharan countries, of course, would like to export to the world’s biggest economy!  America, in turn, uses this desire to requiring development toward “a market-based economy; the rule of law, political pluralism, and the right to due process; the elimination of barriers to U.S. trade and investment; economic policies to reduce poverty; a system to combat corruption and bribery; and the protection of internationally recognized worker rights” [2016 biennial report, p. 8].  Essentially, the United States waives taxes on imports from countries that behave as the United States would like to see.

South Africa has had an interesting story within the framework of AGOA.  As the continent’s most advanced and diversified economy, South Africa was a bit of a question mark for inclusion in the 2015 renewal of the law.  Did it make sense to give these trade benefits to an economy that was already moving rapidly?  South Africa made itself a less attractive trade partner by raising trade barriers against American farmers exporting meat to South Africa, which caused them to violate the “elimination of barriers to U.S. trade” rule above.  At the start of 2016, the situation had deteriorated enough that Barack Obama suspended AGOA benefits for South Africa.  This action was enough to convince the foot-dragging South African government to drop its trade barriers, and so South Africa is once again an AGOA beneficiary in good standing.

What will happen to AGOA under the Trump Administration? Although President Trump has been ambivalent on the subject of free trade, he has not signaled that he will seek to end AGOA either by unlisting all participant countries or seeking the repeal of AGOA through the Congress.  Africans do not expect great things from President Trump, though.  His Tweets about South Africa have had a generally negative tone.

In the end, South Africa is proud of its ability to take care of its own problems.  If AGOA comes to an end, the country will lose one of its best customers for fruits and vegetables, and the automobile industry growing in the Eastern Cape would suffer.  The loss of PEPFAR, on the other hand, would devastate health care in South Africa.  The economy of South Africa is not strong enough to bear the cost of supporting ART on this scale.  The country already relies on the permissive, pro-public health intellectual property laws of India to have access to generic ART.  We can all hope that the PEPFAR and AGOA relationships between South Africa and the United States continue under President Trump!

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