US Companies to Do Business in Africa

Dancing with the Devil: How Does the US “African Policy” Makes it Difficult for US Companies to Do Business in Africa?

The disintegration of the US-Africa relations is not a modern phenomenon. Their roots lie in events that transpired almost 50 years ago. 

The 1970s was a very challenging decade for US foreign policymakers. Even though in 1972 Richard Nixon’s visit to China was considered a success, the Vietnam War wasn’t going well. In addition to this, the Watergate Scandal was consuming the domestic politics, the Arab oil embargo, the mineral-rich Southern African countries are waging an independence war with the help of the Soviet Union, the longtime friend and ally of the US, the Shah of Iran, was overthrown and replaced by Ayatollah Khomeini, the Iran hostage crisis. It came as a heavy blow to the US as five years earlier junior military officers had overthrown another US ally (Emperor Haile Selassie). The US foreign policymakers were preoccupied with these events and could not challenge the Soviet Union’s political and military dominance in these regions. 

After the Emperor of Ethiopia was overthrown, Somalia invaded Ethiopia with the full military support of the Soviet Union and economic support of the Arab League. The new government in Ethiopia requested shipment of Arms that the previous government paid to the US. 

However, the Carter Administration refused to ship any arms to Ethiopia to please the Arab league. The new government in Ethiopia secretly approached the Soviet Union for arms which the soviets accepted in a heartbeat. As a consequence, Ethiopia became a communist ally for the first time in its history.  

In 1981 when Ronald Reagan got to the White House, the then CIA director William Casey and Secretary of State Alexander Haig openly challenged the Soviet Union and its global dominance. As Gunther Hellmann remarks in The Collapse of “Constructive Engagement”: U.S. Foreign Policy in Southern Africa, the new administration ‘’failed  to  devise  a  coherent  and  effective  policy  transcending  the  tension  between   anti-communism and  anti-apartheid movements.” Due to that, the Middle East and South African became pawns for the US in the war against the Russians

The Reagan Administration wanted to change the regime in Ethiopia. They tried several scenarios, like restoring the monarchy, supporting anti-communist guerilla groups who were pro-US. These efforts did not work. During the same period, inspired by the Marxism–Leninism movement, a small group of Tigrain university students in Addis Ababa moved to Tigray to form a resistance movement. They called themselves the Tigray People’s Liberation Front (TPLF). Their mission was to separate the province of Tigray from Ethiopia. This group formed a strategic alliance in the north with secessionists known as The Eritrean People’s Liberation Front (EPLF). It was heavily armed and had more financial resources than its TPLF counterparts. They had received funds from the Arab states, Egypt, Iraq, and Syria.

The small TPLF group received help from EPLF via arms and military training. At the same time, the Reagan Administration was eager to collaborate with inside parties to overthrow the government of Ethiopia. Due to the absence of opposition groups, they shifted their focus to TPLF. This led to several secret meetings between TPLF and the CIA in Khartoum Sudan, European cities, and occasionally in the US.  They were tasked to supply the anti-government militia with high-grade weapons and equipment. 

In 1983, The Tigray province of Ethiopia experienced a severe drought, which left it helpless in front of the Western countries. The British and US government joined forces to initiate a ‘humanitarian aid’ including food campaigns for the famine-stricken population. They used this as a ruse to supply the anti-government forces with military equipment and satellite communication. At the same time, the Soviet Union and its allies themselves were swept with democratic movement, which ultimately weakened the military regime in Ethiopia. Consequently, the administration empowered TPLF rebels to overthrow the government of Ethiopia. The fateful event occurred in 1991. 

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The rebels stayed in power for 27 years with the full support of the US,   which turned a blind eye to the blatant violation of human rights committed by their allies. Thousands of lives were lost during their chaotic reign. The TPLF was also involved in looting, embezzlement, and money laundering. It led to the loss of billions of dollars in illicit financial outflow, including gold. 

In 2018 a popular people uprising forced the group out of power, and a new administration led by Dr. Abiy Ahmed was formed. As a reformist administration, it made peace with Eritrea and freed political prisoners. Subsequently, it allowed opposition parties outside of the country to come in and participate in the political process. They even welcomed armed forces, hoping to create a level political field and show a united front to the community. These were characteristics they aspired for to promote stability and peace. 

Despite the new administration’s best efforts to bury the hatchet, the TPLF group refused to become part of the change. Instead, they aimed to sabotage all government efforts to reform Ethiopia.  The rebellions moved to the Northern part of Tigray and continued to conspire against the federal government. 

Flash forward to last year, and we see them succeed.  

On November 4, 2020, they used the global hype around the American elections as a distraction to attack the National Defense Force base in Tigray. They raided the army base at night and stole more than 85% of the military equipment. Stolen items included tanks, missiles, rockets, etc. Besides this, they massacred the sleeping soldiers and physically assaulted some soldiers, allowing them to escape without a stitch on their back.

The government of Ethiopia closed the borders of Sudan to prevent the fugitives from crossing the border as an immediate response. The PM flew to Eretria, accompanied by senior military officials. They went there to assess the critical situation and console the surviving soldiers. The delinquents started bragging about their break-ins and threatened to take over the federal government during this time. They instigated terror by firing rockets in surrounding regions, especially in Amhara and Eritrea.

For its credit, the Trump administration acknowledged the crimes committed by TPLF and requested it stop the violence as it might trigger an international crisis.    

Unfortunately, the Biden Administration shifted the narrative and demanded the withdrawal of Amhara regional forces. The Ethiopian government managed to turn things around within three weeks of fighting. The sheer power of the US presence is unbelievable as Africa witnessed the super-powerful anti-authoritarian government bodies succumb to US pressure.

The question is whether or not the Biden Administration will wield this power in the right direction. Their current habit of accusing the government of these actions appears to be a misstep. They repeat their predecessors’ actions by not acknowledging the TPLFs involvement in the Mai Kadra massacre.  

Could this be the start of a proxy war against China? Or could this meddlesome nature be the last nail in the rapidly disintegrating US-Africa relations? 

The BHG Group has witnessed the rise and fall of US-Africa relations for over 25 years. We will open our African operation head office in Addis Ababa this fall. The city is the only place in Africa with a direct international flight to almost all African countries, the Middle East, Europe, Asia, US, South America & Canada. It allows our business (like ours) to work with companies strengthening business relationships with the rest of the world. 

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Apart from this, Addis Ababa serves as headquarters for the African Union. It’s why almost all international embassies are located within this region. In a continent where almost all foreign businesses have to deal directly with the government, such as for business licenses, land lease, building permits, import permits, expat work visa, foreign exchange permits, what is being said and done in Washington D.C. make or break American companies in Africa. 

US companies working in Africa often bear the brunt of the racist remarks and misconstrued statements passed by the White House. From an African perspective, the prolonged inactivity in the economic sector, followed by an unjust travel ban (which included Nigeria, Sudan, Tanzania, and Eritrea) and derogatory remarks, accelerated the downfall of the US-Africa relations. 

Government officials and State departments are unable to be objective to US-based applications. They can’t help but show bias against a country that downgrades them in front of international media. 

As Jeffery Sachs said, “The sad truth is that the American political class and mass media hold the people of poorer nations in contempt, even as they intervene relentlessly and recklessly in those countries.” 

In other words, what the American government wields has a domino effect on the US-African economy and trade relations. 

For example, many US companies have started shifting their headquarters from America to relatively neutral states. In turn,  these changes are causing a significant loss of revenue in the US as these multinational firms have begun purchasing machinery and recruiting workforce from regions it’s stationed in, such as UAE, Holland, Luxemburg, and even Canada. 

Meanwhile, China has taken advantage of the deteriorating ties between the US and Africa.  It currently serves as the biggest trade partner for Africa, generating more than $200 billion annually. Its investment has doubled in the last few years. Forty sub-Sahara African countries signed the MOU for the Belt and Road initiative. Its private investments in Nigeria, Tanzania, Zambia, Madagascar, Malawi, Kenya, and Ethiopia add to this relationship. These resourceful contributions have swayed African investors and leaders towards the Asian market. This is a stark contrast from the power dynamics in 2000 when direct foreign investments to Africa from the US were $ 10 billion and China was $1 billion. The numbers have switched to US investments being $ 49 billion while China invests more than $200 billion.

Therefore, if the US wants to reassert its power in Africa and position itself as an undefeated global economic power, it needs to change its US foreign policy. Instead of feigning a friendly attitude and displaying goodwill symbolically, it needs to focus on things that matter.

In other words, the US administration needs to stop dancing with the devil and make practical efforts to assist the federal government of Ethiopia.

I am a simple girl who loves to write and play football. My interest towards writing has made me write a lot of eBooks and short stories. I believe writing is that passion which helps you connect with your readers.