Johannesburg - The global economic meltdown poses more danger to Africa's growth prospects than the "Buy American" clause.
The clause - which is part of the $787bn stimulus package signed into law this week by US President Barack Obama - has sparked panic that the world could slide into protectionism, further deepening the current recession.
But officials at the Department of Trade and Industry (DTI) have come to the conclusion that it posed no major threats to the preferential market access to the US economy that the continent has enjoyed under the African Growth and Opportunities Act (Agoa).
One of those is DTI trade diplomat George Monyemangene, who believes the clause will not hurt the world's poorest continent.
"If you look at the package itself, it is geared towards rescuing the car and the financial sectors in the US, with which we are not in direct competition," says Monyemangene, who is a chief director for Africa bilaterals at the DTI.
"Moreover, if you look at the export baskets of many African countries they are narrow and limited to commodities, clothing and textiles.
"As far as I know the 'Buy American' clause will not affect these goods. From our perspective, African countries need to focus on regenerating their economies by increasing agricultural output and the beneficiation of other resources. This will ensure we get optimum benefits out of our resources," he adds.
The US has designed the clause to stimulate its flagging economy in order to generate spending and jobs. However, it is seen by the Europeans and the Japanese as a protectionist measure, which they have threatened to retaliate to strongly.
Obama has reassured the world that the clause would comply with World Trade Organisation (WTO) rules. The provision stipulates that only American iron, steel and other manufactured goods be used for public buildings and public works funded by the package. But the provision doesn't apply if US goods would increase the cost of the project by more than 25%.
Nkululeko Khumalo, a trade analyst at the SA Institute of International Affairs, is also not losing sleep over the "Buy American" controversy and confidently argues that it will not affect the Agoa deal.
"The question is does the clause affect the Agoa exports to the US? The answer is no. If that was not the case, we would have seen a lot of reaction from African countries.
"I also don't think that the Americans are breaking the WTO rules although they are sending the wrong message," he says.
Many analysts argue that African countries have failed to take advantage of Agoa, which gives zero-rated-tariff market access to more than 8 000 African products, to speed up their industrialisation, and have remained largely raw material exporters, who are vulnerable to wild swings in commodity prices.
Monyemangene predicts that foreign direct investment (FDI) to the continent could potentially be hit by the global economic crisis and "we may possibly see a marginal reduction in FDI to the continent".
Commodity exports and prices, on which Africa is heavily dependent, have been on a freefall as a result of lower demand induced by the economic meltdown. This is reducing vital export revenues for many African countries.
The crisis is forecast to slash growth in African to 3% this year from initial projections of between 5% and 6%.
The global crisis was set off by defaulting US homeowners, who were exposed to subprime loans. The problem spread to the banking and auto industries, eventually sucking in Europe.
- City Press