U.S. State Department Geographic Bureaus: Africa Bureau

U.S. DEPARTMENT OF STATE
95/04/04 REMARKS: G. MOOSE ON TRADE/INVESTMENT IN SUB-SAHARAN AFRICA
BUREAU FOR AFRICAN AFFAIRS

REMARKS BY GEORGE E. MOOSE
ASSISTANT SECRETARY OF STATE FOR AFRICAN AFFAIRS
TO THE ANNUAL TRADE AND INVESTMENT CONFERENCE ON AFRICA
SAN FRANCISCO, CALIFORNIA
April 4, 1995

Good afternoon. I am pleased to be here today to talk to you about the democratic transformations in Sub-Saharan Africa and their implications for U.S. trade and investment.

This morning, you heard from a number of U.S. Government experts on Africa. This afternoon, you will be hearing from representatives of the multilateral banks, African embassies and the private sector. Public- private participation in this conference is an indication that the promotion of U.S. trade and investment is a joint effort, and a matter of great importance to us.

I want to express my appreciation to all of you -- to The Northern California District Export Council; to the Corporate Council on Africa; to the representatives from African embassies and to all participants -- for the work you are doing in fostering a shared vision of an African-American partnership.

AFRICA IN TRANSITION

Africa is undergoing a transformation, potentially comparable to what Latin America experienced over the past decade. The clearest indicators of this transformation are the growth and expansion of democratic governments and institutions, paralleled by significant economic reform and liberalization. Nearly two-thirds of African countries are now at some stage of democratic transition compared to only four in 1989.

Many African nations have taken difficult and courageous steps to keep budget deficits down, maintain realistic exchange rates, and increase competition through domestic deregulation, trade reform, and privatization of public enterprises. The aim of these reforms has been to create an enabling environment in which the private sector can act as the engine of development.

U.S. leadership and support are critical to that transformation. Our diplomatic efforts and bilateral aid programs have given significant impetus to democracy-building and economic development. Our contributions to the programs of the World Bank and International Monetary Fund in Africa have reinforced economic policy reforms and infrastructure development.

The transformation of Sub-Saharan Africa has significant implications for U.S. interests. First, the progress realized to date has stimulated growing interest and opportunities for U.S. business. Second, the emergence of more stable, more democratic governments has given us responsible partners with whom we can address the full range of regional and international issues: settling or preventing conflicts; combating crime, narcotics, terrorism, and weapons proliferation; protecting and managing the global environment; and expanding the global economy.

Although the results thus far have been encouraging, we must recognize that Africa's transformation is ongoing, incomplete, and still tenuous in many places. It would be extremely shortsighted not to persist in the effort to consolidate and protect the investment already made. The problems that would arise if the transformation falters -- failed states, political instability, human tragedy -- would pose direct threats to U.S. interests and security.

TOUR D'HORIZON

Nowhere are the benefits of active U.S. involvement and investment more evident than in Southern Africa. Our efforts at conflict resolution and democratic institutions have paid -- and will continue to pay -- significant dividends.

In South Africa, the establishment of a non-racial democracy has encouraged U.S. business to contribute to the country's economic development and help erase the economic disparities that are the legacy of apartheid. South Africa already accounts for $2 billion in trade -- nearly half of U.S. exports to Sub-Saharan Africa. The number of U.S. companies in South Africa has risen from 184 in 1991 to approximately 500 today. AT&T, Citibank, IBM, Kodak, Sara Lee and Procter & Gamble are becoming household names; and Ford and Pepsi have recently made multimillion-dollar investments. South Africa is the cornerstone of a much larger market, one that encompasses the 11 nations of Southern Africa and their 130 million inhabitants, and extraordinary minerals, wildlife, and other resources. The potential of the sub-region is what has led the Commerce Department to declare South Africa one of the world's ten major emerging markets for U.S. exports.

South Africa's transformation is now an important part of the story of an ever-increasing number of countries across the continent who are moving towards democracy and liberalization, and reaching out for a piece of the global economic pie.

Next door in Mozambique, the elections last October brought about a new parliament and the beginning of a process of both conflict resolution and democratization. This election, in which 87 percent of the population participated, gave Mozambicans an opportunity to take a giant step towards democracy. For the investor, it opens the door to the development of mineral, timber, and fishing resources.

In Angola, last November the signing of the Lusaka Protocols brought forth a new opportunity for peace in a country which offers tremendous openings for U.S. trade and investment. A recent cable from our Embassy in Angola asked us for additional personnel to help support U.S. trade and investment in that country which could see a doubling or tripling of U.S. exports in just a few years.

In West Africa, Ghana provides an example of how U.S. leadership in promoting democratic institutions and economic reforms has turned Ghana into one of our most promising African export markets. Between 1992 and 1993, U.S. exports to Ghana expanded by 73 percent. U.S. business has found profitable opportunities in gold and diamond mining, tourism, agribusiness, aquaculture, oil and gas exploration and refrigeration. At the end of April, Ghana will be the site of a telecommunications summit hosted by Southwestern Bell for ministerial-level representatives from some ten African countries.

In Senegal, one of the oldest democracies on the continent, important steps are being taken to encourage foreign trade and investment. From May 1 through 6, President Diouf, together with Reverend Leon Sullivan, will co- sponsor the third African-African American Summit. Several hundred American business representatives will participate in a three-day Business Forum and Workshop, and will have an opportunity to meet with a large number of Africans interested in doing business with the United States. Some twenty African heads of state are expected to attend.

In East Africa, Uganda has made tremendous strides and is now experiencing a boom in trade and investment. Its performance in implementing economic reforms is among the best in Africa. Uganda's Investment Code has streamlined procedures and now provides for a one-stop investment service center. The Code includes provisions regarding the repatriation of profits and protection against expropriation of assets.

Unfortunately, there have been setbacks as well. We recently saw the overthrow of one of Africa's longest sitting democracies in The Gambia, civil unrest continues in Somalia, Sierra Leone and Liberia, the tragedies in Rwanda and Burundi highlight the complexities of ethnic strife, and democratic reform remains elusive in Nigeria and Zaire.

Yes, these are stories that hit the front pages of our major newspapers. But they overshadow the positive story that needs to be told about Africa's political and economic future.

TRADE AND INVESTMENT

Secretary of State Warren Christopher has been firm in his commitment to an "America's Desk." He said the purpose of this desk was to advance the vital interests of the United States, and he has done that. He, along with Secretary of Commerce Ron Brown, has been vigorously working to help American companies win in world markets. In an appearance before the House International Affairs Committee last week, Secretary Christopher said that Africa was a market for American exports and jobs.

With over one-half billion consumers and imports rising about 7 percent annually, Africa's market is more than significant in global terms. There is great potential in sectors such as telecommunications, finance, agriculture, and natural resources. The U.S. direct investment position, conservatively estimated, stands at $3.5 billion. In 1994, U.S. firms exported nearly $4.4 billion in goods to Sub-Saharan Africa. This is 22 percent greater than our exports to the New Independent States of the former Soviet Union.

These exports represent tangible benefits to American families. By some estimates, every extra $1 billion in exports adds 19,000 new jobs in the United States. Doubling our exports to Africa could create an additional 90,000 jobs at home. And our exports to Africa will increase, provided that the political and economic transformation currently underway is sustained. Given the potential gains to the United States, our current development aid to Africa -- about one-half of one-tenth of one percent of the Federal budget -- represents a minuscule investment with the possibility of a tremendous future pay-off. Already, U.S. firms are earning over five times more in exports to Africa annually than the $800 million we are providing in assistance through the Agency for International Development's Fund for Africa. INITIATIVES TO BOOST TRADE WITH AFRICA

This Administration has vigorously pursued global trade and investment initiatives that will boost U.S.-Africa business and commercial ties and help integrate Africa into the world economy:

-- Trade. The successful conclusion of the Uruguay Round negotiations and the creation of the World Trade Organization will enhance trade opportunities with African countries. The U.S. Trade Representative (USTR) is chairing a working group to formulate and implement a comprehensive trade and development policy to ensure that these countries are able to take full advantage of the opportunities to compete successfully in growing regional and global markets as trade barriers come down.

-- Investment. On multiple fronts we are pursuing our goals of open markets, non-discriminatory treatment, and basic fairness for U.S. investors doing business abroad -- be it in Europe, East Asia, or Africa. Where appropriate, the U.S. Trade Representative and the Department of State negotiate Bilateral Investment Treaties that protect investors from expropriations and assure the right to transfer funds and access to fair dispute resolution mechanisms.

-- Debt Relief. The United States and other creditor nations have established a mechanism in the Paris Club to offer debt reduction on a selective, case-by-case basis to countries that are undertaking economic reforms, but that are still saddled with heavy debt burdens that inhibit private investment and growth. Some two dozen low-income African countries have benefited from debt reschedulings or reductions over the past several years, and the President has committed to expanding this to other nations that will eventually qualify

SUPPORT FOR U.S. BUSINESS IN AFRICA

I have indicated how our policies and programs that promote democracy, peace, and sustainable development in Africa reinforce U.S. economic interests and provide significant indirect benefits and opportunities for the U.S. private sector. But, working closely with the Department of Commerce, the Export-Import Bank of the United States, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, the Agency for International Development and other government departments, we are also actively involved in providing a range of direct support services and assistance to the business community. Let me provide just a few recent examples of the role our embassies are playing:

-- In Angola, our Economic/Commercial Officer facilitated a half-dozen major new investments or sales from U.S. Fortune 500 companies in two years. He turned around a local tax ruling that would have effectively barred a U.S. company from returning to Angola, and also assisted numerous smaller firms.

-- In Botswana, the U.S. Ambassador's intervention resulted in removal of discriminatory tender requirements that hampered a U.S. company's bid on a $180 million contract to supply pipes for a major water pipeline.

-- In Cote d'Ivoire, the U.S. Embassy worked closely with representatives of a U.S. company to keep the country's leadership apprised of its bid to develop natural gas and oil fields and construct pipelines. The Houston- based firm outbid a large French competitor and signed a multimillion- dollar contract with the Ivorian government last September.

-- In Ethiopia, our Embassy helped a Louisiana-based company in a hard- fought and successful bid for an $84 million project, with prospects for an additional $50 million in sales of related U.S. goods and services.

-- In Madagascar, our Ambassador's efforts to ensure a level playing field for all bidders resulted in the signing of a lease/purchase agreement for a U.S. aircraft.

-- In Mozambique, our Embassy provided a briefing on opportunities for callback telephone services. Within six months, the U.S. company had established itself as the market leader in providing an economical alternative for long-distance service. Its international marketing manager wrote to thank our Ambassador last April, noting that, "as U.S. taxpayers, we certainly feel that we are getting more than our money's worth in Mozambique."

-- In South Africa, joint U.S. Mission efforts in Cape Town and Johannesburg made business arrangements for a recent North Carolina trade delegation headed by Governor James Hunt. The consulates played matchmaker for a number of U.S. firms and potential South African partners. One deal has already been signed, and more are in the pipeline.

PRIVATE SECTOR PUBLIC SECTOR PARTNERSHIPS

Providing information on economic trends, local business practices, and financing options; ensuring a level playing field; removing discriminatory regulations -- this is the kind of work that our embassies in Africa and our personnel in Washington do every day to help U.S. businesses, large and small.

We have ongoing contacts with a variety of Africa-related business groups, such as the U.S.-Angola Chamber of Commerce, the U.S.-South Africa Business Council, the African Business Roundtable and the Corporate Council on Africa, to ensure that your input is included in our policy. These are the kinds of partnerships between business and government that we value and wish to strengthen.

A few months ago, for example, the Corporate Council on Africa, the Department of State, and other Federal agencies held a series of roundtable discussions on improving commercial opportunities in Africa. I participated in discussions, and found many of the recommendations to be useful and timely. Some of the issues that the Corporate Council raised -- the need to remain engaged throughout Africa, the need to support regional economic integration, the need to secure broader international adherence to the principles of the Foreign Corrupt Practices Act, the need to re-invent the role of our embassy economic officers -- are issues that we are already in the process of addressing.

Other Corporate Council recommendations, however, touched on complex issues that require careful analysis and close consultations with Congress. The availability of government-supported export financing, for example, is a central concern; but it is a difficult issue, given that current practice is rooted in the provisions of the Credit Reform Act and the charter legislation for Eximbank and the Overseas Private Investment Corporation. Regina C. Brown, our Deputy Assistant Secretary for Economic and Business Affairs, is chairing an interagency review of the Council's recommendations, with the aim of identifying concrete and feasible steps the Administration can take to address the concerns that have been raised.

CONCLUSION

To summarize let me reiterate that Sub-Saharan Africa is entering a new era, and both Americans and Africans have much to gain through the experience. U.S. leadership and support have been critical to this transformation. But is the Africans themselves who have created new and important opportunities for U.S. business. U.S. exporters and investors, in turn, have reinforced development goals in African nations and contributed to the better integration of Africa into the world economy.

That said, we recognize that some of Africa's governments are fragile and their transformations incomplete. And so our efforts to strengthen democracy, resolve conflicts, work together on transnational issues and promote economic progress will continue to deepen the mutually beneficial partnership between two great regions of the world.

As you go forward with your plans, let me assure that your feedback is of great value to us. We will do our best to help you reach your objectives.

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