U.S. Assistant Secretary of State Johnnie Carson (Photo Courtesy Tami Hultman/AllAfrica)

The following is the address by U.S. Assistant Secretary of State Johnnie Carson to the annual meeting of the Corporate Council on Africa in Washington, DC.

Thank you for the very kind introduction. It is a pleasure for me to be here today to participate in the Corporate Council on Africa's annual membership meeting. Thank you Mike and Steve and all the CCA members. I would also like to recognize many other friends here, including those from the African diplomatic corps, Congress and the private sector.

Africa has been a large part of my professional life, and I have had the privilege of serving in six different African countries as a State Department officer. In three of them -- Kenya, Zimbabwe and Uganda, I had the honor of serving as the United States Ambassador.

I am not shy about telling anyone that I love Africa. I believe in Africa's promise and I am committed -- like many in the Obama Administration -- to helping Africa realize its vast potential. President Obama and Secretary Clinton have made enhancing trade and commerce between Africa and the United States as well as within Africa a top priority for the Administration.

Last August, the Secretary addressed the African Growth and Opportunity Act Forum in Nairobi and spoke passionately about the opportunities and vast untapped potential for economic progress in Africa. As we move into the second decade of the 21st century, no other continent in the world has as much untapped economic and commercial potential. From Cape Town to Cairo and from Lagos to Lilongwe, opportunities are to be found everywhere for those who seek them.

This Administration is determined to help by continuing our support for AGOA and MCC and by expanding our trade relationships with Africa by signing more bilateral investment treaties. We are also committed to working with the private sector on growth.

Despite my optimism about Africa's potential, I try not to divorce my aspirations for Africa's success from the day to day realities of living and doing business in Africa. Those who know me understand that I do not back away from putting the facts on the table and identifying problems where they exist, no matter how difficult this may be to hear. In this vein, let me say point blank that doing business in Africa is often difficult, frustrating and fraught with risks.

The culprits are many, including of course chronic instability in some areas, such as Somalia, Sudan and the eastern DRC, and coups such as we've seen over the past year or so in Madagascar, Guinea and Mauritania -- and yesterday in Niger. Even where there is relative stability, endemic corruption, poor judicial systems and a lack of transparency frequently stifle private investment, economic growth and new business opportunities. This is enormously frustrating to say the least.

As businesspeople, you know what I am talking about. Some of you have experienced it first hand, or personally know someone who has.
In a number of countries across Africa, American companies have been locked in disputes and disagreements because the business and commercial rules of the road are not clear or have changed after a deal has been made. The Votaphone telecom case and mining problems of Freeport MacMoRan in the DRC are examples of this. And the Millicom case in Senegal and the now resolved APR Energy case in Tanzania are two more.

In addition to the legal and regulatory challenges, businesses across Africa also face serious structural problems that undermine and impede the growth of a company. These include the lack of infrastructure, particularly dependable, low cost sources of power and water, that require firms to resort to their own generators for electricity, and drives up the cost of doing business. Last week I was in Nigeria and spent some time speaking with members of the business community, as well as numerous government officials. They estimated that 70 percent of Nigeria's electricity is privately generated. In oil rich countries like Nigeria and Angola, there is no excuse for this.

Firms operating in Africa must also contend with the high cost of inland transportation, sky high ocean freight charges and long port delays; it costs more to move one container from Mombasa to Kampala, a distance of less than 800 miles, than to ship it from New Jersey to Mombasa, a distance of almost 8000 miles.

In many parts of Africa, there are no good all weather roads and rail networks. Nigeria for example has virtually no rail system to move goods from north to south, or east to west. A once thriving rail net work is now moribund. Togo, which has the potential to be a transshipment hub for West Africa also had at one time a viable rail system that no longer exists. The absence of infrastructure is an impediment to investment and business.

Add all of this up, and some would say that Africa has one of the most difficult, unpredictable and costly business environments in the world.

Despite these challenges, there are grounds for optimism and there are good reasons why we should be actively and aggressively engaged in Africa's economic and commercial future.

Fuelled largely by high commodity prices for much of the past decade, Africa's economy as a whole has grown at a higher rate than the world economy and the global downturn has had a smaller impact on Africa. While such growth has tended to be concentrated in those nations with generous natural resource endowments, reforms and relatively good governance in many other countries are a positive sign. In its Doing Business 2010 report, the World Bank ranked Rwanda the world's top global reformer with successful reforms achieved in seven of 10 business regulatory categories. The challenges facing Rwanda after the 1994 genocide are well known but under President Kagame's leadership, Rwanda has made huge strides economically and stands out as a model for others.
Liberia has also made progress and was ranked the second fastest reformer in Africa, Liberians have worked hard to make it easier to start a business and hopefully these improvements will see more investors going there. Meanwhile, Mauritius broke into the top 20 in overall ease of doing business (out of 183 countries ranked worldwide). Others, such as Mozambique, Namibia, Botswana, Ghana, Tanzania and Cape Verde achieved high growth rates throughout the decade in large part because of generally sound policy frameworks. But Africa should not be satisfied with these achievements because they are still too few and far between.

I firmly believe that it is vital for Africa to attract business and investors if it is to break out of its cycle of poverty. Some people think that economic growth can be generated by development assistance from USAID and other donors. Development assistance is important to Africa, but it will not result in sustained economic growth. It won't lead to the creation of new jobs, new capital and new industries -- that role falls to the private sector—which has demonstrated repeatedly that it knows how to do it better.

For those who get involved in Africa the rewards can be great.

The sectors with the greatest prospects include agriculture. With an area of approximately 12 million square miles, Africa possesses vast amounts of underutilized arable land. With appropriate infusions of technology and expertise, Africa's food production and agricultural exports could improve markedly. Major investors from emerging states such as India and Saudi Arabia have already moved aggressively into African agriculture.

With the U.S. Government's Global Hunger and Food Security Initiative, significant investment opportunities in irrigation, fertilizers, seed development and rural credit will likely emerge. This in turn should assist African states involved in the initiative to take better advantage of opportunities under AGOA.

Infrastructure is another growth area. Construction and rehabilitation of Africa's physical infrastructure is a critical need and a high priority in a number of countries. American investors and businesspeople are likely to find opportunities in the areas of transportation, housing, irrigation, electricity and waste removal over the next decade.

A number of OPIC and USTDA supported infrastructure projects are either underway or on the drawing board, such as power generation in Liberia, Togo and Kenya. Significant rail and port rehabilitation projects are planned in several countries. The infrastructure sector is virtually wide open.
Oil and natural gas exploration have seized the spotlight in recet years, with recent discoveries in Ghana and Uganda. But minng remains a key investment area in Africa, which possesses 88 percent of the world's diamond reserves, 73 percent of the platinum and 40 percent of the gold. Other materials are found in abundance, including chromium, silver, copper, and cobalt. For better or worse, the DRC often dominates the news in mining in Africa, but recent large-scale investment in titanium dioxide extraction in northern Mozambique by the Irish firm Kenmare illustrates the continuing opportunities in the minerals sector.

Telecommunications is perhaps the most active and important growth sector on the continent. This industry is expanding rapidly as African consumers demand more and better communications services. Africa has become the fastest growing mobile market in the world with mobile penetration in the region hovering around 30 percent. Since Africa ranks at or near the bottom worldwide in the number of landlines, cellular subscriptions and internet users, the industry seemingly has nowhere to go but up and markets in Kenya and Nigeria present enormous potential for growth.

A recent OPIC partnership with the Portuguese group Telecom to expand and upgrade services in Angola, Mozambique, Cape Verde, Namibia and Guinea- Bissau highlights the possibilities in this sector. Another market of great potential is Nigeria. With a population of 150 million, Nigeria has an internet penetration of only five percent. At some point in the not too distant future, some smart entrepreneur will be able to establish a thriving computer or mobile internet service business.

Health care is one of the continent's most pressing needs. HIV/AIDS, malaria, cholera, and tuberculosis have increased infant mortality and decreased life expectancy across Africa and affected the quality of life for millions of Africans. Africa is also the continent hardest hit by HIV/AIDS. With international agencies such as the UN, the USG program PEPFAR and private sources like the Gates

Foundation committing substantial resources to the sector, there are numerous opportunities for investors in health services.
In the aftermath of Copenhagen, opportunities are emerging for investment in the area of climate change mitigation. Training and capacity building programs will help to conserve and protect African forests, offset the impact of deforestation and the burning of biomass, as well as reduce greenhouse gas emissions. Sustainable forestry and agricultural management investments could mitigate carbon emissions, and promote increased carbon sequestration, natural carbon sinks and carbon-capturing techniques.

Investment opportunities are also emerging in the development of alternative energy. A low-carbon future for Africa linked to solar, wind, geo-thermal, hydro-, and bio-fuel resources is consistent with our climate change goals. Solar technologies including passive solar heating and photovoltaic systems could be developed. Geothermal investments, both large and small scale, could yield extremely efficient sources of energy utilization; the Great Rift Valley has already proven itself as a geothermal resource for Kenya and Ethiopia.

While much of Africa lies within the equatorial belt with lower wind resources, there is potential for large-scale development of wind turbines in the northern and southern regions of the continent, and possible small-scale projects in the central region. Hydropower in Africa remains under-utilized. The Congo River alone accounts for nearly 30 per cent of Africa's surface water reserves and could potentially generate 600,000 megawatts of power. A well-balanced and designed combination of wind, solar and hydropower could meet 80 percent of the continent's electricity demands. To harness this potential would require targeted investment in appropriate technologies and infrastructure.

In short, the time is now for business in Africa. Others, such as China, and emerging states like India and Brazil know it too. The CCA can lead the way for the U.S. private sector. You have a proud history of engagement with Africa, one that must be built upon and expanded. The USG must also play its part, including of course the Africa Bureau at State, which I am privileged to lead. We will work with and where necessary push our interagency partners such as OPIC, EXIM and USTDA to expand and enhance their interagency coordination with their Africa programs.

By working together smartly, we can achieve more for American business and for Africa's economic growth. We must improve also AGOA and help African states boost their international and intra-regional trade. Africa's share of world trade is less than 3 percent, and must increase dramatically. We must use all the tools at our disposal, including MCC compacts, bilateral investment treaties, trade and investment framework agreements, etc. and use them more creatively.

The Africa Bureau recently created a discussion forum -- we call it the Economic Growth Working Group -- with the African diplomatic corps based here in Washington to analyze and act on the challenges I have raised this morning. As we work to reinvigorate our efforts to enhance the trade and commerce relationship with Africa, we welcome your ideas and will depend on our partnership with CCA.

At the end of the day, Africa's potential is huge. In this age of openness and globalization, to squander that potential would be nothing short of tragic. Averting that outcome is the challenge before us, but I know we are up to the task.

Thank you very much for your attention.