Africa: Fostering Africa's Emergence as a Global Economic Powerhouse

15 April 2011
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Chicago — Following is the keynote address to Chicago Africa Business Group Second Annual Africa Business Symposium at the University of Chicago Booth School of Business

I am honored to have been invited to share this event with your roster of distinguished speakers.

Your theme this year, "Leadership and Business: Fostering Africa's Emergence as a Global Economic Powerhouse," is one I feel strongly about. I believe that U.S. leadership and business can go a long way toward fostering Africa's emergence, and I believe that Africa needs U.S. capital investment and technical expertise to become a global economic powerhouse. I also believe that we need Africa as much as Africa needs us, and that the U.S. public and private sectors  should play a larger role in Africa's emergence.  Africa's economy is well on its way to a position of strength; what needs fostering is  our recognition of Africa's emergence, our understanding of how we might benefit from it, and our crafting of a coherent, commercial-based Africa policy.

Many of you in the audience know that there is a window of opportunity open in Africa. Why is it, I wonder, that we recognized this only after noticing that others were jumping in? The answer is over 50 years in the making. Pre- and post-independence, our Africa policy was primarily dictated by London, Paris, and Lisbon, not Washington. Rather than differentiate our policy, rather than seize upon the wave of independence that swept across the continent beginning in Ghana in 1957 – a wave inspired by our independence, experience and ideals – we chose to fall in line behind the former colonial powers when it came to crafting an Africa policy.
In time, our engagement came to be dictated by Moscow. Containing the Soviet Union meant reacting to Soviet moves across the globe. Africa became a Cold War playground, where we played a game of backing and propping up leaders and movements that purported to be on our side, while doing everything we could to undermine those that were on the other side.

With the fall of the Soviet Union, our policy came to be dictated by neglect, or, more accurately, that policy was exposed for what it had always been: no policy at all. Without acknowledgement of or much interest in why Africa had come to be as it was by the early 1990s, nor any thought to or recognition of what interests we had there beyond valiantly saving Africans from themselves, we simply nodded our head in consensus as African countries were instructed to take the harsh medicine of the World Bank- and IMF-designed structural adjustment programs, or suffer on their own.

Things did improve during the first decade of the 21st century. In 2000, the African Growth and Opportunity Act, or AGOA, was signed into law, granting certain African countries and products duty-free access into the U.S. Then, September 11th, 2001, catalyzed Africa's strategic emergence for the U.S. in two ways. The first was that Africa was a front in the global war on terror, and the second was that Africa was an emerging source of oil and crucial alternatives to our over-reliance on crude imports from the Middle East. To better address these priorities, the U.S. established the U.S. African Command, or AFRICOM, in 2007. In 2003, the President's Emergency Plan for AIDS Relief, or PEPFAR, was initiated, and, in 2004, the Millennium Challenge Corporation, or MCC, was created to better deliver U.S. foreign assistance.

However, none of these organizations or programs translated into significant increases in U.S.-Africa commercial relations. Yet, according to The Economist, from 2001-2010, six of the world's ten fastest growing economies were African countries – Angola, Nigeria, Ethiopia, Chad, Mozambique, and Rwanda. Those six countries alone encompass close to 300 million people. They include oil exporters and oil importers. They are from Southern, West, East, and Central Africa. In other words, from 2000-2010, the window of economic opportunity in Africa was wide open.
We all know well at this point that during that decade, China-Africa trade grew from insubstantial to over $100 billion, surpassing that of the U.S.-Africa trade. And while China's engagement with Africa is more complex than mere numbers, we should thank China. And India. And Brazil, Russia, the Gulf States, and others. It is because of these countries that today we are talking about Africa in such optimistic, economic terms. It is because these countries viewed African countries as trading partners and investment destinations that today we are excited about Africa's prospects.

Looking forward, The Economist predicts that from 2011-2015, seven of the world's top ten fastest-growing economies will be African countries – Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia, and Nigeria. By 2015, India's Trade Minister predicts that India-Africa trade, under $10 billion in 2005, will exceed $75 billion. Looking even farther ahead, according to Jim O'Neill, the man who coined the acronym BRIC, "if you look at the potential of just the 11 largest African economies for the next 40 years … their combined GDP by 2050 would reach more than $13 trillion, making them bigger than either Brazil or Russia."
Given the current state of growth in our economy, there ought to be an overwhelming cry from our government and private sector – how can we get in on Africa's growth?!

The answer is twofold. We must know Africa better, and we must create a coherent U.S. strategy for Africa.

I have already addressed a large part of knowing Africa – that is, seeing Africa as others see Africa by genuinely recognizing it as a trade and investment destination – so let me begin with the second of these two ideas: creating a coherent, U.S. Africa strategy.
As it stands, the U.S. does not have an Africa policy. Instead, what we have are policies and initiatives fractured across numerous departments and agencies, many of which are embroiled in turf battles. This divisiveness  puts us at a large disadvantage in comparison to others.

To compete, what we need is a coherent, coordinated, cross-agency approach. To achieve this, we need more leadership from the White House. We need a top-down, central review of Africa's importance. We need to move away from the aid-based approach, which has served us little, and toward a commercial-based strategy that unites our disconnected approaches.

I do not intend to sugarcoat the challenges that confront us in doing business with Africa. However, the window of opportunity is still open, and the time to jump in is now. What we need is for our government to create a strategy that encourages and supports our businesses, helps them mitigate the risks and clear the hurdles of doing business in Africa, and provides them access to the financing necessary to do so.

Not since the dawn of the Kennedy Presidency have Africans expressed as much hope in the U.S. as they do now, thanks in large part to the election of Barack Obama as President. However, this has been a mixed blessing, as expectations and his personal connection to the continent make Obama and Africa the antithesis of Nixon and China. Yet, in this new era in African Business, the United States must make bolder moves to increase its economic engagement of Africa. Not investing in Africa today would be tantamount to missing out on California's Gold Rush in the 1850s, Japan and Germany in the 1950s, Southeast Asia in the 1980s, and emerging markets in the 1990s.

Let me give you an example. The President's National Export Initiative aims to double U.S. exports in five years. However, despite the facts about Africa's fast-growing economies, and despite the more basic, geographical fact that Africa's fast-growing economies are just a short ocean away from us, with no obstacles between, only one African country, South Africa, is listed as a target country, or "next-tier" country, in the initiative.

While it is encouraging that South Africa is listed as one of the six "next-tier" countries, the absence of other African countries and regions, highlight sour lack of knowledge of Africa. Across the continent, Africans are making meaningful progress toward regional economic integration. Take, for example, the East African Community. With a combined population of 125 million and total GDP of $80 billion, the region compares favorably with Vietnam, another one of the "next tier" countries specifically identified in the initiative. Likewise, South Africa is not only a target country in and of itself, but also a gateway into the fast-growing Southern African Development Community, or SADC.

The absence of other African countries and regions also underscores our lack of strategy for engaging Africa. As we aim to double our exports and acknowledge Africa's potential, albeit slowly, we undermine our commercial efforts there. Just recently, the U.S. Commercial Service decided to withdraw its Senior Commercial Officer and close its post in Senegal, the only such post in all of Francophone Africa. The Department of Commerce also is shelving plans indefinitely to open an office in Angola and, less than two years since the President and First Lady visited the country, has decided to close its office in Ghana.

This may be a good moment to remind you that Angola's was the fastest growing economy in the world from 2001-2010, and that Ghana is predicted to have the 7th fastest-growing economy in the world over the next five years.

Luckily, the needed knowledge of Africa is available, as are coherent, Africa policy ideas, through the Corporate Council on Africa, or CCA, on whose board I serve as vice chairman. CCA is the leading organization in this country promoting and facilitating increased economic engagement between the U.S. and Africa. CCA's members together represent 85% of all U.S. private sector investment in Africa. CCA is also the chief liaison between the U.S. and African private and public sectors. In that capacity, CCA knows well the different parts of the U.S. government that deal with Africa, and their collective strengths and weaknesses.
CCA put this knowledge and the knowledge of its members to work crafting substantive recommendations to the new Obama administration and distributing them widely across Washington, DC. The report entitled The United States and Africa: Policy Recommendations from the American Private Sector for the Obama Administration –which you can access on CCA's website– provides a good framework for increased U.S. economic engagement with Africa.

It represents a collective assessment of the state of U.S.-Africa business relations and prospects, and was the result of input from more than half of CCA's members working in sector groups over a three-month period. The authors addressed trade, finance, security, agriculture, electrical power, extractive industries, healthcare, infrastructure, and tourism.

CCA's report bolsters our belief that national security, foreign policy and commercial interests of the United States mandate a much stronger relationship with the nations of Africa. The CCA policy report addresses three key, cross-cutting areas: security, finance and trade.

In the security sector, CCA's recommendations reflect our belief that greater U.S. engagement and cooperation with African governments in strengthening security are key to encouraging greater direct investment and to increasing the benefits for Africans from foreign investment.

In the finance sector, CCA's recommendations support critical U.S. economic and national security interests in the region. They reflect the reality that the growth of African economies creates opportunities for American job creation through the export of capital goods, to build infrastructure, and consumer goods, to meet the needs of the emerging middle class.

In the trade sector, CCA believes that AGOA still provides a valuable framework for integrating U.S. economic engagement with Africa, but should be expanded to foster greater trade and investment,  thus spurring additional economic benefits for both Africa and America.

In addition to these cross-cutting themes, the working groups made specific recommendations for their respective sectors. Key recommendations include:

•    Strengthen public-private partnerships and increase United States Government technical assistance and capacity-building in aid projects. In most sectors, public-private partnerships provide an important means to share expertise, mitigate risks and achieve ambitious outcomes in common endeavors.
•    Provide financial incentives to encourage investment in Africa that will generate export jobs in the United States.
•    Support agribusiness investments to enable Africa to meet its food needs and supply bio-fuels for a green economy.
•    Support investment in Africa's electrical power sector to strengthen the base for economic growth.
•    Expand U.S. government support for private sector health care in Africa.
•    Increase support for American investment in Africa's tourist sector to foster American travel and African job growth.
•    Increase senior-level advocacy for American trade and investment with Africa.
•    Provide risk mitigation measures across all sectors of business investment.

From my experience, I have one more recommendation to add: we should never, ever presume to know more about Africa than Africans. If we do, we will not be able to partner effectively with Africans to fulfill the continent's needs and promises. Again, when I say this, I am talking from personal experience. Just recently, or, forty-eight short years ago, to be more precise, I served as a Peace Corps volunteer in Ethiopia. To this day, it remains among the most formative and important experiences in my life, including my professional career. I cannot emphasize enough how important it is to know a country, its culture, and its language.

I am the Senior Vice President of Seacom. Seacom has laid a fiber optic cable from Mumbai to South Africa, all the way up the eastern coast of Africa to Cairo, and out to Europe – the first such sub-marine cable system not relying on satellite communication in that huge area of the world. For the last year and half, I have been engaged in negotiations with the Ethiopian Telecommunications Corporation about the supply of broadband capacity. My Peace Corps experience and my knowledge of Ethiopian culture was an enormous advantage. The people at the ETC had an enormous respect that I was negotiating with people who were not born when I was there, but who were quite impressed that I remained interested in the country through the years. And, at the end of the day, when we signed that contract, they said it was because of me and their confidence in my experience and my respect for their culture that led them to make the agreement. It was one of the most moving professional exchanges I have ever been involved in.

This is not the only reason I am proud to be a part of Seacom. In this new era, it is also necessary for U.S. companies to operate beyond the traditional, narrowly-defined bottom line. The bottom line has to include considerations of how company investments have improved the lives of a broad base of the population.

In this regard, the existence of Seacom is noteworthy. Brian Herlihy, Seacom's CEO, encompasses the values and vision in his investment and development approaches, which have attracted the respect and partnership of a new generation of African business leaders. Brian is without peer as one of the world's most creative and accomplished large-scale infrastructure developers in Africa.

Much of Africa accesses the internet largely through costly satellite links. In South Africa or Kenya, for example, internet access is slow and expensive. You can't send large volumes of information or data efficiently. Many opportunities have been exploited by those who seek strong financial returns, without regard to providing large-scale access that could benefit a large population. There too often has been a short-term outlook that lacks an understanding of how a broader base of users could also provide a foundation for a long-term return on an investment.

Seacom's cable is transforming the eastern coast of Africa as it connects to the rest of the world. It will allow real-time data sharing within Africa and to and from the rest of the world. It can transform the operations of medical services, research libraries and financial transactions, as well as agriculture, media and government.

Seacom's distinctive consultative operating model has enabled it to bring African investors to the table – we are 77% African-owned – and integrate their concerns, including those about benefits to the larger public. Too often, international investors call the shots and the interests of Africans, particularly the broad base of the population, are secondary. From this project's inception, Seacom has given thorough attention to designing ways by which people can benefit – not just to the rate of return.

We in the West tend to want to do things our way; we think it slows us down to listen to people. I think that is a basic mistake. We go in and tell people how to do things instead of asking them, consulting with them, bringing them in. I think projects can succeed with involvement, collaboration and participation by people on the ground – in the conceptual as well as the execution stages.

I think this is, clearly, good citizenship. It is also good business. In a period of a decade, Bruce Wrobel, founder of Global Alumina, Sithe Global and co-founder of Seacom, has become one on this country's most innovative investors in Africa. When one closely examines his formula for success, one will discover that fundamental to his approach is a philosophy and strategy that is designed to improve the living conditions of Africans. To Wrobel, this is not corporate social responsibility; rather, it is the essence and raison d'être for doing business and forming business partnerships on the continent.

There is always this question to answer: will an investment benefit a broad base of African people where reducing poverty and improving equitable access to services remain predominant issues? You cannot get around that.

Seacom's business operating model provides a blueprint for responsible business engagement to corporations wishing to succeed in Africa. And, best yet, in connecting Africa to the world, we are unleashing creative forces for things we cannot even predict, and amplifying Africa's voice and ability to communicate with the world for all those ready to listen, learn, and exchange.

I hope we are ready to do so here in the U.S. The good news is that we are taking encouraging steps. Secretary of State Hillary Clinton is perhaps the most experienced Africa-hand to ever hold her position, while Assistant Secretary of State Johnnie Carson – a Peace Corps alum himself, I'd like to add – is undoubtedly the most experienced person to hold his position. As a result, positive things are happening at high levels of government, in the State Department's African Affairs Bureau and through the National Security Council.
And so I end where I began. Africa does need us and we can and should play a leading role in fostering its emergence. But we need Africa, too. We need Africa to grow our exports, stimulate our growth, and create U.S. jobs. Africa is no longer just a humanitarian and developmental challenge, but rather a growing and vibrant source of economic opportunities and international partnerships. As Africa enters a new defining era in global business, we must respond in the spirit of collaboration and mutual respect to build a new and prosperous future .

Haskell Ward, senior vice president of Seacom, is a former deputy mayor of New York City and member of the State Department Policy Planning staff. He began his professional engagement with Africa as Crossroads Africa volunteer in Kenya in 1962.

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