|
|
|
|
 |
|
|
| Moderated by: Saida.M, safetyblitz, Raven, Miss Brighter Days, LadyDay, Kunjufu, Kibibi, Happiness, Dillinger, Breadfruit, Backatya |
|
|
| Author | |
|---|
COLTRANE
Villager
| Joined: | Wednesday June 2nd, 2004 |
| Location: | Virtualcity |
| Posts: | 5737 |
| Photo: | [Download] |
| Status: |
Offline
|
| Mana: |    |
Click here for your Black Profile
Search for Black Sites
|
Posted: Wednesday March 16th, 2005 19:55 |
|
Stephen Hayes is in charge of one of Africa’s lifelines. He is president of the United States Corporate Council on Africa (CCA) and represents most of the American companies investing in and doing business with Africa. As the man in the driving seat of America’s investments into Africa, Stephen Hayes gave African Business Tom Nevin some home-grown philosophy on doing business in Africa.
African Business: What do CCA members need to know about doing business in Africa?
Stephen Hayes: In South Africa you don’t have to worry about doing business; in many other parts you need the assurance of financing and financial guarantees - protection for your investment. EximBank and OPIC do that to some extent but it’s becoming more difficult to meet demands. This is one of the issues we’re taking on as an organisation.
We have a commission on financing private capital flows to Africa. We have to find ways to have greater financial guarantees for companies wishing to invest in Africa. The problem is that most African banks don’t support business investment in their own countries. They don’t support loans to new businesses and small businesses. They don’t have a history, a record or experience.
How do you develop that? Until there’s financing available, you’re not going to have much development. On the other hand, in fairness, US banks don’t support US businesses or new businesses in Africa because they think it’s such high risk. That’s something we’re studying in the CCA’s commission on finance.
AB: Where do you think business funding in Africa should come from?
Stephen Hayes: The establishment of a more coherent, more regulated banking system in Africa would go a long way towards Africa helping itself. More regional banks is one way, but commercial banks should be more involved. The large private banks in places like Nigeria, for example, ought to be working with business development; basically they’re not, they’re primarily lenders to governments. Interest rates for businesses are also too high. The banking system needs reform throughout Africa, and that has to start at national levels. As primary lenders to governments, banks in a sense have been hand-in-hand with, or instruments of, governments. They have to move away from that and be more involved in commercial banking at a national and local level.
AB: For overseas businesses, Africa and risk are synonymous - how can that perception be managed in a way that it attracts more investors?
Stephen Hayes: It clearly must have a policy of public-private co-operation. South Africa is doing that very well in terms of its investment policy throughout Africa. Two of the biggest and best investors in Africa are China and South Africa, and that’s because they have a national economic plan through which they work closely with their private sectors, or semi-private sectors in the case of China. While it’s almost antithetical to America’s political philosophy, I believe that the US government and the private sector have to come together and support one another more actively on investment in Africa. The problem with African countries themselves is that they don’t have a private sector history. They don’t know what a private sector is, except what they learned from an education system largely modelled on discarded economic theory.
The possibility of a public-private co-operation in individual African countries is difficult, but it needs to happen. CCA must support private sector development. Public-private cooperation means that a government must develop a new relationship with its private sector, and, inevitably, it does mean moving to a more democratic system.
I’m not advocating democracy for its own sake. There simply has to be accountability to business and to people just as people must be supportive of their governments. Until you have that it will be difficult to have public-private co-operation.
AB: Does America understand Africa and the very different ways it operates commercially and economically, traditionally and culturally?
Stephen Hayes: The short answer is no, we don’t. And that’s because the United States has a tradition of disregarding culture in terms of the ‘great assimilation’. Obviously there are different cultures in America and we’re not just one big melting pot. But because we’ve had a tradition of merging cultures, at least in theory and to a large extent in practice, understanding them hasn’t been in our thinking. It’s not part of our foreign policy, and I believe there’s a great need for the understanding of different cultures to be incorporated in our foreign policy. That would help us significantly. So there’s not a lot of understanding of African cultures.
On the other hand, if the African countries are to enter into the global economy they will need to understand the implications of a global economy driven by Western world. Change at the institutional and personal level is one of the hardest things to go through. It means a change in thinking and acting, and that’s the great battle for anyone. Change is difficult in Africa, as it is anywhere; you’re going against centuries of cultural patterns. The reality is that those changes are going to have to take place if Africa is not going to be left behind.
AB: The African Growth and Opportunities Act (AGOA) is widely hailed as one of the most effective measures in foreign development legislation to have come out of the US in recent years. However, its mechanisms tend to work in favour of the more developed third world countries at the expense of the poorer ones. Can CCA help?
Stephen Hayes: We’re not a development agency or organisation, but we do have some influence in the right quarters. It is a fact that AGOA has worked well only for some countries, perhaps for seven of the 38 approved AGOA countries. There’s still a question whether there’s enough time for other countries to benefit from the AGOA legislation, and that’s just one of the reasons we believe it needs to be extended for another 10 years.
There’s also been a lot of emphasis on textiles and Indian and Chinese companies have moved their factories into AGOA-qualified countries very quickly. In some ways, the major benefactors from AGOA have been those Asians who saw the opportunity and took advantage of it by building, or already having in place, textile companies in Africa and were able to ship produce to the US all that much easier, and that became an economically viable option. These companies have helped Africa. I think there’s been too much emphasis on textiles - currently there are around 6,000 products that can be shipped to the US. But most African countries don’t have the development capacity to do it. Agriculture’s a different matter and just about every African country could benefit from it. That raises its own problems, such as phytosanitary standards and access; these issues need solutions. It’s CCA’s contention that if Africa is to benefit, its agricultural products must be allowed into the US. People in America must be made to understand that support for Africa automatically helps the US economy as well.
AB: Does the CCA have the influence to make a difference? Stephen Hayes: The AGOA Steering Committee is chaired by CCA and we’re pushing for an extension and for greater openness to Africa’s agricultural products into the US. Most agriculture in Africa does not compete with US products.
A negative impression is given by the US Farm Bill that agricultural subsidies are a major factor in curtailing African produce to the US. That’s not the case. Most African countries have not benefited from AGOA, simply because they don’t have the production capacity, and they won’t have such capacity in time before the AGOA concessions run out. AGOA needs to be extended and at the same time we need to open up markets that are more agriculturally defined.
Bear in mind that CCA members account for 85% of American investment in Africa. They are major companies that are important to the US economy and that means that we can influence the extension of AGOA. That doesn’t mean that we get everything we want, but the leadership in government knows who we are.
AB: Taking that into consideration, how much of a success can AGOA be called? Stephen Hayes: AGOA is considered a success, although sometimes I think we make too much of it. On the one hand it is the most important act ever passed on US-Africa economics and trade relations, and there will be more to come, I hope. On the other hand it doesn’t go far enough - it needs to be extended and expanded. But, to me, it was a very important first step. Other problems are the issues in Africa around transparency, sanctity of contract and governance. They’re serious issues and we have to work on those to the extent that we can.
AB: Can AGOA be used as a means to improve social, economic and political issues in Africa? Stephen Hayes: Because we support the very positive issues like AGOA, we have to spend more time attacking the disincentives to investment and trade with Africa. We need to work more actively with those governments that are taking the right steps.
I have found that the concerns of major African corporations are the same as ours. To them, one of the biggest problems is the whole system of governance. Contracts are revoked when new administrations take over in many countries, and there’s no consistency of commercial law. Major changes will have to take place. The fact that South Africa has so few of those problems is one of several reasons why southern Africa is so much further ahead of the rest of Africa.
AB: The New Economic Partnership for Africa’s Development (Nepad) is the continent’s hope for an economic rebirth and large sums of money have been ploughed into it. Can you find common ground here? Stephen Hayes: I think Nepad is one of the best things to come out of Africa in a long time, but I also think it’s in big trouble. As far as I know, we’re the only US organisation whose board of directors have formally endorsed Nepad. I know there are severe doubts from our own government about its effectiveness and until it starts having some concrete results there will continue to be a lot of scepticism. I think they need to produce results quickly otherwise it will be relegated to history. I hope not, because it’s important and the ideas behind it are good, but so far there hasn’t been much in the way of implementation. In fairness, it will take a lot of time for Nepad to be effective, and I don’t think many governments will allow it that leeway.
CCA is part of the Nepad business group’s steering committee. That group also contains the Commonwealth Business Council, its French counterpart and the International Chamber of Commerce to name a few, and we’re advocating for a much stronger, more direct, more structured role for business in Nepad.
Right now we’re working closely with the American Chamber of Commerce in South Africa and we are looking forward to building that relationship further. We will continue to chip away at those issues in Africa that make so many people cynical about Nepad, such as issues related to democracy and the rule-of-law. At this time the private sector is taking a wait-and-see attitude on Nepad. The problem with ‘wait-and-see’ is that it almost guarantees a failure. If you want it Nepad to work then you have to get behind it and be an advocate for it. Even if you think it’s going to fail, the only way it’s not going to fail is for people to start to work for it. ‘Wait-and-see’ will destroy Nepad. Too much is expected of Nepad in the short term; it cannot make a difference overnight. We need to be patient.
For Africa to be of any great investment and trading interest to the major economies, it needs to create a viable middle class, because this is where goods are bought and consumed and economies built up. This will take time.
AB: The perception, and much of the reality of Africa, is one of the few very rich and the vast numbers of very poor and a massive gulf between them that shows no sign of narrowing. Do such mega-economic nations such as the US not ask themselves why they’re even bothering with Africa?
Stephen Hayes: Of course that is a frequent topic of discussion. For me there is a non-business answer: We’re all part of humanity and we have to care for one another. And if we look at it economically, Africa has great potential. I agree totally that the key to economic growth in Africa is the development of a middle class. That’s going to take a very long time, and we must be prepared for that. You won’t have a developing middle class unless you have the development of entrepreneurship and the proliferation of small businesses. To do that you’re going to have to change the way countries are governed. Greater democracy, a goal of Nepad, needs to develop.
AB: How can an organisation such as CCA help get that process started?
Stephen Hayes: By supporting the development of small businesses, by building partnerships with US and African companies, especially small business to small business, and that’s something we especially support. That is one of the purposes of our summit in June.
We recognise that there is no one organisation that’s an answer to all things. We’re doing what we can and making our own small contribution in ways that we can. We recognise that we’re a drop in the bucket, but perhaps we have a few more drops than most to put in. We just have to accept it, make a commitment, work on it and understand that it’s going to take time.
None of this change will take place in the next two or three years. We’ll be very lucky to see significant change in, say, 10 countries in 10 years. It’ll all take a while and we’ll have to measure progress step by step.
AB: As an American representing American business, do you feel welcome in Africa?
Stephen Hayes: Actually, I do. There are always major differences country to country. By and large I do feel welcome, and I believe the blip on the screen over Iraq will go away in the long term. US investment is needed in Africa and I believe people understand that. I don’t think we have been particularly overbearing in Africa, neither do we have the colonial history that others carry. We do have advantages, we just haven’t taken advantage of them yet.
CCA: US-Africa investment bridge
Located in Washington DC, the Corporate Council on Africa (CCA) was established to facilitate business between the USA and Africa. Its 160 corporate members are responsible for more than 85% of the business conducted by US companies in Africa.
As such, it works on public policy issues that affect Africa-US trade, for example finding partnerships for companies and financing ways of increasing capital flows into Africa. The CCA is the key player in terms of US-Africa trade and economic relations and works closely with the US government. “We don’t necessarily agree with all the government says, but we have very good relationships with all relevant departments - State, Treasury and Commerce,� says CCA president Stephen Hayes.
It is a not-for-profit organisation run by a board of directors comprising 30 director-level people from top companies, and funded by a combination of membership dues, underwriting of conferences and a US government contribution of some 30% of its budget.
It also has two grants from the US government to develop business transactions and partnerships with South African black women or coloured businesses.
Another government programme funds West African business linkages. This year’s budget is between $6m and $7m covering about 30 staff. “We work on a project-to-project basis,� reports Hayes. “One of the most important is our co-ordination...the campaign for which President Bush committed $15bn to fighting Aids. That means we’re working with a broad cross-section of South African and other African organisations.�
The beginning of a beautiful relationship
Upon assuming power, US President George W. Bush was widely expected to concentrate on domestic issues, largely leaving the rest of the world to look after itself. However, the 9/11 terrorist attacks upon the World Trade Centre and the Pentagon ended any possibility of adopting an isolationist stance, and the Bush administration has now embarked upon a more progressive, proactive policy of foreign engagement. In terms of Africa, this U-turn has been marked in several ways: through the new funding to combat the spread and impact of HIV-Aids; via the Africa Growth and Opportunity Act (AGOA); by security initiatives in the war against terror; and through the US government’s desire to increase the level of its oil imports from the Gulf of Guinea.
The war in Iraq has highlighted the fragility of US dependence on Middle Eastern oil. The US has already reduced the share of its oil imports sourced from the region to 25% but is keen to lower this figure still further.
West Africa is regarded as one of the few regions in the world which could boost production sufficiently to make a real impact on Middle Eastern imports - partly because advances in deepwater technology have opened up the huge deepwater acreage in the Gulf of Guinea to hydrocarbon development, resulting in greatly increased production in the region.
The Gulf of Guinea oil producers, including Nigeria, Angola and Equatorial Guinea, have been identified by the US as ideal suppliers both because their crude reserves are rising, but also because of their geographical location. The sea lanes between the Gulf of Guinea and the US eastern seaboard are extremely secure in the sense that they cannot be closed by unfriendly third parties, unlike the narrow shipping routes which oil tankers must navigate to sail from the Persian Gulf to the US. Moreover, as US state department economist Robert Murphy says: “Political discord or dispute in African oil states is unlikely to take on a regional or ideological tone that would result in a joint embargo by suppliers at once.�
US Undersecretary of State for African Affairs, Walter Kansteiner, concedes that West Africa “has become a strategic interest� and the African Oil Policy Initiative Group (AOPIG) has been set up to bring together US government and private sector interests. Ed Royce, the chairman of the House of Representatives Africa sub-committee, says: “West African oil doesn’t have the strategic bottlenecks that other nations have. We generally have good political relations with African oil producers. And if it lessens our dependence on a particular section of the world, that’s good.� In addition, West African oil is mainly high quality crude with a low sulphur content making it ideal for refining in the US.
Partly in order to persuade African oil producers of the benefits of maximising their exports to the US, Bush held talks with the leaders of Cameroon, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon and Sao Tome & Principe at the end of last year, while US Secretary of State Colin Powell visited both Gabon and Angola on his way home from the World Summit on Sustainable Development (WSSD) in Johannesburg. The Gulf of Guinea currently supplies 15% of US oil imports, and the National Intelligence Council - a US state think-tank - forecasts that this figure will rise to 25% by 2015, as a result of rising production and US encouragement.
Security issues
The lack of US intervention in African conflicts in recent years, such as the bloody genocide Rwanda, was partly borne out of the failure of its operations in Somalia. Even since the 9/11 attacks, the US has been loathe to interfere in domestic conflicts but Africa has become an increasingly important arena in the war against terror and so the US has increased its diplomatic, military and intelligence presence on the continent. The US military has set up a base in the eastern African state of Djibouti in order to be able to monitor and intervene in terrorist activity in the area lying between Africa and the Middle East: the Red Sea, the Indian Ocean and down the east coast of Africa from Somalia to Zanzibar. Reports of al-Quaida members fleeing to or planning attacks in the region have filtered through over the past couple of years. In any case, the series of terrorist attacks in Kenya points to rising terrorist activity in the region which the US is keen to crack down on. (Please see separate story on page).
Moreover, as result of the increasing importance of Gulf of Guinea oil to the US economy, a strong presence on the west coast is being developed. The US embassy in Equatorial Guinea has reopened, while General Carlton Fulford of the US military command in Europe has visited Sao Tome and Principe to examine the potential for a military regional command centre in the country. Nato Supreme Commander General James Jones confirmed the growing importance of the region when he said: “The carrier battle groups of the future and the expeditionary strike groups of the future may not spend six months in the Mediterranean but I’ll bet they’ll spend half the time going down the west coast of Africa.�
Promoting trade In terms of economic intervention, the mainstay of US policy in Africa has been the Africa Growth and Opportunity Act (Agoa). The act was designed during the Clinton administration but US enthusiasm for Agoa has risen in recent months and President Bush has declared his intention to push for an extension of the act from its current expiry date of 2008. The act was passed in order to enable African states to compete with exporters elsewhere in the world on a more even playing field and to benefit from globalisation rather than always being at the sharp end of the process.
Agoa came into force in May 2000, awarding quota-free and tariff-free access to the US for a range of goods from 38 sub-Saharan countries, providing those states are willing to liberalise their economies. Trade between some countries and the US has grown rapidly over the past three years, particularly in the textile industry. Textile exports from Kenya, Madagascar, Malawi, Mauritius and Swaziland to the US are all reported to have increased by over 10% a year and Africa now provides 3.5% of US textile imports, up from just 1.5% in 2000. With such rapid progress, it is likely that this figure could reach 10% within a decade.
A total of 11 textile factories have been set up in Lesotho as a result of Agoa, creating an estimated 50,000 jobs. The biggest potential lies in West Africa, where cotton producers like Mali and Burkina Faso could directly take advantage of their crop and their geographical proximity to the US to develop clothing factories. However, the only initiatives in the region appear to have been made in neighbouring Senegal. The US has generally followed a laissez-faire policy towards economic development in Africa and has been content to allow the IMF to steer strategy. However, with Agoa it seems to be adopting a much more proactive stance, akin to the European Lome style agreements.
Funding the fight
This proactive style was also exhibited in Bush’s announcement of $15bn funding to help fight the spread of HIV-Aids and countering its impact in the developing world. The lion’s share of the money will be spent in sub-Saharan Africa, with some reserved for the Caribbean. The money will be spread over the next five years and while the $3bn a year commitment makes up only a fraction of the $10bn a year which UNAids said in 2002 was required to produce “an adequate response� to the AIDS crisis, it has still shocked the rest of the world. The fight against AIDS in Africa is not perceived to be high on the list of priorities of the average US voter.
Bush himself described the strategy as “a great mission of rescue� and added “Seldom has history offered a greater opportunity to do so much for so many�.
Most Aids activists oppose the dedication of a large proportion of the money to promoting sexual abstinence, but the sums involved are as big as the scale of the problem. It is estimated that there are 14,000 new HIV infections and 8,000 deaths from Aids every day in Africa, while at least 20m Africans have already been killed by the virus.
At first sight, there may seem to be few links between the various means by which the US government is becoming increasingly interested in Africa, but a closer examination reveals that there may be some overall strategy at work. A desire to help some of the poorest countries and people in the world may lie behind both the Aids funding and Agoa. Promoting the import of West African oil is certainly a strategic issue, as is cracking down on terrorist activity in the continent.
The war on terror may be the link behind all four developments: while the US seeks to suppress terrorist groups and rogue nations, the Bush administration may also have decided that the time has come for a public relations exercise to show that its policy is not merely one of punishment but also of compassion.
Many have argued that poverty and despair in developing countries is providing the ideal breeding ground for terrorism and the funding may be the Bush administration’s way of promoting the positive side of the US. Tanzania’s President Benjamin Mkapa says: “It is futile if not foolhardy to think there is no link between poverty and terrorism�, while British Prime Minister Tony Blair has argued that terrorism can be borne out of “pent up feelings of injustice and alienation from divisions between the world’s richer and poorer nations�. The lesson is clear: reduce poverty and despair, and drain the terrorists’ breeding ground. Africa is by far the poorest continent, so tackling poverty and promoting growth in Africa could be seen as a tool in the war against terror and a method of improving the US’ image in the rest of the world.
Few international terrorists are believed to be Africans, but given the rising numbers of attacks in East Africa, the West as a whole has reason to believe that some of the terrorists of the future could be Africans. Yet improving the living standards of the millions of Africans who live in poverty cannot be achieved within a couple of years and cannot be secured on a Presidential whim. Whether US policy will have the staying power to support African development over the decades required will be the real litmus test of the current apparent change of heart.
Nepad-MCA on collision course?
George Bush’s Millenium Challenge Account will reward countries with good governance while Nepad wants all African countries to develop economically. Is a collision in the offing? Tom Nevin reports.
In the wake of the Iraq war, Africa is understandably nervous as it wonders if its development needs are to be shoved further onto the back burner. Will the awesomely costly process of rebuilding the shattered Middle Eastern country take financial priority and should Africa be worrying? No, says President George W. Bush, pledging that Africa’s development will proceed as planned and agreed, and that finance for urgent issues, such as the Aids pandemic, will receive added assistance.
Many African leaders have voiced their reservations, pointing to the disappointing levels of aid and development funding that have become the norm over the past half-decade or so.
Does Africa expect too much, is it overlooking the already significant inflows of aid and development capital? Is it placing too much store in the New Economic Partnership for Africa’s Development (Nepad) as the catalyst for a flood of partnered economic aid?
There are promises aplenty but the watchword for Africa should be: Listen to the signals that flash along with them.
Earlier this year President George W. Bush sent a new Africa aid initiative to Congress that would tie increases in aid to social investment and good governance. Bush described the The Millennium Challenge Account (MCA) as a new compact for development that would provide increased US foreign assistance to countries that rule justly, invest in their people and encourage economic freedom.
It’s an extremely generous gesture, especially considering that the MCA proposal seeks to increase current levels of core development assistance by 50% over the next three years and provide an annual increase of $5bn by 2006.
“The Millennium Challenge Account represents a new approach to providing and delivering development assistance,� said Bush. “This new compact for development breaks with the past by tying increased assistance to performance and creating new accountability for all nations. We cannot accept permanent poverty in a world of progress. The MCA will provide people in developing nations the tools they need to seize the opportunities of the global economy.� he added.
MCA and Nepad on collision course?
While the MCA is a generous and powerful financial tool and could do great things for compliant countries, it doesn’t exactly help the cause of Nepad, an initiative that wants to pull Africa up by its bootstraps collectively.
It wants an internationally contributed-to kitty of $64bn a year in a central pool that it can administer on a continental, all-country basis. The US doesn’t see it like that and insists on reform before assistance. Africa has its share of maverick states and these will be left out in the economic cold until they mend their ways, resulting in a splintered Nepad initiative.
Another cue comes from White House Africa Advisor, Jendayi Frazer, who considers economic growth envisioned in Nepad a key factor. She says it is a mechanism for efficient spreading of wealth through mobilisation of resources. “On that score America is making a contribution through Agoa. It is aimed at spurring the export sectors of reforming African countries by offering them favourable trade benefits,� she says.
But, she stresses, “the key to our response to Nepad is independent development leading to greater investment�. Frazer says it is essential for Africa to wean itself off development assistance. “What will not work is if Africans set out a vision of progress and then expect the US to pay for it. This is not the basis of a true partnership.�
Frazer believes that resource mobilisation will come through trade, domestic savings and greater direct foreign investment that AGOA will help spur. “It will not come through a long-term relationship promising development assistance alone,� she says.
Then there’s the voice of Assistant Secretary of State for African Affairs, Walter Kansteiner III who says increased trade reduces poverty, and poverty alleviation is a key development goal of many African governments. “Increased trade means increased production, which means increased employment, which means poverty reduction. It’s about productivity. It’s about job creation. It’s about letting people earn a fair return and that’s what’s so exciting. And that’s why trade, quite frankly, is a very fast, immediate response to poverty reduction.�
As far as most Africans are concerned, the route taken is less important than the results achieved.
____________________
“Nobody can give you freedom. Nobody can give you equality or justice or anything. If you're a man, you take it.� -Malcolm X
____________________
Click here for your Black Profile
|
|
|
Current time is 14:49 | |
|
|
|
|
|
|
|
Join the
Blacknet
mailing list
|
|
