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Corporate Council on Africa

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Corporate Council on Africa ...

    CORPORATE COUNCIL ON AFRICA

    CCA-MCC DINNER IN HONOR OF

    NINE AFRICAN PRESIDENTS

    SPEAKERS:

    STEPHEN HAYES,

    PRESIDENT,

    CORPORATE COUNCIL ON AFRICA

    ANDREW NATSIOS,

    ADMINISTRATOR,

    USAID

    CHARLES SETHNESS,

    VICE PRESIDENT, MONITORING AND EVALUATION,

    MILLENNIUM CHALLENGE CORPORATION

    WEDNESDAY, SEPTEMBER 14, 2005

    Transcript by:

Federal News Service

Washington, D.C.

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    STEPHEN HAYES: Nine of the 17 MCC eligible countries are African

    nations. No continent is undergoing a greater renaissance right now than is

    Africa. The MCC provides significant amounts of funding to eligible countries

    that meet criteria for just and democratic governance, economic freedom,

    investment in citizens, and particularly women and children. Each of the

    presidents and prime ministers here tonight, have made tremendous strides in

    their individual and collective leadership to elevate their countries to an esteemed

    level of governance and to ensure MCC qualification. I think our government

    made excellent decisions and these are excellent African leaders.

    Key MCC principles include reducing poverty through economic growth, rewarding good policy, operating as partners and focusing on results. The MCC

    has taken important steps towards honoring these principles. More importantly,

    these countries have honored these principles. Madagascar and Cape Verde

    have both signed MCC compacts to the value of approximately a $110 million

    each to develop their national plans. It’s our hope that all the eligible and

    threshold-eligible countries represented here tonight will realize compact

    agreements very soon with MCC.

    The MCC not only opens a pathway for the U.S. to affirm its commitment to the African continent, but also for U.S. businesses to lend their support to the

    continent’s development through opportunities that arise through the MCC. The MCC is exemplary and lets eligible nations decide the substance of their

    compacts and the means by which the goals will be achieved. The U.S. does not

    make that decision.

    CCA understands that individual country procurement processes are open to international competition, as it should be. At the same time, our goal is to

    encourage greater U.S. trade and investment in Africa. We feel that this nation is

    lagging behind in many ways and we would like to see greater U.S. opportunity.

    To this end, we’ve begun a process to keep our membership informed about

    investment and procurement opportunities as they arrive.

    In lieu of the building momentum of U.S. business support, I would like to thank those CCA members who have shown their commitment by sponsoring our

    gathering this evening. You will find a listing of those sponsors in your program.

    I think it’s particularly noteworthy that the range of companies are from very small

    to very large. We’re very proud that our membership represents a spectrum of U.S. businesses from small to the largest corporations in the world, and we are

    honored that that diversity is reflected in the sponsorship tonight. Now, please

    join me in a round of applause for those sponsors.

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    The Corporate Council also wishes to extend its thanks to Millennium Challenge Corporation for agreeing to work in partnership with CCA and to

    cosponsor tonight’s event. It’s our sincerest hope that we will build on the ties

    that we’ve established. We believe deeply in MCC and we want to do everything

    we can to make it work for Africa and for the United States.

    We encourage those countries that are still developing their compact proposals to continue the good work. Let us know how we can be of assistance.

    And CCA will seek out opportunities to work with each of these countries to help

    grow and expand their linkages to the U.S. private sector and economy. So

    thank you all very much for being here tonight. It’s an honor that you’re all here

    to celebrate what I think is a very, very important aspect of U.S.-Africa relations.

    So enjoy your dinner.

AFTER DINNER:

    STEPHEN HAYES: Mr. Natsios has served as USAID Administrator since May 2001. He was appointed by President Bush as Special Coordinator for

    International Development Assistance, Disaster Assistance and Special

    Humanitarian Coordinator for Sudan as well. Mr. Natsios first served USAID as

    director of the Office of Foreign Disaster Assistance and as assistant

    administrator for the Bureau for Food and Humanitarian Assistance.

    The Corporate Council on Africa has a strong working relationship with USAID. We have two programs in Africa that are really benchmarks for small

    business development, especially between Africa and the United States. CCA

    was fortunate to have Mr. Natsios address our fifth biannual U.S.-Africa Business

    Summit in Baltimore, Maryland, in June and at the Summit he emphasized

    USAID’s commitment to helping Africa address the challenge of poverty. I can

    assure you that the commitment is real. I think we’re very fortunate to have Mr.

    Natsios as director of USAID and we’re very, very happy about his commitment

    to Africa. He reiterated that commitment at the AGOA Forum in Dakar, Senegal,

    which CCA co-chaired, and I look forward to his remarks tonight.

    Welcome, Mr. Andrew Natsios. (Applause.)

    ANDREW NATSIOS: Thank you very much. I have a talk that we spent a long time writing and I really wanted to deliver it, but I tested it this afternoon and

    it’s 45 minutes long – (laughter) and I thought I would either have people drop

    during the my remarks or leave, so I am going to speak extemporaneously.

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     I am among people who I know share my view of development of the world. We have a number of presidents from among the most progressive and

    reform-minded African countries. I don’t want to mention them all because I’ll forget some of them, but it is not an accident that these particular presidents are

    here tonight because they represent the new Africa the new democratic Africa.

    When people tell me stories about Africa being always in the middle of civil war, always in the middle of famine, I say, “Well, wait a second. Wait a

    second. You are talking about some countries in some parts of the world. Do

    not lump all countries in Africa in the same category. There are some countries

    that have had a democracy for a long time, that have very good economic

    policies and that are growing, and there are some countries that are a wreck.

    Let’s not put them in the same category.” That’s true in Europe, that’s true in

    parts of the United States. I don’t want to compare one state of our 50 states

    with other states, but we have some states that are very badly governed. Again,

    I come from Massachusetts, one of the best-run states in the country (laughter)

     usually. I was the finance minister there, so I know how well run it was.

    And so we need to look at Africa the way it is, not with the images in the West that in my view are simplistic and distorted. If I were to invest my own

    money personally, if I had any money I have no money because I have been in

    public service too long, I would be investing it in Africa right now. I also have told

    the president that if you look at the polling data on where America is the most

    popular, where we have our best natural constituency, it’s in Africa. The poll

    ratings for America in Africa are the highest of any region in the world. That’s

    very interesting, and it says something to me: that we have a natural

    constituency, natural friends and allies there and that’s where we should be

    putting our money.

    And if you heard the president’s speech this morning, which I have to say of course, I’m biased. I’ve served the Bush family for almost 25 years now. I

    served in the president’s father’s administration. I think you know that the

    president personally is committed to development and he is committed to Africa,

    and he understands development. We now have 21 presidential initiatives in

    foreign assistance, 21 initiatives, and they are not small and they are not one

    million dollar initiatives. They’re billions of dollars. The president announced

    before the G8 Summit, and we had a re-announcement tonight of the operational

    plans, a $1.2 billion new money initiative in malaria.

    We have the Millennium Challenge Account a most significant new

    direction in foreign assistance in any donor government, and I’m not being critical

    of anybody else, but it’s a most significant new development in foreign assistance

    in decades. It makes a distinction between high performing countries who have

    good policies, who govern well, that are democracies, that have good economic

    policies that encourage investment, and that invest in the social sector so their

    people are healthy and educated.

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    And it attempts to makes distinctions. Now, I know in Africa and other

    regions of the world, people like to believe in solidarity. Everybody wants

    everybody else to work together. Well, we agree with that, but to treat every

    country the same is really not fair. It implies that people who really perform well

    and do the right things have the same level of risks as someone that is a disaster.

    Well, you know, we don’t see this as charity, so you understand this. The

    president’s view is we are making an investment in the future of the United

    States a personal investment in our future.

    Now, we certainly believe in humanitarian efforts to help poor people

    around the world. We also believe it’s in our interest as a country, in a stable,

    peaceful, democratic, prosperous world, in a global trading system which is open.

    That is the American view, that’s the president’s view, that’s Dr. Rice’s view, and

    we are making investments in countries that are going to push that vision forward

     that share that vision with us. So the president has made a commitment and to

    show the commitment, we are the only donor government that has exceeded,

    dramatically exceeded our commitment that President Bush announced in

    Monterey. The president when he entered office, we our ODA Official

    Development Assistance was in 2000, fiscal year calendar year 2000 and

    by the way ODA Official Development Assistance measured by international organization out of Paris, OECD, and it is actual expenditures by calendar year.

    It’s not appropriation levels, it’s not commitments; it’s what you actually spent –

    disbursed. In calendar year 2000, we disbursed $10 billion. In calendar year

    2004, we disbursed $19 billion. And this year, we expect to disburse $23 billion.

    So we’ve increased our foreign assistance by a 130 percent in five years – five

    years. That is a significant commitment.

    And a large portion of that is for the HIV Aids Program, shortly through the

    MCC program. I mean, some people criticize the MCC, and I sit in the board,

    because they wanted to move faster, but if you move too fast when you’re

    designing a development program, you know what you have? Failure. You need

    to be patient and design the project properly in order for it to be a success.

    We’ve now got five compacts, there’s $1 billion in those compacts and we’re

    predicting they’re going to be a success because they were initiated by the

    governments of the countries in which we are working as partners.

    Now the other thing I wanted to mention tonight which is a central subject-

    -there are two things we’re spending money on. One is trade capacity-building

    because we want Africa to enter the global trading system the new global economic order more aggressively, more fully because we believe that it will

    mean higher rates of economic growth and all of the literature and all of the

    research shows that.

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    And so we’re spending $973 million – the United States government

    around the world, much of it through AID in trade capacity-building. We now

    have three trade hubs in Africa and a fourth one we’ve just announced –

    Secretary Rice just announced we’re going to open one in Senegal for West

    Africa, and these are going to help the countries of Africa more radically integrate

    into the global economy.

    The African heads of state and finance ministers and business people are

    very enthusiastic about this initiative, but the less visible and in my view even

    more important initiative is in microeconomic reform. What does microeconomic

    reform mean? There are many countries that have very stable macroeconomic

    orders: they have balanced budgets, they have good balance of payments, they

    have low rates of inflation, they have low unemployment, and they’re not growing,

    and they are functional democracies. They are not growing, and the question is

    why? Why is a country with good macroeconomic indicators that follow the

    Washington consensus not growing?

    And the research we’ve done with people like Michael Porter at the

    Harvard Business School by the way, President Bush had Michael Porter as a professor when he was a MBA student there. President Bush is the only

    president in American history to have an MBA, and Michael Porter is still a friend

    of President Bush. And Michael Porter is a friend of mine because the

    Massachusetts’s economy – the state I came from in 1990 was a wreck. It had

    a 14 percent unemployment rate and had one of the lowest credit rating of 50

    states and it was on the edge of bankruptcy, and Governor Weld at the time

    asked Michael Porter to chair a committee in Massachusetts to rebuild the

    Massachusetts economy through microeconomic reform. So we are not testing

    these theories in Africa. We tested them in Massachusetts my home state

    and we at the height of the prosperity in the 90s, we had a 2.8 percent

    unemployment rate, one of the lowest unemployment rates in the world, and next

    to, I think, Connecticut we had the highest income in the entire world per capita,

    with the highest literacy rate, the highest education rate.

    The economy boomed because we followed these microeconomic

    principles. What is microeconomic reform? How long does it take to start a

    business? How much does it cost to start a new business? How long does it

    cost or take to settle a dispute between businesses in the court systems of your

    country?

    Now, if you think this is irrelevant, let me just tell you a story. In the United

    States and Canada it takes on the average of 60 days to start a new business

    and it costs $200. I will not embarrass the Prime Minister of this country is a

    friend of mine, he is not here tonight and I’m not going to tell you the country. It’s

    a country in Africa and his country, one of the poorest countries in the world, it

    takes $2000 to start a new business and it takes two years in terms of time two

    years.

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    The World Bank did a study on this. They came out with a report called

    “Doing Business” just today, and we went up to the prime minister of the country

    and said, you know, we analyzed this and we checked into it and it’s true: $2,000

    in one of the poorest countries to start a new business. You know why?

    Because someone in one of the ministries’ brother owned the biggest newspaper

    in the country and the rules of this ministry said to start a new business you had

    to advertise in this newspaper with a big advertisement and it costs $2,000 to run

    that ad. (Laughter.)

    Now, no one suggested that anybody was being acting inappropriately,

    but it did enrich the newspaper, and no one could quite understand why it was

    necessary to advertise a new shoeshine shop in the capital city for $2,000. The

    person wouldn’t make $2,000 in five years in the shoeshine shop, but if he

    wanted to have a certificate saying he owned the shoeshine shop, he had to

    spend $2,000 to put an ad in the newspaper. Now, when the prime minister

    found that out, he rescinded the rule overnight, and he said, what idiot wrote this

    rule?

    Now, there is a professor at UCLA, an economist who is in his mid 80s.

    He’s one the greatest development professors harbored in America. And what

    he did is, he did analyses of the countries that have had rapid rates of growth,

    and what he found was that it’s not one rule that makes a difference. It’s dozens

    of rules on top of each other. What’s the business environment generally? Is the

    country welcoming to business or does it regard all capitalism, even free market

    capitalism as competitive as predatory and evil and bad? We don’t want – this

    if you do that, it will be reflected in all your rules rule after rule after rule.

    And if you layer the rules one on top of the other, it’s almost impossible for

    a new business to start and prosper. Well, if you have that kind of a business

    environment, no one is going to invest in your country. And most heads of state

    and prime ministers don’t understand that it’s not one visible rule, it’s not the

    Washington consensus in macroeconomic reform. Everybody knows there’s

    high inflation or low inflation or everybody is unemployed but the microeconomic

    indicators are very small. But in the aggregate, when you layer them on top of

    each other, they have a profound effect on investment and on economic growth.

    Now let me just show, we have started investing based on the World Bank

    indicators, and you should see your countries are in this report, so you ought to

    take the report. I think this is the third or fourth year. It’s not produced by an

    American. Simeon Djankov is a Bulgarian economist and he is the one that runs

    that office, and it is a big controversy now.

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    Some people don’t like what he’s done, but the evidence is that the countries that have good microeconomic indicators a lot of rules and legal

    framework, rule of law have much higher economic rates of growth, and we have begun now in AID to invest hundreds of millions of dollars in policy reform in

    willing governments to try to improve these indicators.

    Now, let me just give you three facts. The number of new companies

    registered in Serbia and in Vietnam jumped 42 percent and 28 percent

    respectively after the reforms were put in place. Slovakia’s reforms in 2002 helped cut the number of people unemployed by 43,000, according to the

    research. In Columbia, which is in the middle of a narco-war, reforms of a

    employment and business startup regulations have created 300,000 new jobs in

    the formal economy 300,000 new jobs just by a series of regulatory changes.

    So I’m going to suggest to some of those heads of state who are here this

    evening to get the report of the World Bank and if you have an AID mission, you

    can tell the mission director that I’m giving them an order through you to help you,

    if you want. It’s up to you because we can’t do this ourselves. These are your

    rules and regulations, and if there’s no commitment locally to reform of these

    rules, then we can’t help you. It’s a waste of money to help. But if you are

    interested in this, look at the World Bank indicators, talk to the World Bank

    representatives, and if you’re an MCC country, you might even work some of

    these microeconomic reforms into your compact.

    My suggestion is that you look at this issue. Look at the report and see

    how your country fairs. There are 11 indicators in the report and the Bank is now

    going to extend the number of indicators further to look at more of these rules

    and regulations and the regulatory climate and the climate for investment.

    Because if we make these changes in Africa, my view is, the economies will

    boom even more than they already have and the countries that have already

    done this are already seeing high rates of economic growth. Mauritius, for

    example, did many of these changes long time ago in the 1980s, their economy

    has been a spectacular success, so we know there are countries that have

    already done this successfully.

    We are prepared to help you. The MCC is based on the notion of

    stimulating economic growth. And I know Paul Wolfowitz, my good friend, is

    looking very carefully at Simeon Djankov’s research since it’s from his own bank,

    and I know there are economists in your countries and your government that are

    looking at the same issue. We are there to help you because ultimately and

    this is my final point and I said this morning and I want to keep repeating it, because lots of people who talk about development sort of miss this. You can’t

    have your social services paid for from foreign aid, loans or grants, forever. You

    got to support them eventually with your own tax revenues.

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    Where do you get tax revenues? From your own people, from individuals, from businesses, from sales taxes, from income taxes, from corporate, but you

    have to have a growing economy to have growing tax revenues, to support

    improved social services, so ultimately education and health and protecting the

    environment are dependent on a growing economy that produces more tax

    revenue to support them sustainably.

    There is a direct connection between prosperity and economic growth and social services and community development. They are not separate things.

    They are intimately related to each other and we need to create the climate for

    rapid rates of economic growth because that’s the only way Africa ultimately will

    be as rich and prosperous and powerful as the United States. You know,

    America 200 years ago was weak, poor, and unstable. Now you don’t think of

    America in those categories, but read the history. We were on the edge of civil

    war just after the revolution. We had rebellions across the colonies. The

    colonies were almost ready to break up. There was poverty in different areas.

    There were huge rates of inflation. The economy was unstable. It was a new

    democracy. The European monarchies were counting on us to fail. People said

    this democracy thing is a joke. It’s a fad. It’ll never succeed. America is going to

    be weak and unstable and poor forever, and we can dismiss this craziness of the

    people ruling. People don’t say that nowadays; people don’t say that.

    So ultimately I believe the great experiment is going on in many countries to move toward their own form of democracy, and their traditions and their

    customs, and toward a market economy is going to mean a more prosperous

    world with fewer poor people and less suffering, and a broader democratic

    consensus, so people control their own governments.

    Thank you very much. (Applause.)

    MR. HAYES: Thank you, Mr. Natsios. I think you were wise to pitch your 45-minute speech. It was a great address and we very much appreciate that.

    The next person, so that you understand the rationale of our program tonight, is that Mr. Natsios is a member of the board of directors of MCC; one of

    five, I think, members. And we now have the acting CEO of the Millennium

    Challenge Corporation.

    It’s my pleasure now to introduce you tonight to Mr. Charles Sethness, the

    vice president for monitoring and evaluation at the Millennium Challenge

    Corporation. Mr. Sethness is currently serving as CEO at the Millennium

    Challenge Corporation while the organization awaits the confirmation of their new

    CEO.

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