Committee on International Relations

United States House of Representatives

The New Partnership for Africa's Development and American Engagement

Testimony of Stephen Hayes

President

Corporate Council on Africa

September 18, 2002

Mr. Chairman and Distinguished Members of the Committee, I am pleased to be here with you today to discuss the newly formed New Partnership for Africa's Development (NEPAD) and its pivotal role in strengthening U.S.-African relations.

Mr. Chairman, the Subcommittee on Africa has exhibited a commendable interest in improving commercial ties between the United States and the African continent. This hearing today exemplifies the recognition that expanded U.S.-African business does not merely benefit individual businesspeople. It has a demonstrated effect on the political, social, and diplomatic elements of our engagement.

The Corporate Council on Africa

I am here today representing the Corporate Council on Africa (CCA) as its President and Managing Director.  For nearly a decade, CCA has been at the vanguard of the U.S.-African economic relationship. The organization represents more that eighty percent of all US private direct investment in Africa, and it strives to enhance trade and investment between the United States and the nations of Africa.  Our 160 member companies range from Fortune 100 multinationals, such as Coca-Cola, ExxonMobil, DaimlerChrysler and Caterpillar, to medium-sized enterprises (such as equipment exporters and commodity traders), to single-person upstarts. Our member companies come from every economic sector and nearly every state.  I come here today representing that diverse constituency.

Africa's Outlook

Mr. Chairman, as the member companies of the Corporate Council on Africa would tell you, the need for engagement with Africa is undeniable. As the war against terrorism continues, our commitments must intensify, not wane, even though in spite of its potential, the continent has continued to fall short of expectations and goals. In fact, I would argue no other area of the world faces larger and potentially damaging challenges. No other people have to make more difficult decisions on such a routine basis.

Nevertheless, the outlook is not just pessimistic. Economic growth on the continent, more than four percent in 2001, grew faster than any other developing world region. According to a report by the United Nations released this month, only 16 African countries experienced GDP growth of less than three percent in 2001, down from 27 countries in 2000. The number of countries with growth rates exceeding three percent increased from 26 in 2000 to 37 in 2001. Per capita income on the continent grew 1.9 percent in 2001, up from 0.7 percent in 2000. In 30 African countries, per capita income exceeded 1.5 percent.

Some of the developing world's biggest economic, business and political success stories can be found in African countries, like Senegal, Mozambique, Botswana and Mauritius. These successes tend to be buried underneath all the problems. Although the world now knows Africa is not merely a single country, we still, unfortunately, tend to lump the continent's 53 nations together in our collective mindset. The problems of some complicate the lives of all.

NEPAD

For this reason, Mr. Chairman, I am encouraged by the concepts behind the New Partnership for African Development (NEPAD), a plan created by Africans for Africans, but one that I believe will require our active support if it is to be successful. Mr. Chairman, I want to focus our attention on the mechanisms that are going to address Africa's challenges and sustain its successes. At this time, I see no better vehicle than NEPAD to do this.

Over the last fifty years, perhaps the greatest flaw in African development efforts is the fact that the other nations and multilateral institutions have on too many occasions imposed their models onto Africa when they were not necessarily appropriate for local practices and needs. NEPAD is the first comprehensive approach to African development by Africa and it deserves our serious consideration and cooperation. Whereas virtually every other large-scale plan for Africa or the developing world was conceived by international developed community and exported to Africa, NEPAD's evolution took the opposite path. It came directly from the continent itself, from four of the continents' most dynamic and committed leaders: Thabo Mbeki of South Africa, Olusegun Obasanjo of Nigeria, Abdelaziz Bouteflika of Algeria, and Abdoulaye Wade of Senegal. And now Africa is presenting its plan to the international community. As the leaders of the G8 countries did last month in Kananaskis, Alberta, it is time to lend our support. We should do so not because it is a perfect document.   The plan is clearly not fully developed. It is an ongoing work that will require progress, and at times will certainly meet difficulties. We should support it because it represents the best of aspirations and the best hope, thus far, for Africa.

We should be heartened that the concept itself integrates economic development with political and social development. As such it brings together those who maintain that economic development must precede political development with those who believe that basic human rights must be an integral part of any plan. What Africa wishes to achieve is nothing short of the same rights that we have so often taken for granted.

Clearly there are many obstacles in the way of achieving these goals quickly. There are thousands of cultures throughout Africa, and a variety of governance systems, ranging from monarchy, autocracy, near-anarchy, authoritarianism and democracy.  When one then adds to the chemistry the volatility of egos in leadership, one can understand the tremendous challenge the Africans are placing upon themselves, all for the hopes of a better continent filled with stability, greater economic equality, and increased human dignity. NEPAD attempts to address all aspects of development.

The heart of NEPAD is a break with the past on governance and accountability. Built into NEPAD is an African Peer Review mechanism that will underscore attempts to reduce the policy reversals and missed targets. The architects are keenly aware of the connection between openness, democracy and rule of law, and performance and prosperity. They are also aware of the millennia of different traditions throughout Africa, the centuries of an all too recent colonialism, the divisions created by the Cold War, their own divisions created by wars for power and wealth, and their own complex relationships that make peer review both necessary and so very difficult. Whatever successes may develop from NEPAD will require unity among key African leaders, support from nations such as the United States, and a great deal of time and wisdom. For these reasons I believe that the United States government and its private sector should actively engage with the leaders of NEPAD and provide support necessary for their hopes and plans to take root.

CCA has supported the ideas that have led to NEPAD since its genesis. More than two years ago, in Davos, Switzerland, our then chairman of the board of directors of CCA, Mr. Maurice Tempelsman, met with Presidents Obasanjo, Mbeki and Bouteflika to discuss the concept. Since that meeting, CCA has hosted each of these leaders in the United States in order to continue to build support for NEPAD.  Mr. Tempelsman sent staff to work with Wiseman Nkuhlu and others who worked to convert its principles into reality. As recently as last week we met with Mr. Nkuhlu and his staff to plan how the international private sector may more effectively work with the NEPAD secretariat.

Most recently, CCA was named U.S. Representative for the Steering Committee of the NEPAD Business Group. The NEPAD Business Group comprises the world's leading business organizations and will act as the medium between NEPAD and the private sector. Other organizations in this coalition include the Paris-based International Chamber of Commerce, the Commonwealth Business Council with headquarters in London, Conseil Francais des Investisseurs en Afrique (CIAN), and the leading French-African business association. Many other business-related organizations will be a part of this network.

Mr. Chairman, what I have said so far is doubtfully little different from what many others have said or will say in support of the NEPAD. Where my organization will be most supportive to the U.S.-African partnership, and to NEPAD, is in three core areas: it will continue to champion Africa's economic importance to the United States, it will work to transmit successful American practices and expertise, and it will identify tangible business opportunities for U.S.-African commercial alliances. Permit me to touch upon some critical parts of these objectives:

Increasing Capital Flows to Africa: Africa's lack of adequate project financing and related expertise is a foremost impediment to the continent's economic and social development. Capital flows to Africa over the past decade have declined. It is the only continent that has had this unfortunate experience. Under the leadership of our current chairman, Mr. James Harmon, we are developing a new plan for financing development in Africa. We believe old international models have not worked as they should, and new approaches need to be created to more involve the mainstream private financial sectors. This week, a CCA Commission on Financing and Capital Flows to Africa will hold its first meeting to begin to lay the groundwork for the plan from the private sector. The commission will include private sector financiers and experts, and appropriate high-level representation from Africa. We will consult closely with the leaders of the NEPAD. The recommendations of the commission will by ready this spring for inclusion in the Kyoto conference and in time for the CCA US-Africa Economic and Trade Summit to be held in Washington in June 2003.

The African Growth and Opportunity Act (AGOA: AGOA has the potential to turn sub-Saharan Africa into the world's next textile and manufacturing hub. Anecdotal evidence suggests that AGOA's incentives have generated nearly $1 billion in investment and U.S. imports of goods covered by the act are increasing dramatically. The Corporate Council on Africa is playing a leadership role in the development of AGOA. We are now training 60 African business leaders from 36 African nations to implement the bill's provisions. We are conducting 16 workshops in Africa and 35 workshops and meetings in the United States this year to continue to develop the trade links between the United States and African countries.

Western African Energy: U.S. energy stakes in western Africa are rising. As America attempts to diversify its sources of petroleum and natural gas, Western Africa is going to become one of the most strategic regions of the entire world. U.S. imports of oil and gas from countries such as Nigeria, Angola and Equatorial Guinea, will likely surpass 20 percent by 2004 and 25 percent of our total supply by 2010. Continued engagement with this region will insure stability of supply, a favorable business climate for U.S. firms, and potentially immense economic benefits for the countries involved. Without economic development for all citizens in these regions, however, the risk of instability could remain moderately high.

More than 90 percent of American business with Africa is energy-related, and virtually every major energy company in the United States is a member of the Corporate Council on Africa. Since the organizations' founding, CCA has played a pivotal role in supporting the U.S.' energy interests in this region, and we will work alongside NEPAD to guarantee that this proceeds.

In June, CCA sent two staff members to the COMESA offices in Lusaka to assist in capacity building, including computer and data-processing training, and in the development of partnerships between American and East and Southern African businesses. If this pilot program proves successful, as we believe it will be, we will use it a model for an initiative in other African regions. I know of no other US organization that is so actively working with the economic communities of Africa.

We believe that a key to African economic development, and to greater US private investment in Africa will be the success of the regional economic communities of Africa.

The support of the regional economic communities is an important component of NEPAD. Stronger economic communities will mean greater economic opportunity for a growing business component throughout Africa.

Mr. Chairman, in an editorial published in the days after the attacks of September 11, United States Trade Representative Robert Zoellick intimated that open markets and the promotion of private enterprise are some of the best tools we have in spurring liberty around the world, complementing our alliances, and strengthening American capabilities. This holds particular resonance for our relationship with the African continent and NEPAD may represent our best opportunity to help ourselves and Africa at the same time.

Thank you