The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
5/13/2020 Deputy Treasury Secretary Neal S. Wolin Remarks to the Corporate Council on Africa’s U.S.-Africa Business Summit U.S. DEPARTMENT OF THE TREASURY Press Center Deputy Treasury Secretary Neal S. Wolin Remarks to the Corporate Council on Africa’s U.S.-Africa Business Summit 9/30/2009 Good morning and thank you very much, Lionel, for that kind introduction. It is a privilege to be with you this morning. This seventh U.S.-Africa Business Summit convenes at a time of enormous consequence for Africa and for the world. The global financial crisis has proved again, if anyone doubted it, that the nations of the world are inextricably intertwined – north and south, developed and developing. For African nations, that truth was clear before the financial crisis, as global shifts in supply and demand sent fuel and food prices skyrocketing in 2008. The financial crisis compounded those economic shocks. As growth rates in developed nations plummeted, demand for African exports fell. So too did the levels of foreign direct investment and remittances. This year, capital inflows are projected to be just half of their 2007 levels. The slowdown has been particularly dramatic in the continent's largest economies: South Africa, Nigeria, Angola. But the effects have also been severe in the smaller economies – many of which had seen rapid growth in recent years. The Obama administration recognizes the seriousness of this crisis for Africa's economies. We have responded with vigorous support through the international financial institutions and through bilateral assistance to address the immediate impact of the crisis. Working with development partners, African governments, too, have taken immediate measures to cushion the impact of the crisis – loosening monetary and fiscal policy, when possible, to stimulate growth. These steps, along with the emerging global recovery, are likely to lead to a rebound in African growth, with the IMF projecting a healthy 4.1% real GDP growth rate for sub-Saharan Africa in 2010. Private capital inflows to Africa, after shrinking year-on-year since 2006, are forecasted to expand again next year. The value of exports from Sub-Saharan Africa, which shrank by 38% this year after six years of double-digit growth, is expected to grow by 13% in 2010. Africa appears to be turning the corner. The question today is this: looking beyond the global financial crisis, how can African nations best position their economies to partner with developed nations and with private investors to achieve strong, sustainable growth in the years to come? A part of the answer can be found by looking at what some African nations are already doing in two key areas: improving their investment climates and strengthening their financial sectors. Some of the most impressive examples of progress in these areas come from countries that, only a short time ago, were locked in devastating conflict. Rwanda, shattered by genocide in 1994, is now in the vanguard of Africa's reform movement. This year, Rwanda was the first sub-Saharan African country to be named the World Bank's top reformer in the Doing Business indicators, improving from 143rd place to 67th place – the largest one year change ever in the history of the Doing Business index. Rwanda's practical steps include reforming the processes for starting businesses, registering property, protecting investors, trading across borders, and accessing credit. In January 2008, a Rwandan Presidential decree replaced a 6% registration fee with a flat rate of about $34 to register property. Registrations now require only a few procedures and an average of 60 days to complete – down from 315 days in 2007. Such changes, together with prudent macroeconomic policies and a sustained effort to bring women fully into the political and economic life of Rwanda, have had a profound impact. Rwandan GDP growth averaged above 7% from 1997-2006, and has continued its strong performance for the past three years despite global financial conditions. https://www.treasury.gov/press-center/press-releases/Pages/tg300.aspx 1/3 5/13/2020 Deputy Treasury Secretary Neal S. Wolin Remarks to the Corporate Council on Africa’s U.S.-Africa Business Summit After decades of civil war, Liberia, too, has made substantial progress in improving its business climate. Through the Liberia Better Business Forum, Liberian President Ellen Johnson Sirleaf has worked closely with the Liberian business community to make it easier to start businesses, obtain licenses and trade across borders. In just the last few weeks, Liberia's legislature passed and President Johnson Sirleaf signed into law a key reform to the Revenue Code. More progress is needed in Liberia. Other reform priorities require the enactment of additional legislation, such as revising the Investment Code, the Commercial Code and rules governing land tenure. But the efforts thus far are encouraging. In Nigeria, the bold actions of the new Nigerian Central Bank Governor, Lamido Sanusi, provide another example of transformative African leadership – in a country whose history has been deeply marred by corruption and internal conflict. Just a few months into Sanusi's term, Central Bank audits revealed non-performing loan ratios of 40% at five of the largest Nigerian banks. Acting quickly, Sanusi replaced the banks' management and announced plans to bolster their balance sheets with $2.6 billion in equity – an intervention structured to restore confidence and attract foreign and local investors to the sector. At the same time, Governor Sanusi has taken steps to strengthen banking regulation and supervision to prevent a recurrence of the problem. And in a recent BBC interview, he spoke of the need for better cross-border banking regulation in Africa as more African banks spread their operations across the continent. We should not overstate the progress of African nations overall in improving their investment climates and strengthening their financial sectors. Many countries continue to throw roadblocks in the way of investors. Zimbabwe remains a cautionary tale, ranking last on investment climate rankings. And real barriers remain even in the best performing economies. Those caveats aside, what is particularly significant about the examples of reform I've mentioned here is that they have been conceived and driven by strong African vision and leadership. And these examples represent only a small cross-section of the positive economic reforms being made on the continent today to pave the way for greater transparency, competition, access to financial services, sound regulation and growth. That, I think, is an excellent sign for Africa's future. Looking beyond the global financial crisis, it is that kind of leadership that marks the path for other African nations to follow. If the efforts underway in Rwanda, Liberia and Nigeria are expanded and replicated, then Africa's future holds great promise. Of course, a commitment to improving the business climate and the development of financial services is not in itself sufficient for Africa to secure a future of prosperity. Even in countries that are firmly committed to good governance and open investment, challenges remain. Two areas in particular demand tremendous attention: infrastructure and agriculture. In both these areas, the U.S. stands ready to commit substantial resources and technical assistance. But we look to Africa to lead the way. Let me start with just one manifestation of the continent's broader infrastructure gap – electricity. Africa has the lowest access to electricity of any region in the world. The high costs of electricity and the lack of a reliable electrical supply are consistently cited as the single biggest concern for private businesses in Africa. In Nigeria, foreign companies have cited high energy costs as one of the primary reasons for abandoning the country. The potential for power generation in Nigeria is large. But the weak regulatory framework deters independent power producers from making investments. Even in South Africa, Africa's leading economy and producer of 60% of the continent's electrical capacity, demand now outstrips capacity and the utility has begun rationing. Over the past ten years, the government has sent mixed signals to the private sector with regard to the openness of the power sector to private participation, despite the fact that an estimated $40 billion in investment will be needed to help South Africa satisfy demand. Addressing the electricity problem is essential not only for business, but for humanitarian purposes. Electricity powers the wells that provide drinking water. It even affects rural healthcare. A Treasury team visited a medical facility in rural Kenya, which has the potential to improve the high rate of maternal and infant mortality in the region. Unfortunately, a lack of electricity prevents the facility from serving patients after dark. Fixing the problem won't be easy. But it is essential and it is possible – particularly through innovative partnerships between governments, the private sector and multilateral institutions. In Rwanda, where only 6% of Rwandans have access to electricity, a small U.S. power developer has partnered with the government to develop a $325 million power generation facility to extract methane from the depths of Lake Kivu – scaling up a pilot project financed by the International Finance Corporation and the African Development Bank. The partnership will more than double the electrical generation capacity of the country. Bilaterally, through the Millennium Challenge Corporation, the Overseas Private Investment Corporation, the Export-Import Bank and USAID, the U.S. is making resources and expertise available to support similar projects. From an MCC road-paving project in Cape Verde https://www.treasury.gov/press-center/press-releases/Pages/tg300.aspx 2/3 5/13/2020 Deputy Treasury Secretary Neal S. Wolin Remarks to the Corporate Council on Africa’s U.S.-Africa Business Summit to an OPIC-financed "tri-fuel" power plant in Togo, the U.S. is already actively engaged in helping African nations meet the infrastructure challenge. The second area where the U.S. stands ready to assist is agriculture. For most of Africa's poor, farming is the only source of income and the only path out of poverty. Yet the obstacles that small-hold farmers face are significant: limited access to quality seeds and fertilizer, little or no access to credit or insurance, poor irrigation infrastructure, difficulty in transporting crops from the farm to market for lack of roads. These challenges have been overcome before. Countries in Asia and Latin America saw dramatic productivity gains as a result of the Green Revolution. In Africa itself more recently, donors and development partners, private businesses and NGOs have managed to improve agricultural productivity for select groups of farmers. The World Bank recently helped to finance an irrigation project in Mali along the Niger River. The project resulted in a doubling of perhectare rice yields for 182,000 farmers. In Mozambique, a U.S.-based NGO provided thousands of small poultry producers with technical support and start up financing. Domestic production now accounts for 50 percent of overall poultry consumption, up from 30 percent in 2005. The average income of poultry producers assisted by the program has risen by $500 annually – in a country where the average annual income in rural areas is only $120. Maximizing Africa's agricultural potential, however, – waging Africa's own green revolution – will require a new approach that is based on the full commitment of African nations. It will require both the focused dedication of fiscal resources and the implementation of policy reforms to address the full range of challenges farmers face. Many African governments have already committed themselves to this cause under the Comprehensive African Agriculture Development Program – the C-A-A-D-P. And when these governments develop comprehensive, country-led strategies, we will stand ready to partner and provide assistance – not for the short term, but for the long term. We have already pledged the resources to do just that. At the L'Aquila Summit in July, President Obama and other leaders pledged $20 billion over three years to increase agricultural investments in poor countries, with the United States contributing at least $3.5 billion. The United States is already working with African countries and our development partners to put these pledges into action at the country-level. And just last week in Pittsburgh, President Obama and the other leaders of the G20 called on the World Bank to establish a new multidonor trust fund to support innovative bilateral and multilateral efforts to improve global nutrition and build sustainable agricultural systems –including programs like those developed through the C-A-A-D-P. But again – and this is a message that President Obama delivered so eloquently in Accra this summer – where we provide assistance to African nations, we will do so not as a patron, but as a partner. We take the idea of partnership seriously. Beyond the short-term assistance provided in response to the global financial crisis, we stand behind the commitment made at the 2005 G8 Summit in Gleneagles, Scotland, and we are on track to meet our target of $8.7 billion in development assistance for Africa in 2010. Going forward, the Administration has committed to doubling U.S. foreign assistance globally over the next several years. As we do so, we will look to see a corresponding commitment from our African partners: a commitment to continued reform; to increased transparency and openness; to strong institutions and governance; to creativity and long-term planning; and to establishing an environment that will stimulate private sector investment. As highlighted this morning, we see many reasons to feel hopeful. Leaders like President Kagame, President Sirleaf, and Central Bank Governor Sanusi among others have begun to lead the way towards essential reforms. And projects already underway demonstrate the possibility of progress in critical sectors like infrastructure and agriculture that hold the key to Africa's growth. As we look beyond the global financial crisis, those examples of leadership and progress are ultimately far more meaningful than any new commitments of aid from abroad. The United States will stand with Africa as a partner and as a friend, but ultimately, to quote President Obama again, "Africa's future is up to Africans." Thank you very much. ### https://www.treasury.gov/press-center/press-releases/Pages/tg300.aspx 3/3
@FedFRASER