Joint Hearing Of The Subcommittee On Africa And Global Health Of The House Foreign Affairs Committee And The Subcommittee On Commerce, Trade And Consumer Protection Of The House Committee On Energy And Commerce - "U.S.-Africa Trade Relations: Creating A Platform For Economic Growth"
Chaired By: Rep. Donald Payne And Rep. Bobby Rush
Witnesses: Panel I: Florizelle Liser, Assistant U.S. Trade Rep. For Africa, Executive Office Of The President, Office Of The United States Trade Rep.; Leocadia L. Zak, Acting Director, U.S. Trade And Development Agency; Holly Vinenyard, Deputy Assistant Secretary, Africa, The Middle East And South Asia, International Trade Administration; Panel Ii: Stephen Hayes, President And Chief Executive Officer, The Corporate Council On Africa; Greg Lebedev, Senior Adviser To The President, U.S. Chamber Of Commerce, Chairman, Center For International Private Enterprise; Lisa D. Cook, Ph.D., Assistant Professor, James Madison College, Department Of Economics, Michigan State University; Karen Tandy, Senior Vice President, Public Affairs And Communications, Motorola Incorporated
Copyright ©2009 by Federal News Service, Inc., Ste. 500, 1000 Vermont Ave, Washington, DC 20005 USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service at www.fednews.com, please email Carina Nyberg at email@example.com or call 1-202-216-2706.
REP. PAYNE: (Sounds gavel.) We will bring this delayed hearing to order.
This is a hearing of the Subcommittee on Africa and Global Health and the Subcommittee on Commerce, Trade and Consumer Protection. Chairman Rush hopefully will be here soon. Our votes have just ended temporarily. This is abnormal, but for the last several days there have been political procedural votes being done by the opposition and purposed to delay and disrupt the workings of the House, so I apologize. It's something beyond our control. A member can call for a vote to adjourn anytime they want to and that's what's been happening.
So at this time I will not make any opening statement. We'll move right to the first panel, panel one. We have our assistant U.S. trade representative for Africa, Ms. Liser; our acting director of the U.S. Trade and Development Agency, Ms. Zak; and the deputy assistant secretary, Africa, the Middle East and South Asia, International Trade Administration, Ms. Vinenyard.
We will begin. I won't take time to read the background. Normally we do that in our committee, but because of the time we will go right into and begin with Ms. Liser. If you would start, we'd be pleased. Thank you.
MS. LISER: Chairman Payne, thank you to you and to Chairman Rush and the other members for holding this hearing. I'm pleased to be here to appear before you on U.S.-African trade relations and to share some successes and challenges we face in promoting African economic growth through expanded trade and investment.
President Obama and U.S. Trade Representative Ron Kirk are committed to a new approach on trade, so we are seeking ways to sharpen U.S. trade policy and to shore up the foundations of global trade today. Strengthening the rules-based system will boost trade and promote development for the long term for America, for Africa and the world. That is why President Obama and Ambassador Kirk are committed to a successful conclusion of the World Trade Organization's Doha round, an outcome that is ambitious and opens new markets for all, including for Africans.
We are also looking at our trade preference programs, including the African Growth and Opportunity Act, with an aim to make them more effective and to ensure that the developing countries that need them the most are the beneficiaries. Africa's share of global trade is declining. Sub-Saharan Africa's share of global trade is less than 2 percent, down from 6 percent in 1980. If that share were to increase by just one percentage point to 3 percent it would generate additional export revenues of $70 billion annually, which is nearly three times the amount of annual assistance to Africa from all donors.
Also, exports from the continent are concentrated in primary commodities such as petroleum, minerals, cocoa and coffee. There is little of the manufacturing engine in sub-Saharan Africa that has fueled economic growth and reduced poverty in other regions of the world. Even in agriculture, which many see as Africa's strong suit, the recent trend lines have not been positive. In 2005 the region switched from being a net exporter to a net importer of agricultural products. We believe that export diversification and further processing of agriculture products into higher-value exports could help improve food security in the region by addressing issues of availability and stability of food supply.
But even with that bad news, U.S. trade with Africa is expanding and diversifying. AGOA is an important tool that has helped increase both the volume and diversity of U.S. trade with sub-Saharan Africa, and U.S. imports under AGOA totaled $66.3 billion in 2008, more than eight times the amount in 2001.
Now, while much of the increase is attributable to oil, non-oil AGOA imports more than tripled to $5.1 billion and a number of AGOA product sectors experienced sizeable increases during this period, including, for example, beverages, vegetables, cut flowers, certain footwear, textiles and apparel. Though African textiles and apparel producers have faced increased competition and a declining share in the U.S. market, textiles and apparel still accounted for 22 percent of all AGOA non-oil trade in 2008, so it is still an important sector.
We are trying to address the challenges. We know that market access alone is insufficient to increase U.S.-Africa trade. That is why AGOA and trade capacity building assistance are the twin pillars of U.S.-Africa trade policy. In 2008 the U.S. devoted over $1 billion to trade capacity building in sub-Saharan Africa, and the five-year $200 million presidential initiative called the African Global Competitiveness Initiative is helping to expand African trade and investment with the U.S. and support African regional strategies to grow Africa's share of world trade.
Dialogue with Africa about key trade and investment issues remains important and we wanted to share with you that the eighth AGOA Forum will be held in Kenya on August 4th to 6th, 2009. Its theme is, "Realizing the Full Potential of AGOA Through Expansion of Trade and Investment." As always, the forum will be an important opportunity to discuss the challenges in expanding U.S.-African trade and investment relations. We look forward to the participation of members of Congress and their staffs in the forum.
In conclusion, through ongoing dialogue and a range of initiatives, the administration is looking forward to working with Congress to strength U.S.-Africa trade relations and through trade to create a platform for economic growth in Africa.
REP. PAYNE: Thank you.
The co-chair of the Commerce Committee that is really having jurisdiction over this has come. Since folks were here for an hour and a half we tried to get moving, but I'll turn over the meeting to Representative Rush and there may be procedural things that you do with the Commerce Committee that we don't do in Foreign Affairs.
REP. RUSH: Thank you. (Laughter.)
Well, I think the protocol is pretty much on the sideline here, Chairman Payne. I just want to add my voice of apology to everybody who's here. This is the beginning of a new way that we're going to be operating around here I think for the foreseeable future and it's dilatory and I don't think that it's beneficial to the institution nor to the American people, but we have to do what we have to do and so we can't -- when they call a vote we have to respond.
Please accept my sincere apologies and the apologies of the Subcommittee on Commerce, Trade and Consumer Protection. I know how valuable your time is and we want to, again, welcome you and thank you for coming and taking part and participating.
I will proceed now, recognizing the next witness, Ms. Leocadia Zak, who is the acting director of the U.S. Trade and Development Agency. And I think that the guidelines have been opening statements, two and a half minutes or -- let's just say five minutes or thereabouts. Okay?
Ms. Zak, you're recognized.
MS. ZAK: Thank you very much, Chairman Payne, Chairman Rush.
Thank you and the other members of the subcommittee for this opportunity to testify today about the U.S. Trade and Development Agency's role in advancing economic development in Africa and creating jobs here in the U.S. as well.
I welcome the committee's interest in USTDA's program and look forward to briefly outlining our programs and some important successes.
I know that you have emphasized the exploration of new markets as a vital element for stimulating the U.S. economy. I could not agree more. And I also agree that African development and trade priorities are something that we must focus on. This is also precisely the mission of USTDA -- to promote development in emerging markets while creating opportunities for U.S. exports and the creation of U.S. jobs.
How do we do this? In particular we focus on areas where U.S. business is strong, such as energy, telecommunications, transportation and the environment. Using this model, we have seen the benefits that exports provide to host countries around the world and the U.S. economy. In Africa on a 10-year rolling basis, for every dollar of USTDA program funds expended we have seen a return of $24 in U.S. exports.
During my time here today I would like to provide you with concrete examples of how USTDA has assisted export activities and how African nations have benefited and how U.S. companies, large and small, have also benefited.
In 2002 Roeslein & Associates, a 200-person manufacturing company based in St. Louis, Missouri, approached USTDA with an idea for selling American-built aluminum can manufacturing equipment in Nigeria. The company had identified Nigeria as a potential new market and asked that the agency share the cost of a feasibility study to confirm the market potential, an economic and financial viability of manufacturing aluminum cans in Nigeria.
USTDA provided the assistance requested by this small Midwestern company, recognizing both the commercial viability of the project and the likelihood of success for project implementation. Ultimately, Roeslein secured a contract for $30 million to build, ship and reassemble an aluminum can manufacturing facility in Nigeria that was financed by the Export-Import Bank of the United States.
In January of this year I was invited to Roeslein's facility in Redbud, Illinois to witness the sendoff of this newly manufactured equipment. During the visit I had the opportunity to meet with several workers, who told me how difficult times were in Redbud and how grateful they were for our assistance. To top it off, Roeslein provided USTDA with a check fully repaying the grant that we had provided to them that opened the door for them in Nigeria.
My second example involves a major infrastructure need common in Africa -- energy. Just under a quarter of sub-Saharan Africa's population has access to electricity. To put this into perspective, sub-Saharan Africa generated 63 gigawatts of power for 770 million people, about the equivalent that Spain provides for a population of 40 million. Recognizing the need for more and diversified energy sources, USTDA partnered with Botswana Development Corporation to fund a feasibility study to determine the viability of coal-bed methane gas extraction, considered a clean energy source in Botswana. Once the project was determined to be feasible, USTDA also funded a reverse trade mission that brought key Botswana decision makers to the United States to examine production facilities and meet with U.S. industry representatives and potential financiers for the project.
Based on the positive recommendations for coal-bed methane projects, the Overseas Private Investment Corporation provided an $8.5 million investment guarantee to Kalahari Gas Corporation to fund the drilling of the new clean energy source. Since that initial investment, U.S. companies have benefited from continuing expansion of this project, having exported a total of $52.9 million in U.S. goods and services. At the same time, it provided a crucial need in Botswana.
The Roeslein and Kalahari Gas examples are but two of many in which USTDA has been the catalyst for assisting U.S. companies, small and large, in expanding their markets both in Africa and around the world. We often work in consultation with the private sector, including those testifying here today such as Motorola, the Corporate Council on Africa, and the U.S. Chamber, and we have a very close collaborative relationship with those on the panel here today -- USTDR and the Department of Commerce.
In conclusion, I would like to thank the subcommittee for inviting me here today. Exports to Africa benefit both Africa and the U.S. economy. Before coming here today I talked with our staff that is responsible for Africa and asked them why they enjoy their job and they said because it makes a difference -- it makes a difference in Africa and it makes a difference here in the United States as well.
I look forward to working with to make the difference both in Africa and here in the U.S.
Thank you very much.
REP. RUSH: The chair thanks the gentlelady.
The chair now recognizes the next witness, Ms. Holly Vinenyard. She is the deputy assistant secretary for Africa, the Middle East and South Asia of the International Trade Administration.
Ms. Vinenyard, you are welcome and please begin your opening statement.
MS. VINENYARD: Thank you. Chairman Rush, Chairman Payne, Ranking Member Radanovich, Ranking Member Smith, other members of the committee, thank you for this opportunity to speak with you today about U.S.-Africa trade relations.
I will summarize the points I make in my prepared statement and request that it be included in the record.
Many countries in Africa continue to reap the benefits of sound changes to economic policy and improved governance undertaken during the last decade. Some are becoming key emerging markets for U.S. companies.
So while the current global economic situation has had a negative impact on them, a significant number of African countries have still maintained positive growth.
Thanks in part to AGOA, trade between the United States and sub- Saharan Africa has more than tripled since 2001. Still, our two-way trade with sub-Saharan Africa measured only 3 percent of our total trade with the world last year, and our non-oil imports from sub- Saharan Africa measured less than 1 percent of all of our imports.
Increasing two-way trade with Africa could play a key role in boosting African export revenue and additional U.S. exports to sub- Saharan Africa will have a positive effect on the U.S. economy. As former Secretary of Commerce Ron Brown explained, we want to contribute to Africa's development through mutually beneficial two-way trade. And our current secretary, Gary Locke, has recently said that in addition to creating jobs and economic growth, goods and services traded can also profoundly improve people's quality of life. Trade can hasten democracy and the spread of freedom. Trade can speed the delivery of transformative ideas and technology.
But in order for U.S. companies to expand their ties to Sub- Saharan Africa many African governments will need to address a series of obstacles. A recent World Bank report noted progress in many African countries -- Senegal, Burkina Faso, and Botswana ranked among the top 10 global reformers. The report found, though, that regulatory and administrative burdens to entrepreneurs need to be reduced as they remain higher in Africa than in any other region of the world.
The U.S. Chamber of Commerce's report on "How Corporate America Really Views Africa" focused on the following impediments: African markets represent a difficult business case in terms of risk versus reward, corruption and opportunity costs. The report also highlighted the need for improved infrastructure and stronger protection and enforcement of intellectual property rights, IPR.
Both reports underscore the importance of IPR. In the International Trade Administration we view inadequate IPR protection and enforcement as threatening American interests as well as Africa's own capacity to attract investment, collect tax revenue and build local industry. Counterfeit goods pose a major health and public safety concern.
We have worked with African stakeholders by providing technical assistance and capacity building. This is an example of the kind of work we've done to help make it easier for U.S. companies to do business and at the same time to help strengthen the business climate in African countries. We work with U.S. companies to resolve barriers to trade and investment.
We currently have 250 active market access compliance cases and 38 of those are in Africa. Nearly one-third of the Africa cases we initiated last fiscal year were on behalf of small and medium-sized enterprises.
Our commercial service operates a network of trade professionals in 109 U.S. locations and in 77 countries, including five in Sub- Saharan Africa. In fiscal year 2008 these offices reported over $860 million in exports that they supported for U.S. companies.
I serve on ITA's market access and compliance unit. We work hand in hand with the commercial service. Policy and promotion are two sides of a coin. For instance, I coordinate with our domestic offices when I conduct outreach within the United States, including, Chairman Rush, when I visited your district in 2006 -- shortly after a trip that Flor and I took to Liberia -- to talk to your constituents about opportunities in that country. I accompanied our former director of general commercial service on the trade mission that he led to sub- Saharan Africa last year and we're working closely with our commercial service office in Nairobi as we prepare for the AGOA forum that Flori mentioned.
Despite obstacles to trade and investment with sub-Saharan Africa, there has never been a better time for U.S. companies wishing to explore these markets and ITA offers the tools and services to help them. We look forward to working with you, your staff and your constituents, whether here in Washington, in your districts or on the African continent.
Thank you again for this opportunity and I look forward to your questions.
REP. RUSH: Thank you very much for your opening statement.
The chair recognizes himself for five minutes, but before the chair -- I ask unanimous consent that the opening statement of the members of both subcommittees be entered into the record. We are trying to save some time. So if members want to submit their opening statements for the record, I ask unanimous consent, and hearing no objection, members will submit their opening statements for the record.
Also at the same time the ranking member, Mr. Radanovich, has asked for unanimous consent to include these two news items into the record: "A Conversation Behind Closed" -- the chair recognizes Mr. Radanovich.
REP. GEORGE RADANOVICH (R-CA): Thank you, Mr. Chairman.
I appreciate that unanimous consent request on "A Conversation Behind Closed Doors" by the Africa Business Initiative and also "United States and Africa," a publication of the Corporate Council on Africa.
REP. RUSH: Hearing no objections, so ordered.
The chair recognizes himself for five minutes for the purposes of questioning the witnesses.
There's been a consistent concern about the staffing of the FCS offices in Africa. Section 125 of AGOA (commonly found ?) that FCS's presence in Africa had been reduced since the 1980s and that the level of staffing in 1997, which was seven officers in four countries, did not, quote, "adequately service the needs of U.S. businesses attempting to do business in Africa," end of quote. Accordingly, the legislation required the posting of at least 20 FCS officers in not less than 10 African countries by December the 31st, 2001, quote, "subject to the availability of appropriations," end of quote. I guess that was a caveat.
Ms. Liser and Ms. Vinenyard, would you address the staffing mandates of AGOA? Have they been met fully or have they -- FCS been fully staffed and, if not, why hasn't it been fully staffed? And has the administration requested additional staffing and has the Congress provided additional funding -- appropriations -- for it?
Ms. Liser, you can start.
MS. LISER: Chairman Rush, I --
REP. RUSH: Please.
MS. LISER: (Off mike.)
REP. RUSH: Sure.
Okay, Ms. Vinenyard?
MS. VINENYARD: Thank you.
We recognize that ITA's international presence in many of the world's critical emerging markets, including Africa, needs to be expanded. In order for us to more aggressively support export-related job creation and maintenance, we sought an additional $5.2 million to develop a more robust presence in these challenging markets. ITA personnel on the ground in these areas would help U.S. firms navigate through the often-confusing export barriers and help match these firms with potential customers, partners or distributors.
The House did not include this requested increase and we still believe that our expanded presence is an important component to opening the markets in Africa to U.S. businesses.
REP. RUSH: So there hasn't been an increase in appropriation even though the Congress dictated that that should be the case, that there should be an increased presence on your part if more resources were available to you?
MS. VINENYARD: That is correct, Chairman.
Last week in the House's consideration of the Commerce, Justice, Science appropriations bill, the request for the additional $5.2 million was not included.
REP. RUSH: Ms. Liser, you had --
MS. LISER: I just wanted to share with you, Chairman Rush and Chairman Payne and the others that as the agency that coordinates with all of the other government agencies on the implementation of AGOA that it's important to know that we have a number of people both here and in Africa that are active participants in implementing AGOA.
We have people from TDA, from the Department of Commerce, of course. We also have people from the State Department who are at the post. We people from the Department of Agriculture. And when we do our trade and investment framework agreement meetings throughout the continent where we are trying to enhance trade and investment with the countries that are AGOA eligible, we often take a very large team of government agencies with us -- OPIC, Ex-Im Bank, Department of Labor.
So we feel to some extent that we do have a strong team that is looking at how we can best work together in the administration to implement what we hope to accomplish under AGOA.
REP. RUSH: Well, okay.
What kind of training do these individuals have? Are they trained -- (inaudible) -- the type of activities that will promote the AGOA mandate or are they -- these are not permanent; these are interim and temporary assignments that individuals in your department might fulfill?
MS. LISER: No, actually what we're drawing on is really the strength and the mandates of a number of government agencies. Almost every agency -- and I know I've left out a number of them, Small Business Administration -- almost all of them have offices with permanent staff that are working on Africa and on expanding trade and investment. Each has a different mandate, but we all work I think collectively and in a coordinated fashion.
So, again, we're looking at, just as an example, the Department of Agriculture has a number of people that are helping us to improve the agricultural standards of the Africans and they've even placed on the ground at our regional trade hubs, which are run by AID -- I didn't mention AID; they're one of our biggest agencies that are working to implement AGOA. And on the ground we've placed at these regional trade hubs throughout Africa experts from the Animal and Plant Health Inspection Service. The Africans had complained that they could not meet the U.S. sanitary and phytosanitary standards. So I just wanted to share that.
We continue through a number of agencies and their mandates and their staffs to implement the goals of AGOA.
REP. RUSH: So am I to just -- this is my final question -- am I just to then conclude that you don't need the additional appropriation?
Ah! (Laughter.) All right.
MS. LISER: Mr. Chairman, you did not hear me say that.
REP. RUSH: Oh, okay. I --
MS. LISER: We would definitely welcome a strengthening of whatever support we can get through appropriations for all of our respective mandates and collectively to do what we can to implement AGOA.
REP. RUSH: Thank you very much.
The chair now recognizes the gentleman from California for five minutes, Mr. Radanovich.
REP. RADANOVICH: Thank you, Mr. Chairman. And thank you for holding this hearing. And I want to welcome the witnesses to the committee hearing. I do have a question for each.
Ms. -- is it "Liz-air"? Thank you.
You state that one of the ways that you're looking to shore up global trade is supporting a global rules-based trading system. In looking at sub-Saharan Africa, which countries need improvements, which are closer to that standard? Can you kind of give me an overview of sub-Saharan Africa in that regard?
MS. LISER: Certainly. First of all, the Africans as a group are the largest regional grouping of countries within the World Trade Organization. I remember when I first started working on trade issues and would go to Geneva when it was still the GATT -- before it became the WTO -- you did not see very many Africans at the table at all. And now when you go back to Geneva you see many Africans who are there, they're at the table and they are active in the negotiations in the WTO.
So, first of all, as a group we think that they are indeed abiding by the rules-based system and are very active in promoting their interests in the negotiations and in making sure that they benefit from the global trading system.
In terms of specific countries, I think for Africa part of the issue is they have, as I said earlier, a relatively small share of world trade. Even with all of their rich resources on the continent, they have anywhere between 2 and 3 percent of world trade. So the issue for them has to do with a lot of the supply side constraints. They have transportation that is expensive and inadequate in many cases, high cost of energy -- I have not visited one factory producing products in Africa that did not have a backup generator, so that adds cost. And so --
REP. RADANOVICH: But can you kind of outline, give me an idea of the countries in sub-Saharan Africa?
MS. LISER: The particular ones that --
REP. RADANOVICH: Perhaps the ones that are doing better than others, the ones that need the most help?
MS. LISER: Well, I think as a group they need a lot of support and we're trying to give it to them, but in terms of countries that are doing very well, South Africa is doing very well. In fact, their trade with the U.S. grew by about 71 percent last year. They also are the largest beneficiary of AGOA -- non-oil beneficiary of AGOA.
But there are a number of countries that produce a range of products. We think that a number of them are diversifying. So I think in East Africa, Tanzania is really beginning to be quite competitive in a number of areas but still needs a lot of help. The MCC compact they have, we'll help them with that. In West Africa we have reports that Senegal is also doing fairly well in terms of advancing its trade. There are quite a few of them. Lesotho is the largest exporter of apparel to the United States, so you would not think that from a very tiny country as small as it is.
REP. RADANOVICH: Thank you. Thank you very much.
Ms. Zak, welcome to the committee. Ms. Zak, you mentioned in your testimony the importance of developing private sector relations between the U.S. and Africa. Could you discuss further the importance of expanding and developing the African private sector and how this could benefit both Africa and the United States in the future?
MS. ZAK: Thank you very much. And thank you very much for the question, because I think it's very important to do both. One of the things we focus on is developing the local economy and I think to do that you need to develop the private sector as well to develop the local economy.
So, for example, one of the examples that I gave was the Roeslein example, the can manufacturing. That as a result will create jobs in- country and at the same time created jobs in the United States. So we try to work with the public sector but also with the private sector in developing the private sector as part of our program and see that as an important part of economic development.
REP. RADANOVICH: Tell me, in your role in promoting trade with Africa, what barriers have you encountered that you think most need to be removed.
MS. ZAK: Well, I think for us one of the things that we hear from U.S. companies is one of the problems is that there are other countries that are providing assistance in a non-competitive way and that as a result they need assistance from the U.S. to be able to compete with other countries. And I think that for them is one of the biggest barriers, is facing others who provide assistance in a way that's not competitive.
REP. RADANOVICH: All right. Thank you.
I yield back.
REP. RUSH: The chair now recognizes the chairman of the Africa Subcommittee, Mr. Payne, for five minutes.
REP. PAYNE: Thank you very much.
Let me ask under AGOA until now, the major benefits in increased exports under AGOA have been limited to several countries -- South Africa, maybe Lesotho, Kenya, Madagascar and Swaziland, mainly in assembling clothes. How can we broaden the scope of AGOA, first of all, in your opinion?
Secondly, is it wise to expand market access under AGOA for non- apparel textiles, certain agricultural commodities as you briefly touched on, in order to enable more countries to utilize AGOA? I feel it's certainly feel it's underutilized.
And maybe each one of you might be able to comment on how you think it can be increased and improved.
MS. LISER: Thank you, Chairman Payne, and for your long-standing support of AGOA and interest in seeing how we can maximize its benefits.
We actually have seen an expansion of the number of countries that are exporting under AGOA as well as products that they're sending. I know that it's a range of products that you don't normally associate with Africa -- footwear, eyewear. I've been to an eyeglass factory, footwear factory; processed agricultural products, fruits and jams and jellies are being produced, piri-piri sauce or hot sauces, as they call it. So we are actually seeing that and we do have more U.S. businesses that see the products coming from Africa as quite competitive in the U.S. market, especially in niches.
So apparel and textiles are still 22 percent of the non-oil, but that figure actually used to be much higher. Just a few years ago it was 40 percent of non-oil. So to us, as we see the number go up in terms of AGOA non-oil exports to the U.S. and the percentage of apparel go down, we know that that's a reflection of the diversity that is occurring.
In terms of ways to expand and improve AGOA, on the one hand people could say it's the market access, that we should add more products, but I think as we look at it we know that about 98 percent of the products they send us are already eligible to come into the U.S. duty free. The truth is that on the capacity side they are really lacking. And if we really want to help Africa take advantage of AGOA, we've got to do something to help them with their productive side.
I'll just use one example. We had determined that in Ghana there was a company, a small company, that was producing absolutely beautiful baskets, but they were producing about 500 or so of those baskets per year. They got an order -- I probably shouldn't say what buyer -- but a large buyer here in the U.S. ordered about 5,000 baskets as a test order and would have ordered many more thousands of baskets from them. Just being able to ramp up from 500 baskets a year to 5,000 baskets a year almost put the company under. They had to put people on the ground from the buying company there to help them and when the containers left with that trial shipment pretty much everybody on the other side said that's it for us.
So part of the issue is their productive capacity and we really have to find good ways to help them. I think we're doing some of the things that need to be done but nowhere near what needs to be done to really help them take advantage of that access that they already have. So, you know, that's part of our main problem with AGOA.
REP. PAYNE: Well, let me, since I've been told by Mr. Rush's assistant that I have only one more minute, I'll just ask one real quick question. I turned it upside down, though, so -- but just this one other question.
In 2000, as you know and we have discussed, AGOA was created to promote economic development in Africa by enabling African countries who could not certainly compete before in a global trade arena with other least-developed countries, LDCs, to gain unprecedented access to U.S. markets, to tariff-free quotas for certain products. And as we know, AGOA has and continues to create hundreds of thousands of jobs, promote community prosperity and economic growth annually on the continent. As we've also mentioned, though, AGOA has only scratched the surface. We need capacity building, we need other things that I don't have time to get into, infrastructure and all that.
However, this is the question: As you know, the general system of preferences -- the GSP -- expires at the end of this year. Some in Congress are discussing harmonizing and expanding preference programs across LDCs. For example, Bangladesh faces significant developmental challenges, but it has a competitive textile and apparel industry exporting five times the amount of textiles that all of AGOA countries export collectively to the United States. This is without the preferences. Now we have a movement to have preferences. Bangladesh is doing five times more than all of Africa put together, and I wonder, you know, how much would an all-LDC preference program erode the AGOA program, which has not actually been able to move to where it ought to be?
And I would just ask maybe each one of you maybe if you could just in about 20 seconds, according to my time, if you could just touch on that.
MS. LISER: Well, I think that, first of all, the U.S. trade representative, Ambassador Kirk, is in the process of looking at our trade preference programs. And as you noted, GSP will be ending; we have a couple of other programs that are ending. AGOA, of course, goes through 2015, but we're looking at AGOA as well in that larger context of what do we need to do and where do we need to go with preference programs.
That review has not been completed yet, but I think that for those of us who work on Africa and have been looking at this for quite some time, what we are aware of, again, are the capacity challenges on the African side and a sense that the Africans face some particular challenges that perhaps other countries do not. So we recognize that there are a number of countries in many regions that are poor and do need help. At the same time, all LDCs don't walk in the same shoes.
So as we go forward, our expectation is that we'll be looking at how we can help those countries who need the help the most to benefit more from the preference programs, not just AGOA, but also GSP. There are a lot of countries who are in GSP that haven't been able to take advantage of it either.
But we hope that it can be crafted in such a way that we are mindful of the areas that are still infancy -- in their infancy, or infant industries for the Africans and where perhaps there might be ways to shape programs that they would still be able to have an advantage in those areas -- a competitive advantage in our market in those areas.
REP. PAYNE: Anyone else? Yes.
MS. ZAK: I must defer to Ms. -- defer to Ms. Liser. But I also want to add that it is very important to be able to provide the infrastructure for trade. And with respect to AGOA, or any other trade, it's important that the infrastructure does exist to be able to have trade take place.
MS. VINENYARD: I agree with absolutely everything my two colleagues have just said. If I could just add in one additional point for further context -- is that we have ongoing discussion in the Doha development agenda to talk about these very issues. And so we've -- we continue to encourage our African counterparts and interlocutors to fully engage in that as we go forward.
REP. PAYNE: Thank you very much, Mr. Chairman.
REP. RUSH: And the chair now recognizes the ranking member of the Subcommittee on Africa, Mr. Smith, for five minutes for the purpose of questioning.
REP. CHRISTOPHER SMITH (R-NJ): Thank you very much, Mr. Chairman. Let me thank our distinguished witnesses for your insight and counsel. Your testimonies are outstanding.
Just -- since we are pressed for time -- I'd like to ask a few questions, then yield and you can answer each of them or whatever ones you would like.
Back in 2000, I was the prime sponsor of the Trafficking Victims Protection Act. It took two years to get the legislation passed. It emphasizes the three P's in combating human trafficking, be it labor or sex trafficking: prosecution, protection and prevention. Last week the secretary of State released -- and our legislation prescribed it -- this TIP report would be produced every year. And with a great deal of fanfare, Secretary of State Hillary Clinton had a State Department event and it was very well attended by NGOs and by some government officials.
And my question would be, since 19 countries of Africa are on the Tier 2 watch list, meaning that they have egregious problems with trafficking but they are taking some actions to mitigate those -- but they're still on the watch list; they could go either way. Seven countries in Africa are actually on the Tier 3 list, which means they are not taking even minimum efforts to stop their own trafficking. There is government complicity with traffickers and maybe even government people on the payroll, especially at the police level. To me, that does grave damage to the economic climate.
And my question would be: How do each of you, in your work, integrate the excellent work State is doing on combating trafficking? Again, the victims, obviously, are exploited. (It is ?) shadow slavery for those who are being exploited. But it also is ruinous, I would think, of the climate -- I know it is.
As one of you pointed out, Ms. Vinenyard, you know, corruption. We know that. I've held hearings myself when I was chair of our Human Rights Committee and then the Africa Committee on what corruption really does to a country, not just for those who would invest but obviously in country. So how do you integrate the work here country by country?
Secondly, on the issue of the Millennium Challenge Corporation, the MCC, you know, Mali got ($)460 million, Ghana $547 million. To me, that is the model of trying to integrate all of the indicators, all of the prerequisites to getting that money once one signs a compact so that there is accountability and, hopefully, a lot of good positive outcomes.
Are we doing enough? Are we funding the Millennium Challenge sufficiently enough? I think we're not. I think we could do much more to boost up the good work that they do.
Thirdly, on competition with the PRC -- Mr. Payne has held hearings. I held hearings when I was chair of the Africa Committee of the growing and, I think, very negative influence of the PRC, especially as it relates to dictatorships like in Sudan but also in Zimbabwe -- although we have hope now with the new prime minister there. But they come in -- they being the Chinese -- with no human rights strings attached whatsoever, all out of self-interest, as we saw.
I was in the Congo -- DR Congo last year in Goma, but also paid a visit to the capital while there, and heard several of the lawmakers there complaining bitterly about the agreement that had been made about building a large road and the Chinese government gets all of the commodities, the precious minerals, on both sides of the roadway. And I suspect that roadway has a lot of zigs and zags in order to fleece the DR Congo of their goods -- now, so your thoughts on China's influence?
And finally, you know, we've always thought that NGOs are king and NGOs do a marvelous job everywhere. But even today, and I've long thought of this, President Michelle Bachelet from Chile made a very good point that we -- when we overemphasize the NGOs, we do so unwittingly at the expense of government capabilities and capacities.
Yes, corruption's a problem in Nigeria. We've all been there. I've been there many times. We know corruption's a problem. But there is a risk, and maybe a positive risk, of saying but we want to still build up the government capability to do business and everything else that they need to do, NGOs not withstanding -- and your thoughts on that.
REP. RUSH: Before the witnesses answer the questions, Mr. Smith, I have to remind you we've got a couple of more members who want to ask questions, and they should be given the right. You've asked about five or six questions. (Laughter.) So would you restrict your questions to two so we can get to the other members that have been -- because they've been waiting here for quite some time, please?
REP. SMITH: Well, I've asked them so they can pick and choose whatever they'd like to answer.
MS. LISER: If I could just say, maybe we should defer on the MCC question because I think that without a colleague of ours from the MCC here that might be a good one to get an answer to at a later point.
You've asked a number of good questions. We could probably go on and on about them. On the trafficking one, I think that you know that the AGOA eligibility criteria don't refer specifically to trafficking but do refer to child labor and protection of worker rights. And in the annual review for AGOA eligibility that we have, we start it every September, end it usually by December; we look very carefully that the State Department is always at the table, is one of our closest partners in looking at a number of these labor-related issues. And we do, indeed, look at a number of reports they have. That is not the only one.
So the answer to the question is is that we do integrate what State is doing in these very important areas and we do take very seriously the criteria that Congress has set for AGOA eligibility.
In terms of NGOs and government capability, I think the only thing that I would respond -- just sort of from the experience we've had -- is that we need civil society. We also need governments to have strengthened capacity and we need the private sector to also work together. And so we have found that in the countries that are doing the best in terms of economic reforms, opening their markets, as well as governance reform, that what you often find is that there is a good dialogue going on between all three of those -- the government, civil society and private sector. So we would like to see more of that happen and in more countries.
Finally, on the point of competition with the PRC, on the one hand we have, I think, expressed concern about some of these relationships and the way that they're evolving, particularly with countries like Sudan and Zimbabwe where there has been a lot of international concern about those regimes and what they're doing there. So where PRC is actually going off and establishing those kinds of relationships with rogue governments we've express concern.
On the other hand, traveling to Africa frequently, we also see projects that the Chinese are undertaking which, with the cooperation of the Africans, seem to be going well. And I'll just tell you one of them. When I first went to Liberia a number of years ago, the trip from the airport into Monrovia took an hour and a half over roads that I -- it was just horrible. The next time I went, we had a section of road that went very, very smoothly, and then we went back into the potholes and so forth. The last time I went, it was totally smooth.
That is a road that with PRC involvement has benefited Liberia. So I guess our view would be that the Africans have to, at the highest levels -- whether it's head of state -- determine what they can do with the PRC that benefits their countries and their people, and then what we need to do here in the U.S. is to do the same. We need to be looking at what are the best ways that we can work with them.
And, frankly, I think through the MCC and through the efforts of a number of government agencies, we're finding the best ways for us to also work with them. But, again, on the negative side, we have definitely weighed in on that and we believe that the Chinese will be fairly isolated in that particular approach to African governments that are not doing the right things.
MS. ZAK: I was going to say, in the interest of time I'll just say that was very well said. And I do want to add, with respect to the PRC, the fact that we do need to support the U.S. government agencies that are helping U.S. businesses with respect to the competition that's provided by the PRC. And that's what the U.S. Trade and Development Agency does, Ex-Im Bank, other members here. So the one thing we can do is support those agencies.
MS. VINENYARD: Thank you. I don't disagree with my colleagues that -- the issue of competition with China.
I'd like to add an extra point in that one of the issues that we have with the Chinese are the increased counterfeit goods that are coming into Africa. And that's been one of the emphases of our programs and looking at intellectual property rights, is in training the customs officials on how to identify counterfeit goods that come across borders and working with judiciary enforcement and prosecution- type issues. So when I talk about intellectual property rights, that's definitely something that's on our minds, with respect to the Chinese influence.
With your question regarding corruption, we counsel companies -- we find out about some issues from companies directly, sometimes our -- (inaudible) -- centers. When we're looking at how companies are positioning themselves to bid on contracts, some of those issues come up. We address these issues with host governments as appropriate.
And finally, we also work with foreign governments outside of Africa, mainly signatories at the OECD Anti-Bribery Convention to address the supply side of those issues as well.
REP. RUSH: The chair now recognizes Ms. Woolsey for five minutes.
REP. LYNN WOOLSEY (D-CA): Thank you, Mr. Chairman.
My concern is more like on the human cost of trade. So I'd be concerned and -- about your opinions and your responses to when the United States goes into a developing country and markets to that country, how do we ensure that we're not disrupting local markets and economies? I'm particularly concerned about the farmers and the small crafts persons.
And I'm also concerned that we invest in microfinance around, you know, in developing nations and in communities and we're trying to bolster -- to help them bolster their economies, so how are we, you know, supporting that and making sure we're not competing with those that are on the ground trying to do the work themselves?
For example, in Tanzania, 100 percent of the mosquito nets are actually made there, so how are we supporting this kind of growth?
MS. ZAK: I'll respond to part of that. With respect to how do we choose these markets and what do we do, I asked that question to my staff and their response was we listen. We listen to what the host country needs. We listen to what they want. We listen about the fact that they want to develop their economies and they want to be self- sustaining.
So from the U.S. Trade and Development Agency's point of view, we listen to what the needs are of the host country and that's how we ensure that they're protected.
REP. WOOLSEY: And then, Ms. Zak, who are you listening to -- the people on the street or their government?
MS. ZAK: We're actually listening to many people. One would be listening to government officials, but we also work the private sector -- so listening to the private sector in country, listening to people on the street, also listening to the experts in U.S. government. We work closely with the Department of Commerce, the Department of State as well.
So we gather as much information as possible in this process. But it isn't just listening to host country governments; it's also listening to the people in country, as well as the experts who have that information.
REP. WOOLSEY: Thank you.
MS. LISER: Congresswoman Woolsey, I think that -- when you were asking about -- concerned about the human cost of trade, I was thinking about the fact that this is a debate that happens in a lot of countries, including the U.S., which has to do with both the cost and the benefits of trade and understanding how economies as a whole really do -- can benefit from trade and how you can look at some of the -- sort of the, I guess, the pros and the cons of what happens.
Now, in terms of Africa and the farmers that are there, that was one of the points I had made earlier -- it might have been before you'd come -- that many African countries are producers of raw commodities and that we're not seeing the kind of processing of those products, so it keeps them at sort of the low end of the global trading -- the low end of trade in terms of global trade.
And so one of the ways that we hope that we're working with them to help them benefit more and to see more benefit rather than cost from trade is to help them not be at the lowest end of the value chain -- we call it. So, for example, countries that produce cotton, we want to also see them producing the thread, the yarn, the fabric and the apparel.
They will be able to attract investment, create jobs and the backward chain helps the cotton farmer as well so that they're not selling all of their cotton to countries like China who then takes those same products, makes it into value added products that employ millions of people and then send their apparel to the rest of world with cotton in it. The cotton farmers get very little of that, and the others who process it get more. So, again, we think it's very important if Africans are going to benefit more from trade that they have the opportunity and the skills and the capacity to add value to and process those products.
The last point I would make -- you talk about the small craftsman, and I would just say that many of the African countries have very competitive producers of what we would call handicrafts. And we are importing a lot of those handicrafts now. There is a lot that's increasing.
But as I said about the gentleman with the baskets in Ghana, for you to be able to get the big orders and to be able to hire more people in your factory, or maybe even have a second factory, you have to have the capacity to meet those orders. And so helping a basket maker in Ghana, just as an example, going from 500 to 5,000 to 50,000 baskets, that's where we need to give them assistance.
REP. WOOLSEY: Well, would it be possible in a developing country, instead of insisting that they grow from 500 to 50,000 over time, that there's a different way to produce that same number of baskets by spreading it out over the district or -- I mean, maybe they don't want to be producers of 500,000 baskets?
MS. LISER: And I think that that's possible, but again, you know, producing small amounts of products and trying to sell those on the global market in a competitive way, unfortunately, makes them not as competitive as the people who can do the 5,000 baskets. And I don't know if you ever look, but you will often see in some of our big-box stores -- Target and others -- you know, products that look like they're from Africa, but if you turn them over you'll see that they're made in other places.
We want the Africans to be able to do that. Do we value having those very small, you know, quantities of handicrafts that are handmade and beautiful? We absolutely do. But if they're going to be bigger players in the global trading system, somehow they have to be able, in certain circumstances, to go from that 500 to that 5,000.
REP. RUSH: The gentlelady's time is up.
REP. PAYNE: Mr. Chairman, could -- if the other two panelist members would permit, if we could have the second panel and they could begin with the questioning because we don't know when the votes will come again -- if that's all right with everyone here. And we'll start with Ambassador Watson and Chairwoman Lee, and then we could then go to the time -- would that --
REP. RUSH: So are you suggesting that we dismiss this panel?
REP. PAYNE: Yeah, so that we don't --
REP. RUSH: Well -- is it all right with them? Is all right with --
REP. BARBARA LEE (D-CA): That's fine, Mr. Chairman.
I just have to go to the CBC's sentencing --
REP. RUSH: Yeah, okay. The chair recognizes --
REP. LEE: No.
REP. RUSH: Hold on. Ms. Watson was here first. If you --
REP. DIANE WATSON (D-CA): No, you go ahead.
REP. RUSH: Okay, the chair recognizes the gentlelady from California.
REP. LEE: Okay, I want to thank everyone for yielding, but we have a big deal on the sentencing disparity issue that I have to run over to. But I just want to thank all of our panelists and our chairmen for this opportunity and welcome everyone and just very quickly wanted to ask you about the issue of HIV and AIDS and medicine on the continent.
As you know, the continent faces a severe public health challenge. In some cases countries have secured you know licenses from brand-name pharmaceutical manufacturers are issuing compulsory license to produce drugs at a cheaper cost. And in other cases countries have imported cheaper generic versions of those drugs.
So I want to get an update just very briefly, and you can send it in writing if you'd like, with regard to the enforcement of U.S. trade laws and patent rights and how they are or are not prioritized at the expense of saving lives, because this has been a huge issue for many, many years now. And we know that generic drugs cost a heck of a lot less, could save a heck of a lot lives, but many of our laws, our patent laws actually hurt rather than help the generic drug industry.
MS. LISER: Congresswoman Lee, that's a very important question, and I think we probably should send you a response. I think you'll be pleased to know that many of the African countries do have access now to the ARVs and at prices that are quite low.
So that's happening for a variety of reasons, but for the sake of time I will just promise you that you will get a good answer to this.
REP. LEE: Thank you very much.
And thank you again for yielding.
REP. RUSH: The chair recognizes another gentlelady from California, the third gentlelady from California, Ms. Watson for five minutes.
Do you want to ask the second panel? Okay. Thank you very much.
The chair wants to really thank you all. You've been expert and very informative. And we certainly appreciate your taking the time.
And again we apologize for the delay.
Thank you very much.
I'm going to now, as agreed upon, I'm going to relinquish this chair to Chairman Payne for the second panel. And he'll call the second panel.
REP. PAYNE: Thank you very much, Mr. Chairman.
Let me thank the first panel again. And as we mentioned, to members who came late, we apologize for the tardiness. And we tried to explain to them what was going on here.
Let me -- yeah -- we really appreciate the patience of the panel and others in the audience.
Our second panel -- is Steve Hayes going to be here? Oh -- we will introduce the second panel. We have -- he just stepped out for a minute, but Mr. Steve Hayes who is the president and CEO of the Corporate Council on Africa -- I know who just recently returned I believe from Zimbabwe.
We have Dr. Lisa D. Cook, assistant professor, James Madison College, Department of Economics at Michigan State University.
We have Mr. Greg Lebedev -- how's that, 50-50? -- senior adviser to the president, U.S. Chamber of Commerce, chairman of the Center for International Private Enterprise.
And finally, Karen Tandy, senior vice president, public affairs and communications for Motorola Incorporated.
And we will begin with Steve Hayes who will be seated in a second.
I know Steve -- when he was a young YMCA worker 30 years ago and working around the world and Africa. So I knew he would be back in time. So he's one of our protegees.
Well, yeah, I knew it. I was trying to cheat -- (laughs) --
MR. HAYES: (Off mike) -- priority -- there we go -- makes this a national priority.
U.S. companies may be too slow in stepping forward. We need to work together to make it easier for the U.S. private sector to invest in Africa.
We can make a major difference in Africa by investing in education, capacity-building and training and working with African nations to engage U.S. infrastructure and agribusiness interests especially in the planning, development and investment processes. These investments not only strengthen Africa, but help the American economy.
What I think we have to realize is that Africa can help us as much we can help Africa. The investments we make in education, for instance, could be beneficial for our own training schools, including our universities and technical schools. Working with Africa to develop greater and broader educational capacity not only helps Africa but can provide jobs for American faculty and technicians as trainers in Africa.
We have a highly trained service sector and professional education sector that could be put to further use by working with Africa to build capacity. Governments cannot do this alone.
Also, institutions -- I dare tread here -- but also institutions such as AFRICOM can assist African governments in meeting their own security needs as Africa's own security forces are developed and trained through well-targeted capacity-building and training programs. To do this we must get the U.S. private sector much more engaged in Africa.
The Corporate Council on Africa believes that a key to our success will be the degree to which public and private sectors work together in planning and implementation. I think for us to be effective in Africa -- as effective as possible requires a level of cooperation among the private and public sectors that we have not seen since the Marshall Plan.
As our corporate members worked together over three months preparing our policy recommendations for the Obama administration -- and I thank you for including it in the record -- it's of interest to me that throughout the report, sector by sector, a major theme is not simply what government should do, as much as that the government and the private sector must work together in planning as well as implementation to develop our economic and political ties to Africa.
We also strongly urged the administration to bring into the process, at equal level, various players in Africa, from the countries themselves to the regional economic communities, because African development is becoming regional rather than simply a national challenge and opportunity.
And this will be a major theme of our upcoming U.S.-Africa business summit to be held in Washington the week of September 28th. We expect that more than 1,500 businesspersons from African the U.S. to be here, along with several hundred government representatives from throughout Africa, including heads of state, heads of government. And I hope all in this room will be a part of this.
Mr. Chairman, I would also just digress very slightly to say that your question on GSP -- I'd like to take that also and say that if there is a blanket GSP I think the economies of Africa will be hurt very badly. I think we need to have something unique for Africa.
Thank you very much.
REP. PAYNE: Mr. Lebedev.
MR. LEBEDEV: Mr. Lebedev.
REP. PAYNE: All right.
MR. LEBEDEV: Thank you, Mr. Chairman. The chamber very much appreciates the opportunity to testify and applauds this committee for its recognition of the importance of Africa as a destination for American business.
To be sure, global business is a key to American prosperity, and Africa, in our view, is an underemphasized market opportunity, and it has been for too long.
American business and the people of Africa can prosper together, but as commercial and trading partners and as investors and as consumers, not just as donors and the beneficiaries of foreign aid.
Africa needs sustainable prosperity. And this can only be achieved by building and maintaining free-market institutions which permit African and American businesses to flourish.
The U.S. Chamber believes that the American business community should be there to help. Now, some American businesses have been in Africa for a long time. You all know that. But too many others are hesitant. And it's fair to ask the question, why?
We wanted an answer and the chamber wanted to learn what factors deter American business from a greater engagement throughout Africa. And so we teamed with Baird's Communications, which is a leading public relations firm in South Africa, to conduct a set of interviews with U.S. business executives who work in Africa every day.
The interviews took place over the course of 2008, so the data's pretty fresh. And we talked to about 30 executives, most of whom came from Fortune 100 companies. They represented a cross-section of industries. And the interviews were given in confidence so that we could receive very frank and honest answers.
The aggregated results of the survey were -- thank you very much, Congressman -- put in the record. The survey findings, however, are highly significant for three reasons.
First, the survey quite correctly highlights Africa's well-known structural weaknesses: inadequate infrastructure, unskilled labor, inconsistent rule of law and political uncertainty. These are not trivial conditions. And they need to be addressed.
But second, and possibly as importantly, the survey does not suggest that these conditions are universal to Africa. Nothing's uniform in a continent with 14 percent of the world's population.
These are very serious concerns, but they do not afflict all African countries in the same way. So the good news is that real business opportunities exist, but they must be identified. And the conditions on the ground must be navigated. This is a significant finding for both Africans and American business.
The third finding, however, may be more vexing, because it's intangible. The surveyed executives reminded us that the characterization of Africa, the way the continent is regularly described in the mainstream media, is grim. It is portrayed as if it's one place, not 50 different countries -- one place which is in a continual state of violent unrest. This is an understandably intimidating image which is rooted in some truth, but tragically misrepresents the positive conditions and opportunities that widely exist throughout the continent.
So what's to be done, Mr. Chairman? In our view, there's work that needs to be done on both sides of the Atlantic.
Too many African governments have struggled with the disconnect between words and deeds. They say they want more U.S. business, and they do, but too many have been unwilling to do those hard things to create a welcoming environment for U.S. capital, goods and services.
African governments must appreciate that they are competing with other developing countries and emerging markets for trade and investment, which means that they must market themselves aggressively and undertake those domestic reforms in education, health, infrastructure and governance which will attract foreign investors. It's the same economic development game that U.S. cities and states play every day.
For our part, the U.S. Chamber is taking a number of steps to facilitate greater U.S.-Africa business relations. For openers, we're going to -- we're about to launch a second part to this same survey, and this will involve the African governments themselves. We're planning a series of interviews with African government officials, showing them the findings and asking how they plan to do the things necessary to attract U.S. business. And we'll publish the results of that survey as well.
Next, the chamber's affiliated organization, CIPE, that which I chair, regularly works in Africa and around the world to help reform struggling economies by supporting free-market institutions. We build business associations. We promote public and private governance. And we teach business advocacy.
I just got back from Kenya where CIPE hosted a four-country conference which talked about and focused upon the value of public- private dialogue, which means to us that government and business need to talk to each other every day.
The chamber can also draw in its strengths and experience of American business on the ground through our network of AmChams, the American Chambers of Commerce. We have over 100 around the world -- sadly, only a handful in Africa.
Finally, the chamber's new African Department will advocate for African-related issues such as the next round of AGOA that was talked about in the first panel. We'll also host visiting African dignitaries, as we did recently for the much-beleaguered Prime Minister Tsvangirai of Zimbabwe.
And probably most importantly, we will help American business see through the haze of Africa's bad press and navigate the way to the tremendous opportunities that exist in the world's last untapped markets.
Mr. Chairman, let me say again that we appreciate this forum which permits a conversation that's very important to both Africa and the United States.
The real lesson for the continent of Africa and for us is that we need each other. The American business community needs markets to sell goods and services, locations to manufacture, enterprises in which to invest and partners with who to trade. And we do far too little of that with our counterparts in Africa.
In turn, Africa needs American business, not just for an occasional investment, but because we bring employment, expertise, model business practices, skills training, community development and an ambitious and honorable approach to free enterprise. And we have a cultural connection to the continent that no other country can claim.
Mr. Chairman, Africa is a market which offers tremendous potential. And the U.S. Chamber looks forward to working with this committee to help overturn the misimpressions and stereotypes and create a new era of reciprocal commercial engagement between the United States and our many friends throughout Africa.
REP. RUSH: The chair thanks the gentleman.
The chair now recognizes Dr. Cook for five minutes -- Dr. Lisa D. Cook.
I'm sorry, Dr. Cook.
She's the assistant professor of the James Madison College of the Department of Economics at Michigan State University.
Dr. Cook, you are recognized for five minutes.
MS. COOK: Thank you, Mr. Chairman and members of the subcommittees. Thank you very much for this opportunity to testify on the important topic of U.S.-Africa trade relations.
Just as international trade has been an engine of growth for the U.S. it has been for Africa recently. Between 2000 and 2007, a threefold increase in global trade with Africa has been associated with average annual growth of 5 percent in African economies. My research shows and analyzes this reversal of decades of economic decline in Africa.
My main point today is that increased trade in Africa has resulted in and can result in better economic outcomes for the U.S. and for Africa.
Coca-Cola, UPS, Pampers, Jeep vehicles, and Intel technology can be found throughout Africa. Ethiopian and Kenyan coffee, Egyptian cotton towels and South African wine are no longer exotic and are ubiquitous in the United States.
What we know is that the U.S. and Africa are better positioned to mutually benefit from trade than at any other time in recent history. Reforms undertaken by many African countries in the late 1980s and 1990s contributed to high growth rates and to Africa becoming more integrated into the world economy.
AGOA has also opened up trade with Africa; partly as a result of U.S. and African policies between 1999 and 2008, exports to Africa nearly tripled. And imports from Africa increased sixfold.
Trade with the U.S. has been interrupted by the financial and economic crisis. Exports to Africa shrank by 11 percent between the first quarter of 2008 and the first quarter of 2009, while imports from Africa fell 57 percent over the same period. The downward spiral can be swift and deep.
Declines in demand and in commodity prices lead to lower incomes and government revenue, which in turn lead to lower spending on health, education and poverty reduction. Further, due to the financial crisis, trade finance in Africa has contracted sharply or has become prohibitively expensive.
Despite the economic downturn, U.S. exports to Africa rose in several categories, including footwear, electronics and transportation equipment. And these exports have been steadily in recent years.
U.S. export activity has generated positive spillovers for African firms. For example, American Plastics Technologies, a small equipment manufacturer in Illinois, has partnered with Alpha Fluids in Lagos, Nigeria, which will produce IV fluids, medical beverages, medical drips and bottled water for Nigeria and ultimately for West Africa.
Direct opportunities for employment -- that's 40 new jobs at American Plastics -- and indirect opportunities for suppliers -- that's 16 firms in the U.S. -- have been created on both sides of the Atlantic.
Nonetheless, trade with Africa is not perfect. On average, it costs almost double the amount to ship a container from Africa as it does from an OECD country. It takes five to six days to process exports and imports in the U.S. For Chad, exports take 78 days to process, and imports take 102 days on average.
Infrastructure, governance and the general business climate continually hinder Africa's potential for international trade. Problems with AGOA implementation are well known -- such as limited composition of exports, which are largely concentrated in energy and textiles.
A host of policies, practices and institutions related to trade must be addressed in order to maximize the gains from U.S.-Africa trade. The extent to which these gains may be realized will depend on many factors, including the avoidance of protectionist measures on both sides of the Atlantic.
Finally, trade and aid are not mutually exclusive. U.S. aid agencies have been critical in connecting American firms to partners in Africa. Ex-Im Bank guaranteed a loan of $16 million to support the American Plastics partnership mentioned earlier.
Nora Bannerman exports thousands of shirts from Ghana to Ross Stores, one of the largest discount clothing stores, with the help of USAID's West Africa Trade Hub.
Given increasing claims on the resources of developed countries in the short run and considerations of sustainability of development in the long run, increasing trade between the U.S. and Africa may produce significant spillovers for Africa's development for many years to come.
To conclude, U.S.-Africa trade has increased markedly in recent years. This has created growth opportunities in both places. Trade with Africa has also created significant opportunities in other places, too, such as China and India.
Given this recent experience of dramatic growth in Africa, now is an especially important time to augment our relationship with Africa.
Thank you for your indulgence and your work on this important issue.
REP. PAYNE: Ms. Tandy.
MS. TANDY: Good afternoon, Chairman Rush, Chairman Payne, Ranking Members Radanovich and Smith.
Thank you so very much, along with the other distinguished members of the subcommittee, for inviting Motorola to testify today.
By way of background, Motorola operates in more than 100 countries around the globe; 15 countries in Africa are included among those. We opened our first office on the continent of Africa 40 years ago in Nigeria and benefited from hiring locally, utilizing the creativity of diverse cultures and individuals.
We have learned that localization is the only sustainable, growth-oriented business plan for Motorola in Africa. The U.S. private sector understands that to grow our business in Africa we must be full partners outside of our narrow business interests. Being good corporate citizens means helping communities solve problems, whether those problems involve technology, infrastructure, health and educational needs or issues related to public safety.
Providing the proper tools and technology solutions for governments to communicate effectively and securely creates and fosters a stronger environment for community and business development.
A country's economic and social successes are inextricably linked, as these committees well know. Unfortunately, talent and capital sometimes depart the areas where they are needed most because of the lack of personal safety or poor health and education services.
And our experience in Africa has taught us that this is one of the key problems on the continent. But Motorola has the technology to link different sectors of a community and regions together to help address some of their most critical public safety concerns and support a more stable business climate, whether it is supplying radios for a U.N. mission in the Sudan or investing in the future of Africa by connecting privileged schools with disadvantaged schools through our Canopy wireless broadband technology.
Today Motorola has offices in Nigeria, South Africa, Egypt and Morocco, with an operational presence in a number of other countries from Algeria to Rwanda.
Our wireless technology and solutions and services are used by most police and public safety forces throughout all of the African countries as well as the African and foreign peacekeeping forces participating in missions throughout the continent.
In the private sector Motorola supplies secure communications networks and equipment to oil companies, mining operations and agricultural projects to enable pipeline and other field operation security and communications, all of which contribute to the economic development of Africa.
Motorola has been working with Mobile Telephone Networks, which has one of the widest operations of mobile communications throughout Africa.
We are also working with our carrier partners in Uganda, Ghana and Nigeria to improve the quality of service for mobile phone subscribers.
In Morocco we are working with one of the carriers, Wana, the telecommunications arm of Morocco's biggest conglomerates, ONA, to pilot a WiMAX network which we launched this spring. And that has the potential to deliver broadband service to a wider subscriber base of citizens in a more cost-effective manner.
In Nigeria we have continued to expand the mobile phone networks for M-tel, Zain and regional providers over the past few years to connect Nigerians countrywide.
Another valuable asset that Motorola contributes to Africa is our time and our knowledge. Motorola is working with government agencies to help revolutionize the delivery of quality rural health care and education through delivery models that can be replicated throughout Africa at relatively low cost.
To address the shortage of doctors in South Africa, Motorola, the Medical Research Council, the State information Technology Agency and the Limpopo Health Department joined forces in a wireless broadband network trial. In that trial we connected three hospitals and one clinic. Video cameras were included that enabled the doctor to examine and diagnose the patient more than 60 miles away. All of the vital data such as heart rate and blood pressure information were submitted to the doctor for that diagnosis as well. And there are already plans in progress to expand to other hospitals and clinics in the Limpopo province.
Similarly, through our work with the government and other South African entities, Motorola has helped launch the Ulwazi e-Learning Partnership to improve local education by addressing the issues of teacher shortages and lack of resources.
This project connected a privileged school together with four disadvantaged schools so that one teacher could reach 100 students at once. And to make that happen Motorola funded the computers, the webcams, the sound equipment, the white boards, in addition to the entire wireless broadband network. We are now attempting to replicate this in discussions with the government in Rwanda.
Mr. Chairman, Motorola is proud of its leadership role in investing and fostering the long-term relationships and economic growth in Africa, and we look forward to working even more closely with you and the U.S. government to help support your efforts in bringing the United States and Africa closer together both economically and socially.
REP. PAYNE: Thank you very much.
And let me thank the panel for your excellent testimony.
And we'll open our questions with Congresswoman Watson.
REP. WATSON: I want to thank the first panel and the second panel as well. And I'm reminded, and my colleague Lynn Woolsey will remember, California used to have trade offices in South Africa and we opened one on the west coast of Africa. And, of course, due to the budget we no longer have them in a new administration. However, it's a burgeoning field for us to really look at, as you're doing, Ms. Tandy, and the rest of you have reported on.
I'd like to, number one, I think what really keeps investors in the U.S. away is that they don't really understand business in Africa and there's not a whole lot of advertising. So in September, during the Congressional Black Caucus, we're holding our workshops on investing in Africa. But we have to train investors first because they have to know that it might take five years before your money can turn around and have a benefit.
One of the things that we notice in South Africa -- and there's a kingdom called Bafokeng -- they discovered a platinum strip and the queen mother says I'm sending my young people west so they can learn how to mine that platinum and the money can go directly to our villagers and they can build the new shining city on the hill.
So there are many different things going, but I'd like to -- and this is directed to anyone on the panel that would like to respond -- how can we use commercial investment in agribusiness to endure when climate change is a reality? Some people want to say it's not, but -- and you know, there's certain areas of the continent that have been under a drought for seven to 10 years.
But what actions can be taken now to mitigate the negative effects of climate change by the U.S. government and by businesses?
Anyone want to take that on? Okay.
MR. HAYES: Sure.
REP. WATSON: Mr. Hayes.
MR. HAYES: Thank you, Congresswoman. Yeah, I also -- I've been to Bafokeng as well and met with the king. It's also, as you know, the highest -- one of the highest incidences of HIV/AIDS in the world as well. So there's just tremendous challenges there and I applaud that program.
REP. WATSON: Is that the Daimler Chrysler program?
MR. HAYES: No, I actually led that delegation --
REP. WATSON: Oh.
MR. HAYES: -- the Daimler Chrysler delegation program there. I was talking about the queen's program on the platinum and the education. So thank you, yes, we were -- the Corporate Council on Africa was leading that.
REP. WATSON: Right.
MR. HAYES: Thank you.
The issue of agribusiness is an area where -- and my concern is that I think the United States is -- has a critical challenge in Africa, partly because of China, partly because of the economic partnership agreements which, I think, is another form of colonialism from Europe that are coming in. And also, I think your point is -- and one of the problems, I think -- (inaudible) -- on interviewing CEOs is asking if you've ever been to Africa. Most CEOs have never been to Africa. They are the ones that ultimately -- they have they own kingdoms, they make the decisions to where they go, and until we get more corporate executives exposed to Africa --
REP. WATSON: I just have to tell you this -- let me interrupt you for a minute. When I first came back and came to Congress, I was number 45 out of 45 on Foreign Relations. And I would hear our members talking about Africa and there's a program here that's working real well, we're going to pick it up and put it here. And I'm saying, do you really understand that Africa is a continent --
MR. HAYES: Right.
REP. WATSON: -- with 54 nations on it, 22,000 languages -- 22,000 tribes, 16,000 languages and they're so different? And so, so many -- too many people don't really understand how villages work, how tribes work, how communities work.
MR. HAYES: That's exactly right. And there are also a number of countries who are doing things very well and still not getting U.S. investment.
REP. WATSON: Yes.
MR. HAYES: We meet the requirements -- or they meet the requirements at MCC. Botswana is another great example where they are doing all the right things and still not getting investment. And so I think the question has got to go deeper, more into U.S. attitudes and so forth.
In terms of agribusiness, I think there's areas in which that to help our own economy we've got to look at where -- what are the areas of Africa where the United States has a comparative advantage and how do we help those industries develop more? Agribusiness is very key to that, as is infrastructure. We can compete with anybody in the world on an equal playing ground.
We also, I think, can help the villages far more effectively than almost any country in the world. And so I think that we have -- where the government and the private sector can work together and address the issues. And as you note in my written statement, climate change is, I think, critical and we've got to address that. We've got to plan that now and not be into another reaction to a famine, but planning, in fact, how we can do that.
I think the agribusiness sector -- I think our research universities can face that now, can work with Africa, not simply for, but with Africa and make a huge difference. But I think the government has to also come out and say this is important to us and talk to the American government and say to the private sector it's time you became more engaged and we're going to help you become more engaged. We're going to help you become more engaged by having more access to financing. There's hardly an American bank that's willing to finance an American business to work in Africa. So we've got to look at those issues as well.
I've gone on too long so --
REP. WATSON: Thank you.
If I can take another minute, Mr. Chairman.
I want to address this to you, Ms. Tandy, and your company has done -- as you described -- a great deal of phenomenal work in Africa, and when you expand broadband coverage, there's a problem that jumps up. And the cost of Internet access is rarely the determining factor in purchasing or using, so how effective is an expansive broadband network throughout Morocco when the majority of citizens do not have computers?
MS. TANDY: Thank you for your question. It is a trial in Morocco, but the importance that we found is that extending broadband is really about connecting everyone. And the trial is to bring mobile broadband -- the ability to move data as you move. And these -- it's significant that this trial has come to Africa.
This is a growing and developing technology around the world that has not found its footing everywhere yet. So I think that this is a doorway for Africa, and certainly, extending broadband is part of moving an entire culture forward down the road.
REP. WATSON: Would your company be willing to, say, donate laptops to the village schools so every child in their primary education can become familiar?
Now, expense is a real problem. The cost of it's a real problem. So do you have any programs like there where you would donate and help young people become accustomed to using this modern technology -- as they are in Iran?
I think that resonates with everybody.
MS. TANDY: Thank you for your question. We actually are, as I mentioned, supporting schools in South Africa. And that is not the full extent of our support to building that kind of capacity. We've -- through our foundation -- provided a great deal of product in kind support, as well as funding which I can detail for you later, but it includes the school for -- a school for entrepreneurship and supporting also the South African Women's Entrepreneurship Network with grant money to them, as well as the Pathways Education Center in the Eastern Cape of South Africa.
Whether that includes laptops specifically in those instances, I would have to get back to you on that. We have actually contributed a great deal of product in kind and cash contributions, whether it was for laptops, the ability to move data by phones -- by cellular phones off of the cellular wireless infrastructure, as well as Phones for Health which we contributed millions of dollars to, as well as -- excuse me, I was -- we have contributed a great deal of product and support for that. And we have contributed millions of dollars to Product Red and -- over almost 28, 29 million dollars to Product Red. So how much of all of that gets converted into laptops for youth, I will determine and get back to you.
REP. WATSON: Well, I just want to say, and I'm sure the world is watching and wants to comment on the way the technology is being used in Iran to alert the rest of the world as to what's going on. And I think the more, as you say, hookup throughout this globe, what is happening in countries, the more knowledgeable we can become and the more we can have impact in a positive way in these developing nations.
And I just want to end with you, Dr. Cook. We've had hearings, in our oversight committee and also in our foreign relations committee. And we're looking at the way NGOs are working, the way AGOA is being used, the Millennium fund, and so on. What can we do under this administration to improve on what needs to be done in Africa to be able to motivate Americans and particularly African- Americans to go back to source and to help these developing nations? I thought you might just want to summarize what we can do.
MS. COOK: Thank you for your question. I think one of the first things that can be done -- you'll forgive me for being an economist and not -- make sure that we have data on what works. We're just getting data from the Millennium Challenge Corporation. And I think it's going to be critical that, on the face of it, it certainly seems like it's working and it's doing good things. How well it's working, what incentives countries are responding to is going to be critical to know.
So that's the first thing. The second thing, in terms of getting people interested, I'll report from my own courses that I teach on Africa, on the economics of sub-Saharan Africa. I don't think we need to do much to get people interested. There are so many people signing up for my courses, it's astounding. And my colleagues don't believe it. They think I'm making numbers up.
So I think that what we have to do is to show more, in terms of the media, the heterogeneity of Africa, that it's not just one country. My colleagues here have said that. It's not just one country. Well, actually, you've said it as well, that there are places where there can be contributions made, and they can make them in very different ways.
They can make them as volunteers, through summer opportunities. They can do it through study abroad. Michigan State has the largest study abroad program of any public university. So I think that these are definitely ways that we can connect and try to get students to give back or young people in general to give back.
REP. WATSON: You know what I find is really at the core of this is the follow-through. You know, we get loads of people who are interested and they come and they sit in the workshop, but when it comes to investing your money in a continent that is so far away and so unfamiliar to many people, that's where the line stops.
And thank you, Mr. Chairman, for the extra time.
That was just a comment. You don't need to answer.
REP. PAYNE: Thank you very much.
REP. SMITH: (Off mike) -- much, Mr. Chairman.
Let me thank you all for your testimonies and your great analysis of so many issues vis-a-vis Africa.
Mr. Hayes, in reading over your book, which I think really is a comprehensive attempt to try to really move the ball forward, you point out on Chapter 7 on the health care part that the business of health in Africa predicts a doubling of the African health care market by 2016 and you talk about the importance of the private sector. You talk about not-for-profit NGOs as well as commercial and for-profit.
And I'm wondering, and I'm sure this is part of the not-for- profit part, but the faith-based health care initiatives that the Catholic Church, the Anglican Church and so many others do provide, we found, and continue to find that PEPFAR has worked as well as it has worked primarily -- not primarily but to a large extent because of the faith-based health care infrastructure that's pre-existing and very easily could be built upon.
And it seems to me, and I have visited myself and I know Don has done this as well -- many of the PEPFAR initiatives -- I remember one in Uganda where a church based, in this case Catholic church, based and the ARVs and the prevention programs and everything else, mother the child, through a army of volunteers under the rubric of -- or under the canopy of a -- lady of -- I'm trying to remember the name of it, but it'll come to me -- it was just amazing how they were able to mobilize so many people.
And it seems to me the best bang for the buck and the investment, you know, at least to some extent needs to be focused on that.
You might want to speak to that and you also -- on infrastructure I think you make an excellent point about unfocused and minimal U.S. government resources promoting infrastructure development dampen and inhibit U.S. engagement in Africa. Then you point out that the EU has done much more and others.
And maybe all of you might want to speak to that, because I think the Millennium Challenge has done some good, but it needs to do much more, needs more money to do it. You know, I'll never forget one of the -- on one of my many trips being told by some farmers, and this was in DR Congo, that they could grow anything. They just can't get it to market.
And then we rode on some of the roads. The Dengi (ph) you know, wanted to take their product to market and it was like being on the moon. I mean, huge, huge potholes were incredible. We're going around and then through them.
So if you could speak to that issue of infrastructure; as you pointed out, it's the backbone of Africa's development. The AU has found that. I do have a few other questions, but --
MR. HAYES: No, sure. I couldn't agree with you more on the faith-based institutions. I think they've made all the difference in PEPFAR. They're important. They're vital, in terms of getting to villages, getting to the people. I think they've been very important.
Our own institution, you may recall, was the organization that drove PEPFAR through. I was the president of that organization that created a separate nonprofit to drive that legislation through and I'm very proud of the fact that this -- I would agree with you. It's working very well. I think, again, it's a great example of what has been done.
I think, and you also gave me too much credit. It's not my book -- actually my organization's, certainly, but over 100 companies worked together on this over three months really trying to -- they took it very seriously -- and it was the health-related companies -- particularly saying that, look, there is a great field to not simply address the illnesses, but there's a great market to build a health- based systems throughout Africa -- the hospitals, so that they are much able much more to care for their system.
And it's simply not responding to health crises, but in fact, there is an opportunity for U.S. businesses to help build health institutions so that they are healthier in the long term.
On infrastructure, that is, I think, the greatest need in Africa. I think all of us recognize that. It's also an area where with, in agreement with Dr. Cook, I don't think there's a lot that we need to do. It's just some special things that we need to do that would open it up more for the U.S. infrastructure industry to make a difference in Africa.
The ambassador from Equatorial Guinea came to me and I was talking about why she -- you know, why are we doing China. She said, well, if China can do it at, you know, one-eighth the cost of the American companies -- I said yes, but do you want to repair the roads eight times more for that cost?
I think that with concerted public-private cooperation, and particularly we can get jobs for Americans as well as create infrastructure in Africa, which creates jobs for Africans, so I think there's a real role for cooperation and public-private partnerships.
Does that take your question?
REP. SMITH: I appreciate that.
MR. HAYES: Thank you.
REP. SMITH: And let me just ask two other, couple other very brief questions. On microcredit lending and microfinancing, what role do you all think that plays? You know, we spend a little over $200 million, but obviously it's helping the poorest of the poor in many cases, but it seems to me that at some point that begins to build an infrastructure and an entrepreneurial spirit among some that could be translated into a bigger and better Africa in terms of its economic growth.
And on trafficking, I mentioned this, asked this of the first panel, and another issue related to human rights would be labor rights. We know that China has a awful record when it comes to -- they don't have any independent labor unions. There are a lot of wildcat strikes now going on in China because -- and they're even focused against U.S. corporations because they want what Lech Walesa and what the United States and many other countries, almost -- he promoted what we kind of take for granted, that is, fundamental rights of a labor union, collective bargaining and OSHA-type regulations.
As Africa builds up, what role do you see labor unions playing in Africa's development so that the worker, the men and women on the ground who do the hard work, get their fair share of benefits?
And again, on trafficking, you know, it seems to be we all have to be very, very aggressive in integrating trafficking concepts, minimum standards as we prescribe in the TIP report and our law. You might want to speak to that as well, because I think very easily, a work force can be exploited while, you know, the CEOs and others may look askance.
MS. COOK: Sir, thank you for these questions. I'll start with your question about trafficking. I think you've hit on something extremely important. And I think that the way to end trafficking or at least minimize it is to provide opportunities for those who get trafficked. So if you are providing opportunities for young women who would otherwise be working in, say, footwear factories, who have more independence because they have jobs, I think this is the way to approach it.
And I think this is the only way that's going to minimize the incentive to round up the vulnerable and put them through this pipeline that is global.
On the second issue on microcredit, I think you touch on something very important again, and this is something that is a focus of my research. I think microcredit can be transformative. And I've worked on it in Nigeria and in other places. And once again, it provides some of the most vulnerable people with independence of some sort so there is an incentive for them to invest in the economy and think outside the box or think inside the box; just, they have the tools to be able to do them.
And I think that microcredit actually is not just sort of the NGO that we are often talking about the Grameen model that we are more familiar with. Most of the banks in most of these countries are microcredit. And anything we can do to support them I think would be useful. Support them in terms of supervision and consultation, but otherwise, I think it can be transformative for the very reason that you've suggested.
MR. LEBEDEV: I think it's useful to add and it also touches on some of the things that Congresswoman Watson talked about earlier, whether it's microfinance activity, which can be transformative, whether it is American or other business that changes the nature of the communities in which they work, there are a variety of developmental and commercial activities that have for years affected and touched parts and pieces of these countries.
The dilemma is nothing connects them very well. These become, too frequently, success stories, but isolated success stories.
And I think this is not an observation of one or the other. You've got to do all that, but what we also have to do is recognize that on any given day in any one of these countries, the inattention or indifference of their government can wipe out all of this progress.
And so at one level we have to continually affect positively the communities in a variety of ways, work through the faith-based organizations, but at the same time deal with, use the incentives of the MCC, which is designed to focus on those governments, in effect, that are leaning in the right direction, that are sending the right signals with respect to the way they choose to govern and lead their countries.
We cannot lose sight of the fact that pressure on governments is the one way that we can preserve the gains that we will make selectively and in small ways throughout many of these countries.
MR. HAYES: One other part to that, too, and I think Mr. Lebedev just hit on it, too. Microfinance is very good in a number of areas, but there's a gap in the need for financing for everything between microfinancing and the giant corporations.
The people who need the financing to build the businesses in the large urban areas, especially, there's very little financing available, from either the African banks and certainly almost none from the U.S. banks.
We've got to find a way, and an equity funds will take fund of 10 million or -- you know, often invest 10 million or more, but the investments that we need to be making are the 25 to 50, 100,000 (dollars) for smaller, medium-sized businesses to make a difference. That's lacking.
REP SMITH: (Off mike.)
REP. PAYNE: We're really --
REP. SMITH: Running out.
REP. PAYNE: Yeah, I've given you about 12 minutes on this last one, so I'd better let the -- Chairman Rush -- but I think the point's certainly well taken. I wish we did have time to really go further in it, but --
REP. RUSH: Thank you, Mr. Chairman.
I think that both of you are -- Mr. Hayes and Mr. Lebedev, your responses have been quite pertinent and informative, especially as it relates to small- and medium-sized businesses.
And in your answering to Mr. Smith's question, you answered the first question that I had, but I do have another question, and it's a general question and I would like to ask the four panelists just to respond.
And I'm going -- focus on the diaspora. You know, in the U.S. there is an estimate that we've got 1.4 million African immigrants living in the United States. And the overwhelming majority of them are educated and they're entrepreneurial in a lot of different ways. As a matter of fact, in some of our communities -- in my district in some of my communities, they are leading entrepreneurs, owners of small retail businesses, professional services in my district.
They transfer, it's been estimated, about $40 billion dollars back to Africa to support family. Now, these are folk, individuals who have strong understanding of the culture and economic environment of the home countries and they understand American business, American know-how. They've been able to be successful businesses here in this country.
How can we engage that element, that force in a positive way? I think we should call upon them and encourage them to get involved and not just leave it up to the folk back home. Would you all respond to that, please?
Ms. Tandy, you can jump in also on this.
MR. : I'll be glad to. Go ahead.
MS. TANDY: Okay. I think this is a really interesting and almost intractable problem, it seems, because -- for instance, in Nigeria. I was advising the President Obasanjo with Jeffrey Sachs before. And one of the things that Obasanjo was trying to do was come up with a list of all professionals, all Nigerian professionals living abroad.
The first statistic that came across my desk was that a quarter of the health service in Great Britain was staffed by Nigerian doctors. And I mean the question is whether this is an underestimate rather than the true number. But they're definitely everywhere, high human capital everywhere.
The Economist published an article in, I think it was about 1996, saying that the most educated group -- it's a very, very small group -- the most educated group coming to the U.S. is from Africa. And that's a -- small, very small number of visas, very small number of people coming.
That is a talent pool that can be tapped. And I think it can be tapped in several different ways. Congresswoman Watson was talking about the introduction to Africa, and I think this is where they can be critical.
I will not take my friends to -- I will take my friends to Africa in a sequence. They've got to get used to the environment before they actually sort of fall in love with Africa, as I think everyone eventually does. But I think this is where they're going to be critical, critical in interpreting signals, critical in interpreting the linkages that are able to be tapped.
And also we have to be careful, because just as you see in Iran, those people who have been outside and educated and are trying to make their way back inside, sometimes they're not welcomed and embraced as we think they might be.
So we have to be very careful about how we're leveraging their services, their knowledge, but I think there's something there to be tapped nonetheless.
MR. HAYES: I would also say -- I think right now the diaspora is probably the leading investor in Africa, but it's going by way of remittances and by the millions and overall billions when you look over. So it's going back to families, but the amount is enormous; now, if you could transform that into investment as opposed to sustenance of families.
I seem to be following Congressman Payne everywhere he goes in Africa lately and he was in Zimbabwe right before I was, but the -- as well as a few other countries, but the -- but when I went to Zimbabwe, I was staggered with the fact that a banker there said, look, the second largest investor right now in Zimbabwe is the United States diaspora community. And I had no idea there was such a large Zimbabwean diaspora community. You know, I would assume it came from South Africa. He said no, Britain and then followed by the United States send more remittances back to Zimbabwe through the expatriate community, the diaspora, than any other country.
So how do you translate that, though, into real investment? If you could translate that into real investment, the amount of money they're putting in is much more than some countries are putting in. So that's the challenge. I don't have an easy answer for you.
MR. LEBEDEV: Mr. Chairman, it's actually a fascinating question that you raise because the diaspora -- and it's really multiple diaspora, since there are many, many countries -- but they really are a great resource. And, to Dr. Cook's point, they bring a cultural and emotional understanding of the marketplace that, in fact, would be invaluable.
One of the thing's the chamber is doing right now is working with folks who are part of the Liberian diaspora, who are moving back. And we've got a project ongoing that is hoping to link them with existing businesses. So, in a manner of speaking, they become a technical and cultural resource as foreigners try to set up enterprises there using them as part of that process. They have the potential to be invaluable. It also is an opportunity for them, because they can become stand-alone enterprises in their own right as they're part of a process.
But I think it's a question that's worthy of far deeper exploration, that you raise.
MS. TANDY: Thank you, Mr. Chairman.
Motorola is actually focused on trying to prevent the diaspora -- we are focused on the e-learning and bringing opportunities to rural Africa to connect through distance learning and staying home and build and invest in Africa, and build Africa from within. So I'm in a poor position to address the possibilities of the community, the larger community within the United States and how to leverage that. We're very focused on investing within the population within Africa.
REP. PAYNE: Thank you.
REP. WOOLSEY: Thank you, Mr. Chairman.
Mr. Lebedev, could you do me a favor and expand on your meaning when you referred to Africa's bad press and then, a little bit later, African stereotypes? I thought, well, I kind of thought I knew what you were talking about; then I thought, well, I don't know what you're talking about. What does the U.S. Chamber of Commerce mean by that?
MR. LEBEDEV: What I mean by that is that too often the whole continent -- as many of us have said, the whole continent tends to be misunderstood as one homogeneous entity when, in fact, it is more than 50 countries with their own cultures and experiences. The problem is, there has been a history of violence and disruption in a number of African countries, as we all know.
The unfortunate aspect is that the media tends to portray that as just Africa, as if those bad experiences that happen periodically, and in fact are ongoing right now in certain places, is a statement about the entire place, not a particular incident or a particular country. And it is that misrepresentation, that stereotype of a continent, if you will, which we believe misrepresents the opportunities that are there and badly -- and does a tremendous disservice to those competent African government officials, those superb African businesspeople, who, in fact, deserve the opportunities that are presented by foreign direct investment, trade and other business initiatives.
REP. WOOLSEY: Okay. Thank you very much.
Dr. Cook, when you spoke of the product, American product that's going to Africa, I had this vision of landfills with all of our -- like we have in the United States -- of all of our throwaway products. Is there any work going on so that Africa doesn't repeat all of our same mistakes?
MS. COOK: I would share your concerns, but I would have to beg ignorance here. I don't know the specifics of the deal. But I would have the same concern about plastic bottles or any kind of packaging winding up in large landfills in Africa. But I would agree that this would be an important component and one that we should pay attention to when striking these deals.
REP. WOOLSEY: Well, do you -- and Ms. Tandy, you may want to respond to this -- are we providing Africa with third- and second- generation technology or are we getting there with the newest technologies? Or is there an affordability piece of that that we need to take into consideration?
MS. TANDY: Motorola's been working very closely with our carrier partners throughout Africa and Africa is receiving the current technology. And, as I mentioned, the future technology has now entered Africa with the WiMAX trial that just launched this past spring. So I think Africa is at the same level as the rest of the continents. The rural segments of Africa and the infrastructure that needs to be built out into connecting the rural unconnected is certainly a challenge and a key focus for the carriers as well as for Motorola.
REP. WOOLSEY: Do you see any future for our clean technologies being a product, an import to Africa?
MS. TANDY: We actually -- as a company, we have had some projects in Africa that I could provide you some more information about some wind-powered projects in Namibia as well as a solar-powered infrastructure that one of the mining companies has utilized in the rural area of South Africa. So we do see some potential there.
REP. WOOLSEY: Anybody else?
MR. HAYES: Yes.
REP. WOOLSEY: Yes.
MR. HAYES: There is actually enormous potential in the renewable energy resources. Germany and Sweden are already doing quite a bit in Africa. South Africa is turning to a lot of renewable resources in terms of its planning. So there's just an enormous market there also for U.S. companies of smaller to medium size to became engaged with Africa -- again, the issues of financing, where are they going to get it to get in and government coordination.
REP. WOOLSEY: Thank you very much.
REP. PAYNE: Thank you.
Let me ask a question or two. As we know, the U.S. imports primarily are Nigeria -- well, natural resources, generally speaking, either mined products or oil, so forth. And I'm just wondering if there are, in your opinion, any other promising markets. For example, agriculture is, I think, underutilized. For example, in Zimbabwe they're getting ready to do a second crop. The first crop was pretty good but the second crop they expect to be very good. And Nigeria could probably do three crops.
Are there any -- and livestock, with cost of commodities increasing, at least a year or so they were very high, they've dropped a bit, but commodities and the whole, you know, agriculture business, is something that is going to be a strong industry.
Has there been any work on the part of the business -- Steve, that may be your corporate council or the chamber are trying to -- I know you're in technology, Ms. Tandy, so you wouldn't be telling people they can't grow computers. So I'm just talking about the -- what about that? Has there been a stressing of that to African countries?
MR. HAYES: There has been on our part. But the African countries know they can grow anything. Every country can produce agriculture. As you know, Zimbabwe could feed the continent under the right circumstances and it wouldn't take too much to change that.
The issues are on two different ends. One is the secondary tertiary benefits on agribusiness, canning and so forth. That production capacity is lacking. They can sell to -- with the production capacity, they could sell to the United States market very easily. And so that's another area where the United States companies, and certainly California with the canneries, could expand, again with the right inducements and the right encouragement.
The second problem, though, again, is the agricultural subsidies here that prevent a lot of -- that prevent competition from Africa. So we've got to also address the subsidy issue, as Senator Lugar has also pointed out. But agribusiness is greatly underutilized. I'm concerned that AGOA is too dependent on textiles. We've got to broaden that. And yes, so actually I've said enough.
REP. PAYNE: All right. I agree with Senator Lugar. I don't know who agrees with whom first because I was talking about ending agriculture subsidies, you know, right when I first came to Congress. And I think we're finally, hopefully, going to get around to that. I mean, it's going to be slow and people kicking and screaming, especially from our farm belt. But I do see, hopefully, that subsidy, because it's really been in opposition to WTO and other world organizations.
I wonder, Ms. Tandy, if there is any possibility for technology to grow in Africa. For example, I understand that Rwanda was interested in trying to see if they could wire their country to be sort of a center for broadband or, you know -- are there any possibilities for that kind of -- even, why not have a call center in Ghana, where they speak English, or Kenya? You know, you can probably less detect it than the Indians saying I'm Sam, you know, with this "I am Sam." But then I live down the street, so to speak.
Is there any possibility of having call centers in Africa, in your opinion?
MS. TANDY: I don't know whether that has been explored. However, it makes sense that it is certainly possible in Africa. There are a tremendous number of entrepreneurs springing up throughout the continent that we are also investing and giving grant money to and technology, so there is no reason why a call center, as far as I know, couldn't be part of the future in Africa.
MR. LEBEDEV: I would echo that. Africa has a wonder resource of English language speakers. Certainly, there is some market maturation in India right now and one could argue there might be cost-competitive advantages in Africa. So I think that, to your point and to Ms. Tandy's point, I think that's a sensible area in which to look.
Going quickly to your question about agribusiness, I think also, again, as Steve said, bringing, creating the right inducements to get the right companies there and even setting aside the barriers to shipping back to the United States, there's a billion people there that need to be fed. And too many of these countries are already net importers of food, and for sure there's an opportunity for domestic consumption of a variety of things that the big companies can help grow there on the spot.
Similarly, I think you could look at certain grains, because it is from grains that we can do some very interesting things with biofuels. And, again, looking forward, these are the sorts of things that should be indigenous industries in Africa. We shouldn't have -- we wouldn't -- you know, it would be nice to have them sort of grow from the bottom up some opportunities like that that also affect climate issues very directly.
MR. PAYNE: Yes, Dr. Cook.
MS. COOK: I think on the last point that you make, this is really perceptive in terms of technology. When I was advising the Rwandan government for its first post-genocide IMF program, one of the things that I included in terms of a recommendation was taking advantage of the fact that 90 percent of its phone system was digital. There's no other phone system in Africa that could claim that. And this provides a number of different opportunities, a number of different applications, that would be possible through this digital system.
So I think that there are a number of opportunities, not just with call centers. I was suggesting that it become the Memphis of Africa in terms of Memphis being the center of FedEx, where FedEx is located. And it's centrally located. If you can have high school graduates who can use technology really easily, this is a great place to locate that kind of application.
But to go back to your first question about what kinds of agricultural products might the U.S. partner with African to develop -- specialty coffee and teas. I was mentioning before that Kenyan and Ethiopian coffees are becoming ubiquitous in America and I think that the same is true for Burundi. I mean, this is a burgeoning market for Tanzania, for other countries in East Africa.
Tourism -- so I think that developing tourism is a nontrivial thing in Africa. I think it can have huge benefits. It's a niche market but it's a niche market just like specialty coffees and teas and I think it's growing. I think it's growing by leaps and bounds.
And in terms of other kinds of agricultural products, cassava -- I think that this is all over Africa and it has so many different applications. It's almost like our garlic. And there's so many different things it can be used for -- biofuel, starch in clothes, dyes. And I think that if there was a way we could help with developing the research to be able to use these products, I think we'd be doing them a tremendous service and we'd benefit from that, too, because I think we'd learn a lot more from these products that we don't have, that aren't indigenous to the U.S.
REP. PAYNE: Well, that's good. When you mentioned Memphis, I though they were doing some blues over there, but, no.
So the -- let me, I've just been informed that President Kibaki just recently connected the first of several fiber optic cables in Mombasa, so this seems like they are starting to move forward in that regard. And I do think that there are tremendous opportunities.
Let me certainly thank the panel and I thank all of you for your patience. Once again, we apologize for this day. It will be the same tomorrow, though, and Friday, so you wouldn't have escaped it if it was not on this day.
And so we do intend to have a follow-up. Chairman Rush has a strong interest, and since his jurisdiction is Commerce, Trade and Consumer Protection, we are really going to try to work together. This is probably one of the first times that this particular subcommittee has dealt with trade in Africa and it just happens that his interest coincides with the interest of the Africa and Global Health Subcommittee. So I think that we will try to really have some Rush-Payne or Payne-Rush activities to see if we can kind of stimulate this area.
And I'd like to thank the members who did come and stay.
Let me just conclude by saying I ask unanimous consent for members to submit additional questions for the record and for members to have five days to revise and extend their remarks -- without objection, so ordered.
Secondly, I ask unanimous consent for entering into the record a statement provided by Francois Baird about a survey of the views of U.S. corporate executives about foreign direct investment in Africa -- without objection, so ordered.
Thank you very much. The meeting is adjourned. (Sounds gavel.)