Foreword

 The theme of The Foundation for Democracy in Africa’s Second International Symposium on Democracy, Trade, Investment, and Economic Development, The Private Sector: The Engine That Will Drive Sustainable Economic Growth in Africa, March 10-13, 1999 in Miami Florida, is an affirmation of the tremendous achievements made by many countries in Africa since the end of the cold war, on the political front, and the need to empower the private sectors in these African nations, so that similar gains can be made in the economic front thereby making available badly  needed jobs, housing, health care, goods and services, and establishing a tax base that will help improve the standard of living, for the average African, thus cultivating the pathway for peace and prosperity on the continent.

 

Alex Penelas, Mayor Miami-Dade County receiving an award from FDA for  his continuing support of U.S. Africa Trade and investment

This year symposium, also coincided, with the signing of the Sister City Port Agreement between the Port of Miami, Florida, and the Port of Dakar. The Foundation for Democracy in Africa is proud to have been a part of this major achievement in the efforts to promote trade and investment and cultural exchanges between the US and Africa. The Sister Port Agreement Signing Ceremony is also a historical achievement for Miami Dade County, Florida, under the watch of Mayor Alex Penelas, and the Miami Dade Board of County Commissioners, in their effort to position the Port of Miami as the Gateway  for goods and services between the United States of America and the countries of Africa. Special acknowledgment goes to Commissioner Dennis Moss for his immense contribution to making this historical achievement possible, and for agreeing to lead a five-person FDA/Miami-Dade County delegation, to Dakar Senegal, to negotiate and prepare the ground for the Sister City Port 

Agreement Signing Ceremony, Abidjan, Ivory Coast; Accra, Ghana; Lagos, Nigeria; and Johannesburg South Africa to promote this conference and Miami Dade-County.

Commissioner Dennis Moss and State Representative Beryl Roberts of Florida

 

As we approach the end of the twentieth century, the future looks promising and abundantly prosperous for Africa. Democratic institutions are taking roots across the continent, non-governmental organizations like  FDA are working with bilateral and multilateral organization within and outside Africa to help provide training and other resources needed to create an enabling environment so that the young and evolving democracies in Africa can thrive.

The free market economic concept has been embraced by leaders of the public and private sectors and civil society, in Africa.  African governments are beginning to be more responsible, transparent and responsive to the electorate, and this can only lead to the evolution of a strong and viable middle class that will provide the talent and discipline to run the engine of the Africa economy.

One of the ways the United States of America can be supportive of the evolution of a New Africa, is by lifting trade barriers on goods and services from these emerging democracies; encouraging the new democracies to increase their production capacity, by giving them access to the U.S.  markets, thereby helping to create good paying jobs in Africa; allowing the private sector in Africa to achieve economies of scale that may result in lower prices for basic necessities of life, in Africa, and by helping to increase the tax base for these young democracies so that there will be sufficient resources available for the day to day operation of the democratic institutions, in return the average African household with a higher disposable income may become a viable consumer of goods and services from the United States of America .

We hope that the passage of HR434, the Africa Growth and Opportunity Bill, sponsored by Congressman Rangel, the wise man from New York, and Congressman Phil Crane of Illinois, will be passed in both chambers of the U.S. House of Representative, and signed to law by President, Bill Clinton, before the end of 106th Congress. This will be the first step in the right direction in moving US-Africa relationships forward.

The HIV/AID pandemic remains a calamity worldwide, challenging the health care system of every country across the globe. According to UNAIDS about 33.4 million people worldwide were living with HIV/AIDS as of December 1998, with about 5.8million newly infected victims.

In North America approximately  890,000 adults and children are living with HIV/AIDS, in Western Europe about 500,000, in Latin America about 1.4 million, in South and South -East Asia about 6.7million, in North Africa and the Middle East about 210,000, in Sub Saharan Africa about 22.5million adults and children are living with HIV/AIDS.

According to UNAIDS, almost 67 percent of the people living with HIV/AIDS worldwide are in Sub Sahara Africa as of December 1998. The scope and gravity of the HIV/AIDS pandemic in Africa are staggering. There is an urgent and compelling need to address this problem in order to secure the future of Africa. The resources needed to address and contain this public health problem is not available in Africa. Because of the debt burden on most of the African countries, allocation for public health programs is in adequate, and clearly lacking to address the HIV/AIDS pandemic. While there is no known cure for AIDS, the United States and other G7, countries have been able to contain the spread and devastation of HIV/AIDS. The Foundation for Democracy in Africa, urges President Clinton to provide the leadership in advocating for debt relief and debt forgiveness, for African countries so that money presently used to service debt incurred and stolen by past corrupt regimes can be used to address the HIV/AIDS pandemic in Africa and help secure the future of Africa.

The recent transition from military dictatorship to a democracy in Nigeria, the most populous country in Africa, and the peaceful and transparent transition in South Africa from Mandela to Mbeki are one of the biggest gains in the democratization of Africa.

The Medal of Glory, FDA’s highest honor  was presented to Dr. Dorothy Height, Chair and President Emeriti, National Council of Negro Women, Mr. C. Payne Lucas, President of Africare, and His Excellency Abdou Diouf, President of the Republic of Senegal at the Awards Gala during AfriCando.  These distinguished individuals were honored for their significant contributions to human development and democracy in Africa.

“AfrICANDO’99" was FDA’s last annual US-Africa Trade and Investment Conference of the millennium. Let me take this opportunity to thank all our sponsors, friends and supporters for their continuing support and encouragement, and reiterate our commitment to continue working to advance the political and economic gains of the countries of Africa.

We look forward to welcoming you in May 2000 to our 3rd annual US-Africa Trade and Investment Conference in Miami, Florida.

God Bless Africa, God Bless America. 

Fred O. Oladeinde, President, FDA

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t Conference Review

 

“AfriCANDO’99,”  the 2nd Annual US Africa Trade and Investment Conference and Exhibition was officially opened on Wednesday, March 10, 1999.  The conference theme “The Private Sector the Engine that will Drive Sustainable Economic Growth in Africa” was the topic of the opening remarks by  Sonny Wright, Chairman of the Board of The Foundation for Democracy in Africa (FDA), one of the organizers of the “AfriCANDO’99" the Gateway to Africa.   His opening remarks correctly identified the critical note that The Foundation has initiated in the development of trade relationships between Miami-Dade County and the countries of Africa.

Witnessing the historical signing of the first  of its kind, the Sister City Port Agreement between the Port of Dakar in Senegal and the Port of Miami in Florida, were more than fifty (50) delegates at the morning of the opening day of the conference.

Dade County Commissioner, Mr. Dennis Moss the legislator who initiated and authored the documents that created the Sister-City Port relationship, called for a need to establish trade and economic development between Miami- Dade County and the City of Dakar in Senegal. Both port directors, Mr. Pathe Ndiaye,  Port of Dakar and Mr. Charles Towsley, Port of Miami signed the port agreement.

The signing of the agreement was followed by a brief remark by the executive director of the Foundation for Democracy in Africa.

 

Thami X.N.. Ngwevela, Consul General, South African Consulate

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Plenary Session: “How to Sell to The U.S., Latin America and the Caribbean

The first part of the plenary session entitled “How to sell to the US Latin America and the Caribbean,” was moderated by  Manuel Gonzalez, Dade County Office of the Mayor, International Trade and Commerce Coordinator.  The second part of the plenary

session addressed the experience of US companies in Africa and the current initiatives by the Organization to Promote Private Sector Development.  Both, Jay Malina, President of Xebec Trade Finance and Chairman of the Greater Miami Chamber of Commerce and  Lars Hummerhielm, President of the Association of Bi-National Chamber of Commerce of Florida participated in that panel.  Mr. Hummerhielm alluded to the fact that the same type of trade relationship developed with every other continent of the world needs to be developed with Africa.  Mr. Gonzalez, the moderator made a very important observation noting that Africa is exactly at the stage that the Latin America was fifteen to twenty years ago. 

 

Manuel J. Gonzalez, International Trade & Commerce Coordinator, Office of Miami-Dade County Mayor Alex Penelas

 Mr. Malina concluded the session by encouraging the African-American community to get involved in the international trade as part of the opportunity to get involved with the empowerment process.  Millions of dollars will be invested to create trade relationships with Africa.  And this is good for the community.

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Luncheon Program

The keynote speech for the luncheon was delivered by the Dade County Commissioner,  Dennis Moss, who took that opportunity to expand on his experiences and observations during his ten-day African Trip.  Arriving for the first time in Africa and observing the entrepreneurship among young people, Commissioner Moss expressed a strong need to connect with the Motherland  in order to transfer technology and develop a bilateral relationship between Miami-Dade County and Africa, specifically Dakar, Senegal.

 

El Hadji Sy, Dakar, Senegal presenting Miami-Dade County Commissioner Moss with an appreciation gift for his efforts creating the Sister Port City Agreement between Dakar, Senegal and Miami-Dade County

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Concurrent Workshops

The Role of NGO’S in Promoting Sustainable Development in Africa was moderated by Fred O. Oladeinde, President, The Foundation for Democracy in Africa. Panel members included, Aisha Inok Bakare, President, Nigeria Association of Women Entrepreneurs, Malik Diop, President, CASPRA, Candy M. Mongo, Zambia, and Lucia Quachy, President, Ghana Association of Women Entrepreneurs. The panel discussion focused on the need for capacity building and  bilateral and multilateral support for local NGOs.

The HIV/AIDS  Public Health Issues and Economic Impact panel, was moderated by Dr. Gershwin Blyden, the Executive Director of the Institute of Democracy in Africa.

The workshop on HIV/AIDS stimulated a lot of interest and discussion among the delegates.  The discussions were centered around the HIV/AIDS pandemic.  About 2/3 of the 33 million people infected with the AIDS virus are Africans.  It is estimated that two million people will die this year in Africa from this disease.  In Zimbabwe, Botswana, Namibia, Swaziland, about 20-25% of the people ages 15-49 are infected with HIV or have AIDS.

Most alarming is the innocent children infected by mother via breast-feeding.  Mr. George Dunlop and Dr. Sarah Moten, strongly suggested an alternative way of feeding the newborn babies with nutritionally balance baby formula.  Seventy percent of the 5.8 million newly infected people are in Sub-Sahara Africa and 90% of the 590,000 new cases involves children under the age of 15 years old.  Mr. Okonmah correctly stated the economic impact of AIDS to the African economy.  Since, Women has played a significant role involving distribution of goods and services throughout the African trade infrastructure. Women play a very important role in sustaining African economic growth and that women have the power to control this infection rate both among the adult population and the babies.  Women need to be empowered by allowing them to say no to husbands who have multiple sex partners and also women can adopt alternative way of feeding the babies.  This was a very stimulating session.

The first day ended with a welcome reception hosted by Johnson and Wales University.

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General Session

Thursday, March 11, 1999.

The Honorable El Hadji Malick Sy, President of the Board of the Port of Dakar, spoke about the potential opportunities the Sister Port City Agreement between Miami-Dade County and Senegal would create relative to economic development and job creation. Abdouleye Ange, President, Global Marketing, Inc., served as the French language interpreter.

Charles Towsley, Port Director of Dante B. Fascell, Port of Miami and M. Pathe Ndiaye, Port Director of the Republic of Senegal spoke eloquently about the potential opportunities for trans shipment activities regarding trade between Miami-Dade County, Florida and Dakar, Senegal.

El Hadji Malick Sy, President of the Board of the Port of Dakar, Senegal, Pathe Ndiaye, Port Director, Republic of Senegal, and Charles Towsley, Port Director, Dante B. Fascell Port of Miami, Florida

 

The ceremonial signing of the Sister Port City Agreement was conducted by the port directors and witnessed by Mr. Sy.  This was a historical moment for both Miami-Dade County and Dakar, Senegal.

Business Match Making

During the afternoon session, more than two hundred sixty (260) Florida-based companies participated in the business match making exercise with indigenous African companies that pre registered for the conference. Several of the participating companies exhibited their products and services, including: AT&T, American Airlines, American Bankers Insurance Company, Ghana Airways, Hard J. Construction, International Contractors Club, Metro-Miami Action Plan Trust, Miami International Airport, Miami-Dade Transit, Pangola United, Inc., PAWA Complex and Williams-Scottsman, as well as a number of the indigenous African companies.

Awards Gala

The Gala took place at the Pier 12 which is located at the Port of Miami.  The evening was a festive one, filled with food, fun, and ceremony.  The event opened musically with a performance by Ile-Ife, the Afro-Cuban Musical Group.  Richard Dansoh, Esquire served as the Masters of Ceremonies.  The food for the Gala was skillfully prepared by renowned chefs from local hotels and restaurants throughout Miami.

Dr. Dorothy Height, Chair and President Emeriti of the National Council of Negro Women, was presented an award for her significant contributions to human development and democracy in Africa. This is the highest award ever presented by FDA. Anthony Okonmah, Executive Director of FDA presented this prestigious award to Dr. Height.

The Medal of Glory was also  awarded to C. Payne Lucas, President of Africare, for his extraordinary humanitarian work in Africa.  The nonprofit nongovernmental organization he presides over, Africare has demonstrated humanitarian support and provided aid to families and communities throughout Africa.

His Excellency Abdou Diof, President of the Republic of Senegal was also a  recipient of the Medal of Glory. Ambassador Mamadou Mansour Seck was on hand to receive the award on behalf of President Diouf.

The evening concluded with participants exuding pride and a feeling of exuberance regarding the issues discussed, the contacts made and the future of African trade and investment.

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General Session

Friday, March 12, 1999

The Honorable Alex Penelas, Mayor of  Miami-Dade County delivered the keynote speech  during Friday’s  general session. Mayor Penelas discussed expanding strong trade relationships between Miami-Dade County and Africa and his speech reenforced the “I CAN DO,” “AfriCAndo” theme between Miami, Florida and Dakar, Senegal.

The Honorable Alex Penelas, Mayor Miami-Dade County addressing conference participants

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t Text of Remarks

The Honorable Alex Penelas, Mayor Miami-Dade County

I wish to welcome you, and to thank all of you for coming to participate in the Second annual Conference on U.S. Trade and Investment in Africa, “AfriCando.”

As I stand here with you today, I look upon the people who could certainly become the driving forces behind a future U.S. – Africa trade corridor originating right here in Miami-Dade County.  I hope you will all join me in taking a “Can do” attitude in forging strong economic ties with Africa.

We hope to expand those relationships to Africa and believe we will be successful for the same reasons we have strong relationships with Latin America and the Caribbean.

The three main advantages are:

1.             Our geographic location.

(69 daily nonstop flights to the 34 FTLA countries)

2.             Our Infrastructure.

(Airport and Seaport allow us to do an unprecedented amount of international trade, & multi-billion dollar expansion programs scheduled for ports)

3.             Our diversity.

 As a result of those strengths, Miami-Dade County was selected to host 34 countries in the “Summit of the Americans,” in 1994.

 And our place as the “Gateway” to Latin America and the Caribbean was further solidified when Miami-Dade County was named the permanent Secretariat of the “Free Trade of the Americas” zone. That made us the headquarters of Latin American and Caribbean trade talks.

 This demonstrates our community’s importance as a Mecca of international trade.  And we now stand poised to make use of what is an emerging marketplace for international commerce, Africa.

 When I attended the U.S. Conference of Mayors in January of 1997, Mayors from across the U.S. spent an entire day discussing the issue of the emerging African Trade market.

 A special call was issued to mayors from around the country to establish their own trade relationship with Africa, in conjunction with the passage of the Africa Growth and Opportunity Act in the U.S. Congress, and the White House five point African trade initiative.

 I’m here to tell you that it makes more sense for us to forge strong economic ties with Africa than any other city in the U.S.

 The same characteristics for economic opportunity that existed 15 to 20 years ago in Latin America and the Caribbean now exist in Africa.

Evolving Democracies - African countries are now shifting from dictatorships and Communism to “Democracy”.

Rule of Law - Leaders who believe in the “rule of law”, are coming into power.

Emerging Markets - Their markets are experiencing economic growth, and their currencies are stabilizing.

Geographic Advantages - And of course the geography, we have the closest ports to Sub-Saharan Africa.

This conference is about all of us coming together to make Miami-Dade County a future gateway to Africa.

Last year I created the “Mayor’s Office of International Trade and Commerce,” in which I appointed the Mayor’s “International Trade Council.”  One of the most important projects of the council is my “Africa Trade Task Force.”  I appointed a group of people to develop a plan of action for fostering trade with nations in Africa.

This is our mission.  We are hoping to link Miami-Dade County businesses with companies in the emerging African marketplace.  Africa is such a ripe area for investment, and we are hoping to increase the number of imports of goods from African countries, while at the same time boosting the amount South Florida exports to Africa.

Historically, African Americans in South Florida have received a small part of the benefits that come from international trade.  The reasons are clear, a lack of opportunity, a lack of education, and a lack of knowledge about the types of opportunities that are out there.

But things are changing. Here is one example¼

Just this past August we held a historic ground breaking ceremony on Miami Beach for the First African American owned resort hotel to be built in Miami-Dade County.  The new Royal Palm Crowne Plaza Hotel was a major milestone for African- American business in our community.

But this is not just about getting African-Americans involved in the emerging African market.  It is about offering opportunities to all business people in this community.  Miami-Dade County is asking you, the business owner to form a partnership with us.  We are hoping you will join us in investing in a major business opportunity that has the potential for explosive growth.

I want to get Miami-Dade County’s business owners involved on the ground level of forging major economic ties with African countries.

We want to show you ways in which you can reach beyond the boundaries of your own neighborhoods to forge links with business in Africa.  We hope to share with you ideas on how you reap the benefits of greater opportunity by doing profitable business in Africa.

In fact, we already have a database of more than 8,000 Florida companies that are interested in trading in Africa.  And we are currently targeting African companies for partnerships with those businesses.

My goal is to see at least 20 trading partners with African companies within the next two years.  I hope to see at least a 20% Increase in trade between African and Miami-Dade businesses within the same amount of time.

This is a very important and exciting time for Miami-Dade County, because our new quest comes as we are economically revitalizing the community.

In fact, in what I believe will become the crowing jewel of our efforts; Miami-Dade County was designated as a Federal Empowerment Zone.

Later today, Vice President Al Gore will be here in our community to help us celebrate this important designation.

Here is the reason why this is so important to us.  The empowerment zone means more than One Billion Dollars in incentives for Miami-Dade County.  These dollars will go toward creating up to 5,000 new jobs by developing business, and helping current businesses within the zone expand.

This offers us a chance to partner with you in making your business grow, and helping you create jobs for people in our community.  This in turn, will help in the ongoing process of revitalizing the economic landscape of the County, especially within some of our poorest neighborhoods.

Miami-Dade County has an incredible opportunity to capture the African trade spotlight.  And we will be sharing those benefits with big companies represented in our community.

Today is about ensuing that you, the owners of our small minority businesses, will be granted your share in the profitability of the new economic relationships Miami-Dade County is fostering.

Today is about increasing the number of jobs and the flow of money in our community.

Today is about empowering Miami-Dade County, and empowering African-American businessmen and women, by making them movers and shakers in the international marketplace.

As we sail ahead into this vast ocean of opportunity, remember these words¼ “I can do. We can do.  Afri-Can-Do!”

Thank you.

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Opening Remarks

Anthony Okonmah, FDA

On behalf of the FDA, the Institute for Democracy in Africa, The Miami  Hemispheric Cultural Exposition and our County Government, the Miami-Dade Mayor and Board of County Commissioners and all the participating sponsors and organizers of the “AFRICANDO’99.”  I would like to welcome all of you to this historic 2nd Annual Conference on Democracy, Trade, Investment and Economic Development in Africa.

I want to first, thank the people without whose participation and support this conference would not have happened, starting right here in Miami.  Our Mayor, Alex Penelas and his capable staff: Mr. Manny Gonzales, Mr. Mark Coats and Mr. Tony Ojeda, and  of course, representing the City of Miami, Mr. Jorge Carvacho.  More importantly, our Board of County Commissioners and Managers.  Especially, Commissioners Moss, Rolle and Souto who sponsored this year and last year’s resolutions that made both conferences possible, not withstanding the full support of our Mayor. 

We want to thank all our volunteers, lead by Mrs. Wynn, Patricia, Drew, Michelle and our friends from the Port of Miami and their  support staff.  We want to thank our South Florida families who have taken time out to support this event.

Thanks to the Monsignor Rev. Casale, Dr. Reese and Dr. Holman from St. Thomas University who have been working with us to develop our programs at the Institute.

Thanks to all our friends from Africa, Government Representatives, African Federation of African Entrepreneur’s and all the business people from Africa (public and private).

Thank all our friends from United States, who has taken time and resources to participate today.

Special thanks goes to all the people who have devoted time and resources, ( our sponsors) to the richness of this dialogue and we are very appreciative.

I want to briefly speak about FDA and the Institute.  FDA is a nonprofit organization based in Washington, D.C. corridor (affiliated with African NGOs) was founded on the principle that democracy is fostered through trade and education without one, the other will not be feasible for the long run. 

FDA’S mission is to implement the principles of a culturally based, Democratic Government in Africa that will help to bring Africa into the mainstream of the Global Economy, thru free enterprise, thereby cultivating the pathway for peace and prosperity for all people.

The Institute for Democracy in Africa is headed by Dr. Gershwin Blyden.  The Institute is involved in the human capacity building since issuing visas (immigration) has been a major obstacle for people (students) coming from Africa.  The institute has adopted the long distance learning technology to meet Human Capacity needs of the people.  This technology will be initiated very soon.

Today we are here to discuss ways to institutionalize good governance, encourage investment business, trade and economic development in Africa.  Today during this conference,  we will discuss ways to encourage the private sector the engine that will drive sustainable economic growth in Africa.

Today, we will discuss efforts to help prevent future Humanitarian Crises, by discussing mechanism to integrate the culture of peace, prosperity, security and the improvement of the standard of living and quality of life for all humanity especially in Africa.

I thank you all for participating in this very important conference and welcome to your conference.

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Regina Cecilia Brown

CAMAC Holdings Inc.

First, let me apologize for not being able to attend the second annual US-Africa Trade and Investment Conference sponsored by The Foundation for Democracy in Africa.  I have a strong personal attachment to Africa and it is always a pleasure to participate in a discussion on opportunities in Africa and in addition issues affecting women in development.  My paper addresses improving African investment prospects through policy reform.

A vibrant, growing private sector is crucial for improving economic growth in Africa and the standard of living for each citizen.  The World Bank estimates that about 350 million new jobs will be needed in Sub-Saharan Africa within a generation.  Only the private sector-- free to allocate resource and respond to market signals-- can create jobs and income on this scale.  Moreover, the private sectors can best provide Africa with much-needed access to investment, know-how and technology.

Creating an enabling environment for private sector led growth is a key challenge facing African governments today as both economic and political institutions become more open.  As governments review and amend existing policies in both arenas, the need and concerns of private investors-- both domestic and foreign -- are important to keep in the forefront.  A country cannot encourage foreign investment without first creating an environment where its own nationals will want to invest.  Furthermore, in encouraging domestic investments, governments should not overlook the economic value of the informal sector, and small and medium enterprises, many of these run by women.  Africa’s decision -makers need to address specific needs of women and smaller firms and not simply focus on large companies making large investments.

Ghana/Korea Example

To illustrate the importance of an enabling environment, I would like to contrast the cases of Ghana and South Korea.  In 1962, per capita incomes in both countries were virtually identical at $490 (in 1980, US dollars).  About two-thirds of the labor force in both countries was in agriculture.  Twenty years later, the average Korean enjoyed an income five times that of the average Ghanaian.  Why?  The most striking comparisons are level and type of exports, and level of private sector credit.  In South Korea, exports in 1982 represented 39 percent of GDP, and 90 percent of exports were manufactured goods.  Private sector credit was 49 percent of GDP.  By contrast, exports accounted for only 2 percent of GDP in Ghana in 1982, and most of these were commodities.

Private sector credit was only 2 percent of GDP.  A World Bank study on private enterprise in Africa concludes that the level of private sector credit and a policy environment conducive to enterprise and initiative contributes to economic growth and increased income.  Ghana undertook economic reforms in 1983 that started to create the conducive environment for private sector investment, and the results have been positive.

Historical Perspective

Ghana is not alone.  Improving the investment climate is not a new concept in most African countries.  During the 1980's many African nations adopted polices, provided incentives, and improved regulatory frameworks to attract Foreign Direct Investments as part of their economic reform efforts.  Between 1982 and 1987, about half of all African countries either introduced or amended their investment codes with an eye to attracting more investments, largely foreign.  Even countries that have traditionally been seen as more open to investment, such as Kenya and Zimbabwe, have revised their investment codes and overall regulatory frameworks to attract more investments.  Countries which had been hostile to investments, Ethiopia, Guinea, and Mozambique, now offer a range of incentives and guarantees to investors.  In addition, more and more African countries permit and have set up investment promotion agencies and have opened the so-called “one-stop shop” investment centers to assist companies in getting through the regulatory process of establishing a business.

However, during the early 1990's investment flows into Africa have stagnated while those to other developing regions, notably Asia and Latin America, have increased.  Africa’s share of investment flows declined to 6 percent by 1992 down from 12.9 percent in 1981.  Moreover, 70 percent of investments flows into Africa in the early 1990's were concentrated in oil-exporting countries, mainly Nigeria and Angola.

Reasons for Low Levels of Investment

Why has investment flows to Africa been weak compared to other developing countries?  The UN’s World Investment Report lists several reasons:

1) Africa has few location-specific advantages.

2) Privatization programs have been limited in     contrast to other regions.

3) Civil conflicts continue to plague some    countries, (Liberia, Congo-K and B,  Rwanda, Somalia, Sudan, Angola, Sierra Leone); others are just emerging after   years of struggle, for example, Chad, Mozambique, and Uganda.

4) Domestic markets tend to be relatively small, and there is limited opportunity to export to neighboring countries in many cases.

5) Poor and deteriorating physical infrastructure and lack of telecommunications  and financial infrastructures inhibit investment.

6) Relatively slow progress in introducing market-and private sector -oriented  reforms discourage FDI.

7) A high level of indebtedness can lead to chronic foreign exchange shortages that     threaten repatriation of profits.

8) A lack of or low level of skills and access to technology further hinders investment.

U.S. Concerns

Many U.S. companies interested in investing in Africa cite similar reasons for low levels of investment in the continent.  Political stability ranks at the top of the list for most investors.  This is closely related to legal predictability.  An investor is most interested in doing business, knowing clearly the cost of doing business, and not having to worry about politics.  A country with a transparent legal system under which an investor can be aware of all relevant laws and regulations and be assured of their enforcement encourages investment - both domestic and foreign.  The bottom line is that investors want an environment where contracts and the rule of law are respected.  Furthermore, investors expect good governance. - This means: 1) decentralized political activity, 2) accountable and responsible government, and 3) respect for human rights, including a free press that permits a free and open exchange of ideas.

Corruption

Furthermore, U.S. businesspeople explain that the inability to know or plan exactly what will happen to an investment because of 1) corruption, 2) unstable currencies, and 3) poor infrastructures, including the provision of basic services, such as electricity, and honest police protection, creates an environment which is not conducive for conducting business.  From a business perspective, corruption is a wild card in determining the cost of doing business; it creates uncertainty rather than predictability and distracts an entrepreneur from his or her key goal: producing a generated profit.  All told, corruption discourages prospective investors from abroad and limits those at home.

Unstable currencies

The second issue that of  unstable currencies, is best addressed in the context of economic reform efforts and getting the prices right.  Governments must adopt internationally realistic exchange and interest rates, and non-inflationary monetary policies.  They must eliminate price controls, labor market rigidities, and artificial restraints on internal investment and competition.  In short, sound fiscal and monetary policies, and an open trading system are the basis of a healthy macroeconomic environment attractive to private business.

Infrastructure

Thirdly, to attract investment, countries must improve basic physical infrastructures: roads, ports, railroads, and power generation.  Equally, if not more important, are improvements in telecommunications and financial infrastructures.  Business depends more and more on an ability to communicate quickly with firms around the world.  Mauritius, an African country successful in attracting investment, recognized this early on and updated and expanded its telecommunications network.  AT&T is working to improve Africa-wide telecommunications through its Africa One project, which will bring Africa into the 21st century.

Bureaucratic Hurdles

Despite improvements in the macroeconomic environment and positive changes in investment codes, in many African countries, bureaucratic obstacles discourage private sector investment.  The famous study by Hernando De Soto in The Other Path cites the example of Peru.  When De Soto’s Institute for Liberty and Democracy attempted to register an imaginary factory, the process took 289 days, required the full-time labor of the group assigned, as well as $1,231, which represented the equivalent minimum wage earning for one month of 32 people.  This tale holds true for many African countries today.

Market Integration and Reforming Trade Regimes

U.S. investors also cite the relatively small market size of most African Countries as a constraint on investment.  With the exception of Nigeria and South Africa, few African countries possess the market-size that will draw foreign investment in value-added industrial sectors.  To attract more investors (foreign and domestic), Africa must look to the creation of larger markets through regional integration.  Today only 5-10 percent of Africa’s trade is with Africa.  African countries can work bilaterally and through existing regional organizations to eliminate barriers tariff and non-tariff, to cross-border trade, and to integrate transport and communication systems.  Import licenses and complicated customs procedures also inhibit trade and hinder efforts toward creating larger regional markets.  International donors, including the World Bank, IMF, and African Development Bank have encouraged and supported regional integration efforts.  The fundamental responsibility, however, rests with Africa’s decision-makers.  Progress has been made through the efforts for the West African Economic and Monetary Union (UEMOA), Southern African Development Community (SADC) but much more needs to be done.

Free Trade Zones

Free Trade Zones, or Export Processing Zones (EPZ’s), are popular with some foreign investors, and Mauritius has been successful in using these to its advantage, particularly in developing its textile and apparel industry.  However, a World Bank study of Export Processing Zones as a tool of economic development indicated that links from the zones to the local economy often are disappointing.  EPZ’s are most useful for exposing local labor and management to international competition, and the quality expected on the world market.  In Africa, EPZ’s also can be useful in initial stages of diversification away from commodity exports.  Although EPZ’s have some advantages, particularly in Africa, there are no substitutes for liberal economic environment conducive to export-oriented development.

Export Promotion and Diversification

Sound macroeconomic policies and correct prices, however, are not enough to boost growth through investment and exports.  Ghana’s example illustrates the need for export promotion and diversification programs.  Although Ghana had adopted enabling macroeconomic policies, exports did not grow as much as hoped, particularly non-traditional exports, such as clothing.  Such exports totaled $1 million in 1983, at the start of Ghana’s economic reforms, and grew to $60 million in 1990, an impressive figure, but not enough to offset declines in traditional commodity exports.  Ghana now actively promotes non traditional exports, and we expect increased growth.  For example, a new juice plant, built by a Ghanaian, has reached full capacity in one year and is both producing for the local market, and exporting, by air to the Middle East.  The Ghana example shows that domestic investors in particular need to be supported thru: 1) export finance, 2) market information, 3) access to technology, 4) tariff reform, and 5) elimination of cumbersome administrative regulations.

Investment in Human Resources

Human resource development cannot be ignored when looking at policy reform.  Lack of or a low level of skills in the labor fore is one reason for a low level of investment in Africa.  Without specific skills taught in conjunction with a sound basic education, the African workforce will have difficulty in accessing technology and know-how essential for Africa’s economies to compete in the world, to attract private investment, and to support growth and competition.  Beyond job training, health and nutrition of the citizens of African countries also are important in attracting investment and achieving development.

 A World Bank study on sustainable growth in African cities two priorities for human resources: 1) improve the quality and relevance of education at every level, and 2) redirect public resources toward basic education and health care.  With these priories met, Africa’s workforce and entrepreneurs can be ready to take advantage of the enabling environment of investment.

Domestic Investment

Small and Medium Enterprises

The policy reforms, I have described to create an environment conducive for investment hold true for domestic as well as foreign investors.

Indeed, growing numbers of private entrepreneurs are essential to future economic growth.  Most domestic investment will come from small and medium enterprises (SME’s).  SME’s play a key role in the transition from agricultural to industrial economies.  For example, in Japan, where small enterprises have always been important as subcontractors to large firms, over half of manufacturing output in 1960 originated from firms with fewer than 100 employees.  One-third of all the workers in Japan were employed by them.  This was at the start of Japan’s rise to a world economic power.  In the U.S. today, the 100 percent of new job creation comes from the small business sector.  Large companies are downsizing.

In Africa, too, SME’s predominate in productive activities.  According to the IFC, small firms (less than 50 employees) account for 85 percent of manufacturing employment in Ghana, 86 percent in Nigeria, and 96 percent in Sierra Leone.  With the rapid rate of population growth in most of Africa, SME’s labor intensity is expected to continue to provide the best chance of employment generation.  The challenge for African nations is to remove existing constraints to SME’s.  In other countries, such as Tanzania and Kenya, the figure is lower but nevertheless significant at around 60 percent.  Many of these constraints will fall away as governments adopt sound fiscal and monetary policies and eliminate trade barriers.  However, governments must be alert to large company biases in investment incentives, such as tax and trade concessions.  In addition, African nations need to promote SME’s through easing access to credit, providing business training for future entrepreneurs, and providing market information, particularly for export markets.

Informal Sector

The challenge for African nations is to create an infrastructure to help the informal economy become part of the formal economy so that the informal vendor of avocados on the street can become the small enterprise of tomorrow, earning greater income and employing more people.  This transformation from informal to formal has been successfully accomplished through credit programs for micro enterprises.  For example, in a loan program set up by Save the Children in the Gambia, one women borrowed a small sum of money (around $30) to start her own trading business.  One year later she has a small storage area well stocked with goods and provides her family with economic security.

Women

This example also illustrates the value to including if not targeting women in efforts to boost small enterprises. In fact, more micro-loan programs today target women rather than men, partly because women have better loan repayment records.  Moreover, women make up a large percentage of the informal sector in Africa.  World Bank economists estimate that petty trading by women accounts for 30 to 50 percent of GDP in some countries.  African countries can reap employment benefits by assisting women in turning petty trading operation into small and medium enterprise.  For example, in the U.S., the 11 million employees of women-owned businesses total more than the number employed by the Fortune 500 companies.

Private/Public Sector Dialogue

Finally, in looking at investment policies, it is important for Africa’s leaders to listen to the concerns of their own, however nascent,  and to let reform come from the bottom up and not only for the top down.  There must be continued communication and dialogue between the private and public sectors.  In Ghana there is a Private Sector Round Table which meets periodically with government to make the views of the private sector known.  Partnership is the key word.  Governments should be alert to general biases against smaller firms in tax policy, labor laws and access to credit.  Such funds as the Southern Africa Enterprise Fund, sponsored by the U.S. AID and the West Africa Enterprise Fund, sponsored by the Databank, private investment bank in Ghana address the issue of access to credit and capital to help create and expand small indigenous businesses in these regions.  The African Development Bank also created a private sector arm a few years ago to address this issue, and was instrumental in the creation of the African Business Round Table.

Conclusion

In summary, to grow and to improve the standard of living of the average African, African governments must work with their citizens to create an environment that encourages investment, both small and large scale, of their own nationals.  A country that fosters private investment at home will also attract investors from abroad.  Many of you already know that one key to improving investment prospects is to adopt sound macroeconomic policies that send appropriate signals to the market.  Equally if not more important is transparent, predictable legal system, free from corruption and undue influence that demonstrates respect for contracts and the rule of law.  Tax and other investment incentives are fine such as they are but elimination of the “petits blockages,” the little obstacles, cumbersome regulations and unwelcoming attitude to private investors, will do more to increase investment levels than any tax holiday.  An open trading system and increased regional market integration will bring in foreign investors and stimulate local producers, particularly in manufacture of non-traditional exports.  Look at the informal sector and the needs of its entrepreneurs and bring them into the formal economy.  Remove constraints of small and medium enterprise, which, like the informal sector, create the lion’s share of new employment.  Give access to credit to the private sector and give information on marketing and training.  Let everyone know the rules of the game, and give clear, enthusiastic signals that the government is committed to sector-led growth.  Finally, support women, educate them and provide them with access to credit.  They are often an untapped source of economic growth.  I hope you will take my ideas and suggestions, consider them and work together-public officials, civil society, NGOs and private sector official in a dynamic partnership to develop an Africa- wide enabling environment for investment, the catalyst of economic growth for the continent.

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Moderator’s Report on Critical Issues for Conducting Business in Africa

Candy M. Mongo, Zambia

The workshop group started by observing the disproportionately low number of African Americans at the workshop.  It was felt that in future, more should be mobilized to attend to make the information exchange more beneficial and effective.

 A) Constraints: The following issues were observed as major constraints standing in the way of improved business show between Americans and Africans.

I. Poor communication and infrastructure in Africa.

II. Lack of knowledge by African Americans of the resources and consequently business opportunities available in Africa.

III. Most Africans do not know the rules of how to do export business especially in America.

IV. In some cases, lack of  information standards of what goods meet American needs.

V. Prohibitive Visa requirements for African businessmen trying to enter the USA for business where as the same is not true for Americans trying to enter African countries.

VI. Lack of good governance in some African countries therefore, failing to generate security of contracts for American businessmen and women.

VII. Negative media reports about Africa. Ie.  Corruption and other vices are usually exaggerated in the Western media.

B) Proposed Recommendations: The following recommendations were proposed to address  the above and other issues to improve the pace and volume of business between Africa and the USA.

I. Improve communication between the USA and African countries by use of more workshops and utilizing existing structures like Embassies for obtaining business information from other countries.

II. Encouraging education and workshops for dissemination of information, skills and availability of technology. 

III. Black Americans exploring the possibility of reexporting some of the goods from Africa into South America to increase the market of African goods.

IV. Need for thorough market research on both sides to facilitate informed business decision-making.

V. The need to address the prohibitive Visa requirements to enter the US.

VI. Encouraging African governments to disseminate information to help their citizens trade.

VII. Encouraging good governance and democratic systems in Africa.

VIII. Regional integration of African countries to standardize and enhance trade/ trade regulation.

IX. Preparation of profiles of manufactures and what they are able toproduce/supply on both sides (especially small trade entrepreneurs).

X. Africans should be very explicit in their requests for the right skills and technology which are abundant among African Americans to foster  production and enhancement of standards for the American market.

XI. Encourage the membership of Trade and Manufacturing Associations to foster formed representation of either sides concerns as well as to increase networking and personal relations which are more effective for the promotion of business.

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Women in Development

Moderator: Dr. Sarah E. Moten

Panelists: Audrella Hamed and

Leonie Hermantin

A few figures give a rough picture to the current status of women’s involvement in the worldwide development process.

More than three-quarters of the world’s 2.6 billion women live in the developing world, where discrimination and hardship limit their opportunities.

An estimated half-billion rural women worldwide live in poverty.  Of  these, 374 million live in Asia and 129 million live in sub-Saharan Africa.

Women constitute about 50% of the world’s population.

Worldwide, in 1985 there were nearly 600 million illiterate women, compared with 350 million illiterate men.  This education gap is especially sever