News Archive

U.S. Committed to Prosperity in Africa

by E. Anthony Wayne
Assistant Secretary of State
Bureau of Economic and Business Affairs

This article appeared in the East African on June 27, 2005

President Bush and Presidents Mogae, Kufour, Pohamba, Tandja and Guebuza recently announced that the fourth African Growth and Opportunity Act (AGOA) Forum will take place in Dakar, Senegal July 18th to 20th. President Abdoulaye Wade of Senegal has graciously agreed to join the United States in co-hosting the 2005 AGOA Forum. AGOA is a tangible symbol of the United States' commitment to support actions, in partnership with Africans, that generate growth and lasting development. Secretary Rice plans to be in Dakar and will underscore our continued efforts to promote democracy and prosperity in the region.

By increasing trade, AGOA is creating economic growth and decreasing poverty. Due to AGOA preferences, 98 percent of all goods from Africa enter the U.S. duty-free. AGOA imports from Sub-Saharan Africa increased 88 percent between 2003 and 2004, to $26.6 billion. Non-oil imports such as automobiles and agricultural goods were $3.5 billion, up 22 percent over the same period.

African countries can unleash even more new trade and investment opportunities by reducing tariffs within the region, improving the business climate and accelerating regional cooperation. In creating the New Partnership for Africa's Development (NEPAD), Africa's leaders committed to sound economic management, opening their economies, and boosting investment. They pledged to promote sustainable development, transparency, democratic institutions and a legal and regulatory framework that supports private enterprise and innovation. We can already see tangible results.

African leaders are taking important steps to further accelerate economic growth by driving down the cost and risk of doing business, and creating legal and financial systems that support a stable environment for job creation and a thriving private sector. Madagascar, Benin, Kenya, Mozambique and Namibia, for example, are implementing reforms to encourage private investment. Botswana and South Africa rank in the top 25 % of 145 countries ranked by a World Bank report, "Doing Business in 2005." According to the International Monetary Fund (IMF), real GDP growth in sub-Saharan Africa increased in 2004 to an eight-year high of 5% and average inflation has fallen to 25-year lows.

Our goal is not just to help Sub-Saharan Africa, but also to strengthen Sub-Saharan Africa's participation in the global economy by integrating trade with aid. The United States now supplies 70 percent of G7 financial flows to developing nations. Since 2000, the U.S. has more than tripled Official Development Assistance to Africa to $3.2 billion in 2004, and, as President Bush has said, we are committed to doing more in the future. The U.S. is the top source of Official Development Assistance and private financial flows (imports, direct investment, remittances) to the developing world.

On June 7th, President Bush announced $674 million of additional resources to respond to humanitarian emergencies in Africa. $414 million will be spent to avert famine in the Horn of Africa. As the President said, "Helping those who suffer and preventing the senseless death of millions in Africa is a central commitment of my Administration's foreign policy. We're making historic progress in helping the poorest countries in Africa to gain a fresh start and build a future of greater opportunity and prosperity."

Africa is a major beneficiary of the President's $15 billion five-year Emergency Plan for AIDS Relief. In 2004, African countries received about $780 million for HIV/AIDS prevention, treatment and care, tripling the number of Africans receiving life-saving anti-retroviral treatment. In FY 2005, USG assistance will grow to nearly $1.1 billion to fight HIV/AIDS. The United States is also devoting funding to other serious health dangers -- including polio, tuberculosis, and malaria.

The United States has joined together with her G7 partners to forgive $40 billion in multi-lateral debt of 18 Heavily Indebted Poor Countries (HIPC); 14 of those countries are in Africa. This will free up government funds for investment in education, health and private sector development. An additional 18 African countries are under consideration for additional debt forgiveness. The U.S. routinely forgives 100% of bilateral debt of countries that qualify under the Heavily Indebted Poor Countries Initiative (HIPC).

The Millennium Challenge Account (MCA) is yet another way the United States partners with Africans to encourage homegrown reforms for good governance, anti-corruption, sound economic policies and investing in people. Thus far, our Congress has approved roughly $2.5 billion in MCA funding, and President Bush has requested more funding for 2006. MCA is based on the concept that foreign assistance yields better results in countries that adopt market-oriented economic policies, promote good governance, and offer a stable investment climate.

We are also drawing on Africa's strong tradition of entrepreneurship to help build prosperity. USAID has forged partnerships with European as well as American companies to help create jobs and raise incomes in Africa, and to increase African exports. The Cisco Networking Alliance, for example, has partnered with 25 African countries to establish information technology (IT) training academies at 75 institutions throughout the continent. According to tracking data from those academies, 77% of their graduates have found jobs in a field that can help accelerate the growth of the IT industry in Africa and provide a critical tool for economic development.

As Deputy Secretary of State Zoellick said in his remarks at the Common Market for Eastern and Southern Africa (COMESA) Plenary in Rwanda, the United States stands with Africa as a partner and as a friend because we want African nations to be a vital part of the global economy and we want the African people to have security, opportunity and hope. While many challenges remain, we are confident that great strides will be made because Africans themselves are leading the way.