On his return to the US after two weeks in Africa Treasury Secretary PaulO'Neill delivered a speech on 'producing results in Africa'.
10 Jun 2002
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On his return to the US after two weeks in Africa Treasury Secretary PaulO'Neill delivered a speech on 'producing results in Africa'.
'Caring Greatly and Succeeding Greatly: Producing Results in Africa'
Remarks to the Carnegie Endowment for Peace by US Treasury Secretary PaulO'Neill.
Washington, DC
Good morning. Thank you, Jack (DeGioia, President of Georgetown University),for that kind introduction. I also want to thank the Carnegie Endowment forInternational Peace for arranging this opportunity to discuss my tour ofAfrica. And thanks to Georgetown University for accommodating this crowd!It's encouraging to see so much interest in this important subject.
I went to Africa last month to listen and learn; to meet African leaders inand out of government, to meet doctors, farmers, teachers, students, andentrepreneurs. I went to hear their insights into the obstacles to Africa'sprosperity.
I also went to find a real-world basis for recommendations to the Presidenton how to allocate funds from the new Millennium Challenge Account. But mostof all, I went with an open mind, and one pivotal question: How can thepeople of the United States and the developed world best help Africans andtheir elected leaders achieve prosperity at last?
It is too soon to announce policy recommendations from the trip, but Icertainly learned a great deal, and I want to share some of my experiencewith you.
Some would say my trip was a little out of the ordinary. The TreasurySecretary traveling with the rock star. The "odd couple." Bono even hadtee-shirts made portraying Jack Lemmon and Walter Matthau. But we reallyweren't so odd. In fact, I think Bono and I found a lot in common. We bothdesperately want to see the people of Africa - in fact, the people of theworld - living to their full potential.
I did try on the famous blue shades during the trip. And Bono sang theoccasional song. Between these lighter moments, though, I have to say thiswas the most intense twelve days I've ever experienced. I met people likeSister Benedicta, who runs a hospital and orphanage in Ethiopia. Shemaintained an incredible radiance, even as she told us how many people diein her hospital every day - how many children die in her hospital every day.To witness that strength of spirit is a truly profound experience.
I can't begin to describe all the emotional moments during this trip. Theyconfirmed three things for me. First, a truth we've always known: All peopleeverywhere can do great things when they are given the tools and incentivesfor success. Second, that with leadership - honest, accountable, andcommitted to progres - everything is possible. Without leadership, nothingis possible. And finally, that in the right environment focused on growth,enterprise and human development, aid works. Knowing that it can work, wehave a moral imperative to demand as much. Assistance should make a realdifference in people's lives.
We in the developed world must support African leaders who are creating theconditions for success - ruling justly, encouraging economic freedom, andinvesting in their people. And we must ourselves take a leadership role indemanding results.
The impoverished people of Africa - and in poor nations everywhere - requirea new kind of help, that goes beyond the well-intentioned but disappointingresults of the past fifty years.
If our assistance is not making a difference, or if we cannot measure ourresults to know what difference we have made, then we have to change ourapproach. We owe that to the people of Africa.
In Africa, I saw signs of progress everywhere. Programs are working, aid ishelping, and standards of living are improving.
But there is a long way to go. The progress I saw deserves praise, but itjust isn't enough.
Let me highlight the areas in which we witnessed progress. In particular, Isaw three kinds of investments in people that are vital to realizingAfrica's potential: clean water, primary education, and fighting HIV/AIDS.
Clean water is, surely, one of the most essential elements of a dignified,civilized life. No aspect of infrastructure is more basic. Yet 45% ofsub-Saharan Africans lack access to clean, safe water. That's about 300million people - more than the total population of the United States. InEthiopia, that figure is 78%, or 50 million people in that country alone.
One insight from my Africa tour is that local leaders, with some engineeringand financial support, could develop clean water sources for their towns andvillages fairly quickly. For example, in one Ugandan village I saw aconcrete basin installed to protect a natural spring. The women of thevillage could collect the water directly from the basin instead ofcollecting it after it spilled across the muddy ground. The concrete basincost a thousand dollars to install.
But the local chairman for the project told me that the greatest hindranceto installing the system had been local fears that a snake was protectingthe spring, and that the snake would become enraged by any tampering andwould take away the water. He had to spend considerable time persuading hisfellow villagers to go ahead with the project. It took his leadership to getthe project finished.
Or consider another village, where women were trekking to a muddy river toobtain water, even after a well was dug in the village. After the well wasbuilt, the women wouldn't use it. It turns out that they valued their socialtime down by the river, and so they chose to continue collecting dirty waterfrom the river, rather than clean water from the well. When the water tapwas relocated further from the village, providing an opportunity tosocialize, they started to use it.
In these and other cases, only local leadership could tailor developmentprojects to suit local cultures and customs. And it was sometimes shockingto see the disconnect between the aid bureaucracies with their 15-year plansand the availability of more immediate solutions.
You cannot airdrop solutions to local problems. You can only offer airsupport. Local leadership must implement the solutions on the ground and beaccountable for success.
If we can figure out a way to support African leaders in bringing cleanwater to their nations - and I think we can do that much faster and cheaperthan the endless studies say we can - we can liberate hundreds of millionsof people, especially women and children, from preventable, debilitatingillness and meaningless, wearisome labor. They would be free to pursue theirdreams for a better life.
The second important investment I saw was in raising primary educationenrollment. I believe that in Africa, in the United States, and in everypart of the world, children by the age of about ten years old should and canhave the tools to be life-long self-learners. But that requires that we getthem into schools at an early age, and keep them there, with adequatematerials.
In Uganda, they've had tremendous success increasing primary schoolenrollment. Primary school enrollment has increased from about half (55%) ofthe children in 1994 to nearly all of them (94%) in 1999, and nearly halfthe students are girls. Education quality is improving as well. But there isstill a long way to go. I visited schools where they have gone from a ratioof 16 students per book down to six per book. That's progress, but it's notgood enough. We must set our expectations higher. Surely, we can get everystudent his or her own book.
Similarly, one study in Uganda found that only 2% of non-wage spending foreducation was actually reaching schools in 1991. The rest was lost tocorruption and bureaucracy. Following reforms enhancing transparency andaccountability for government spending, over 90% of school spending now getsto the schools. That's a huge improvement. But again, we can do better.
The third, perhaps most crucial area for investment in people is healthcare. Nowhere is this more urgent, and more heartbreaking, than in thestruggle against AIDS. In South Africa I saw mothers with AIDS caring forbabies with AIDS, even when proven, inexpensive drugs are available to stoptransmission between mother and child. I saw the dedication of nurses anddoctors treating people with AIDS, and their patients' struggle to survive.
Certainly, prevention of further HIV contagion is the utmost priority,especially to keep the next generation of newborns free from disease.Uganda, in particular, thanks to President Museveni's leadership on thisissue, is one of the few to reduce the portion of the population afflictedwith AIDS. But among the challenges facing those who fight AIDS in Africa isthat in many countries, there is a social stigma attached to even testingfor the disease. They need more leaders to tackle this issue head-on.
This is our challenge: to focus the attention of the world on gettingresults. Caring greatly is not enough. We must also succeed greatly.Starting today.
I'm glad to see progress, but we should not confuse progress with success.We must challenge ourselves to aim higher and concentrate our efforts sothat international assistance advances the progress taking place on theground.
Providing the framework for basic health and education is fundamental forenabling people to realize their potential. When governments are investingin their people, providing clean water, education, and health care, and whenthe other aspects of good governance are present - just rule and economicfreedom - prosperity can blossom.
In fact, the private sector is already growing in parts of Africa. I visitedentrepreneurs who are grabbing the opportunities that good governance hasmade possible. They are creating jobs in industries from coffee and cutflowers to athletic wear and data processing. By doing so they are spreadingknowledge and inspiring others to reach for their dreams.
As private enterprise expands in an economy, trade and investment grow todwarf official aid. Countries that won political independence years agofinally win their economic independence as well. Government provides theconditions for growth, but it is not the source of prosperity. Privatecitizens create prosperity through enterprise.
And in Africa, where the conditions are right, citizens are doing just that.
For example, in Ghana I visited a successful U.S. investment, calledAffiliated Computer Services, Inc. ACS sells data processing services toinsurance companies in the U.S. It opened its office there in 2000, andalready it employs over 800 Ghanaians, paying an average of three times theaverage wage in Ghana. 80% of the employees are women. The company now plansto expand its operations to four new sites in Ghana and to increase itsworkforce to over 1,000 people.
ACS employees start with a high school diploma and typing skills. Thetraining they receive creates a new knowledge base on which future employerscan build. As foreign investments like ACS show success, others are bound tofollow, and I am optimistic that increasingly advanced services, such assoftware development, will thrive in Ghana and elsewhere in Africa.
In Uganda, I met a woman, Lukia Ssemonobe, who opened a restaurant withmicro-loan funding and a lot of hard work. This woman lost her husband adozen years ago, and had to feed four children without income. Indomitable,she borrowed $50 from the local branch of a micro-finance NGO, and used thatand subsequent loans to build two businesses - a restaurant and then atailoring shop. Now she employs about a dozen of her neighbors, supports herfamily, owns a home, and has become a leader in the community. Lukia showsthe kind of success that is possible.
I also visited a cut-flower factory, where local entrepreneurs arediversifying Ugandan exports by growing beautiful flowers and air-shippingthem the same day to European markets.
In Ethiopia, an entrepreneur from Chicago invested in building a garmentfactory that makes sports clothes and ships them to the U.S. under theAfrica Growth and Opportunity Act. The company now employs about 200workers, each earning between three and 21 times the average Ethiopianincome.
Jobs that deliver prosperity are created one at a time, by people likeLukia, or the investors in ACS. They see opportunities and choose to takethe risks, confident they will reap the rewards of success.
Unfortunately, in too many cases, potential entrepreneurs and investors inAfrica are deterred by arbitrary laws, corrupt bureaucracies and governmentfavoritism. Africa is a continent of entrepreneurial enthusiasm - that'swhat I saw. But these individuals have no chance for success withoutgovernments that fairly enforce laws and contracts, respect human rights andproperty, and fight corruption. Governments also must remove barriers totrade - both internal and external - and open their economies to investment.They must allow companies and entrepreneurs to compete without excessiveinterference, including interference from government-owned enterprises.
That's no small order. But as private sector production takes hold inAfrica, and incomes rise, African growth will become self-sustaining. Africawill be its own best market.
Coming back to my original question, what can we in the U.S. do to supportAfrican success? Here in Washington, we need to push ahead with PresidentBush's reform agenda, to improve the effectiveness of wealthy nations'support for African development and promote the best efforts of our Africanpartners.
Many extol debt forgiveness as the path to African development. I wouldagree that debt forgiveness may help, but it alone is not the solution.
Debt forgiveness solves nothing if we allow new debt to create the nextgeneration of heavily indebted poor countries a decade from now. PresidentBush has proposed that up to 50% of World Bank and other development bankfunds for the poorest countries be provided as grants rather than as loans.This proposal acknowledges the long-term development challenges facing thesecountries, their vulnerability to economic shocks, and the reality thatessential investments in social sectors, such as education and health care -investments in people - cannot directly generate the incremental revenue toservice new debt.
Replacing loans with targeted grants will eliminate the need for governmentsto repay long-term investments in people. It will thereby eliminate the nextgeneration of debt service problems. It is time to end the sad cycle ofindebtedness for countries committed to success.
Second, it's a simple fact that is as true about an individual as it isabout a nation - even without debt, it's impossible to prosper withoutincome. Even if we forgave all debts, many of these countries still couldnot fund their own budgets, and they would not be much better off. In Ugandaover half of the government budget comes from foreign aid. Think about that.It is not a self-sustaining situation. The only way out of that kind ofshortfall is internal economic growth. Local leaders must create theconditions for self-sustaining prosperity, not further dependency.
That is a premise of President Bush's New Compact for Development. In March,the President said, "the advance of development is a central commitment ofAmerican foreign policy " and he outlined a "new compact for globaldevelopment, defined by new accountability for both rich and poor nationsalike."
The New Compact for Development creates the Millennium Challenge Account andproposes an additional $5 billion per year in official U.S. development aid- a 50% increase over current levels - specifically targeting poor countriesthat can use the money effectively. To access the Millennium ChallengeAccount, a developing country must have a government that shows a strongcommitment to ruling justly, encouraging economic freedom, and investing inpeople, as I have described.
Because results are what count, President Bush has created new incentives inour development assistance programs to reward those that achieve realimprovements in peoples' lives. He has committed that as a reward for provenresults, the U.S. will increase funding for the African Development Bank by18%, and will do the same for the International Development Association(IDA), the World Bank program for the poorest nations. To receive theseadditional funds, the programs need only show they are making a differencein people's lives - a challenge these development organizations, theirsupporters, and their beneficiaries should welcome.
In the long-term, domestic entrepreneurship as well as trade and foreigninvestment are far more important for economic growth than official aid. TheUnited States has created the Africa Growth and Opportunity Act, or "AGOA,"to open U.S. markets to exports from sub-Saharan Africa. As Uganda'sPresident Museveni said "If somebody buys what Uganda produces, then he isrendering my country the best assistance possible."
I would also encourage all African nations to reduce trade barriers amongstthemselves, so that all can benefit from their different comparativeadvantages, and relative proximity to each other. They should be their ownbest markets, not their worst.
The Africa I saw on my journey is already changing. We stand ready to help,eager and impatient to assist real improvement in the lives of the Africanpeople.
Consider this. Fifty-five years ago on this very date, U.S. Secretary ofState George C. Marshall gave a speech outlining the European RecoveryProgram, later known as the Marshall Plan.
In it, he said: "I need not tell you that the world situation is veryserious. That must be apparent to all intelligent people. I think onedifficulty is that the problem is one of such enormous complexity.Furthermore, the people of this country are distant from the troubled areasof the earth and it is hard for them to comprehend the plight and consequentreactions of the long-suffering peoples, and the effect of those reactionson their governments in connection with our efforts to promote peace in theworld."
He was talking about Europe in 1947. The words are just as true of Africatoday.
I went to those troubled lands, and I believe this: with the rightcombination of aid and accountability - from both rich nations and poor ones- we can accelerate the spread of education, clean water and privateenterprise throughout Africa. We can help the African people create vibrant,self-sustaining economies and a rising standard of living.
Development is complicated. I know that. I don't underestimate thechallenge. I just don't think we should accept complexity as an excuse fordelay.
As Marshall said, "With foresight, and a willingness on the part of ourpeople to face up to the vast responsibility which history has placed uponour country, the difficulties I have outlined can and will be overcome."
Together, we can produce results for Africa. We will tear down the walls toprosperity. Not in the next generation, but right now. In this era of globalopportunity, no continent, no country, and no person should be left behind.President Bush said it best - there are no second class citizens in thehuman race. We must make his vision into a worldwide reality.
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