On his return to the US after two weeks in Africa Treasury Secretary Paul
O'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 Paul
Good morning. Thank you, Jack (DeGioia, President of Georgetown University),
for that kind introduction. I also want to thank the Carnegie Endowment for
International Peace for arranging this opportunity to discuss my tour of
Africa. 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 in
and out of government, to meet doctors, farmers, teachers, students, and
entrepreneurs. I went to hear their insights into the obstacles to Africa's
I also went to find a real-world basis for recommendations to the President
on how to allocate funds from the new Millennium Challenge Account. But most
of all, I went with an open mind, and one pivotal question: How can the
people of the United States and the developed world best help Africans and
their elected leaders achieve prosperity at last?
It is too soon to announce policy recommendations from the trip, but I
certainly learned a great deal, and I want to share some of my experience
Some would say my trip was a little out of the ordinary. The Treasury
Secretary traveling with the rock star. The "odd couple." Bono even had
tee-shirts made portraying Jack Lemmon and Walter Matthau. But we really
weren't so odd. In fact, I think Bono and I found a lot in common. We both
desperately want to see the people of Africa - in fact, the people of the
world - living to their full potential.
I did try on the famous blue shades during the trip. And Bono sang the
occasional song. Between these lighter moments, though, I have to say this
was the most intense twelve days I've ever experienced. I met people like
Sister Benedicta, who runs a hospital and orphanage in Ethiopia. She
maintained an incredible radiance, even as she told us how many people die
in 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. They
confirmed three things for me. First, a truth we've always known: All people
everywhere can do great things when they are given the tools and incentives
for success. Second, that with leadership - honest, accountable, and
committed to progres - everything is possible. Without leadership, nothing
is possible. And finally, that in the right environment focused on growth,
enterprise and human development, aid works. Knowing that it can work, we
have a moral imperative to demand as much. Assistance should make a real
difference in people's lives.
We in the developed world must support African leaders who are creating the
conditions for success - ruling justly, encouraging economic freedom, and
investing in their people. And we must ourselves take a leadership role in
The impoverished people of Africa - and in poor nations everywhere - require
a new kind of help, that goes beyond the well-intentioned but disappointing
results of the past fifty years.
If our assistance is not making a difference, or if we cannot measure our
results to know what difference we have made, then we have to change our
approach. We owe that to the people of Africa.
In Africa, I saw signs of progress everywhere. Programs are working, aid is
helping, and standards of living are improving.
But there is a long way to go. The progress I saw deserves praise, but it
just isn't enough.
Let me highlight the areas in which we witnessed progress. In particular, I
saw three kinds of investments in people that are vital to realizing
Africa'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% of
sub-Saharan Africans lack access to clean, safe water. That's about 300
million people - more than the total population of the United States. In
Ethiopia, that figure is 78%, or 50 million people in that country alone.
One insight from my Africa tour is that local leaders, with some engineering
and financial support, could develop clean water sources for their towns and
villages fairly quickly. For example, in one Ugandan village I saw a
concrete basin installed to protect a natural spring. The women of the
village could collect the water directly from the basin instead of
collecting it after it spilled across the muddy ground. The concrete basin
cost a thousand dollars to install.
But the local chairman for the project told me that the greatest hindrance
to installing the system had been local fears that a snake was protecting
the spring, and that the snake would become enraged by any tampering and
would take away the water. He had to spend considerable time persuading his
fellow villagers to go ahead with the project. It took his leadership to get
the project finished.
Or consider another village, where women were trekking to a muddy river to
obtain water, even after a well was dug in the village. After the well was
built, the women wouldn't use it. It turns out that they valued their social
time down by the river, and so they chose to continue collecting dirty water
from the river, rather than clean water from the well. When the water tap
was relocated further from the village, providing an opportunity to
socialize, they started to use it.
In these and other cases, only local leadership could tailor development
projects to suit local cultures and customs. And it was sometimes shocking
to see the disconnect between the aid bureaucracies with their 15-year plans
and the availability of more immediate solutions.
You cannot airdrop solutions to local problems. You can only offer air
support. Local leadership must implement the solutions on the ground and be
accountable for success.
If we can figure out a way to support African leaders in bringing clean
water to their nations - and I think we can do that much faster and cheaper
than the endless studies say we can - we can liberate hundreds of millions
of people, especially women and children, from preventable, debilitating
illness and meaningless, wearisome labor. They would be free to pursue their
dreams for a better life.
The second important investment I saw was in raising primary education
enrollment. I believe that in Africa, in the United States, and in every
part of the world, children by the age of about ten years old should and can
have the tools to be life-long self-learners. But that requires that we get
them into schools at an early age, and keep them there, with adequate
In Uganda, they've had tremendous success increasing primary school
enrollment. Primary school enrollment has increased from about half (55%) of
the children in 1994 to nearly all of them (94%) in 1999, and nearly half
the students are girls. Education quality is improving as well. But there is
still a long way to go. I visited schools where they have gone from a ratio
of 16 students per book down to six per book. That's progress, but it's not
good enough. We must set our expectations higher. Surely, we can get every
student his or her own book.
Similarly, one study in Uganda found that only 2% of non-wage spending for
education was actually reaching schools in 1991. The rest was lost to
corruption and bureaucracy. Following reforms enhancing transparency and
accountability for government spending, over 90% of school spending now gets
to the schools. That's a huge improvement. But again, we can do better.
The third, perhaps most crucial area for investment in people is health
care. Nowhere is this more urgent, and more heartbreaking, than in the
struggle against AIDS. In South Africa I saw mothers with AIDS caring for
babies with AIDS, even when proven, inexpensive drugs are available to stop
transmission between mother and child. I saw the dedication of nurses and
doctors 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 this
issue, is one of the few to reduce the portion of the population afflicted
with AIDS. But among the challenges facing those who fight AIDS in Africa is
that in many countries, there is a social stigma attached to even testing
for the disease. They need more leaders to tackle this issue head-on.
This is our challenge: to focus the attention of the world on getting
results. Caring greatly is not enough. We must also succeed greatly.
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 so
that international assistance advances the progress taking place on the
Providing the framework for basic health and education is fundamental for
enabling people to realize their potential. When governments are investing
in their people, providing clean water, education, and health care, and when
the other aspects of good governance are present - just rule and economic
freedom - prosperity can blossom.
In fact, the private sector is already growing in parts of Africa. I visited
entrepreneurs who are grabbing the opportunities that good governance has
made possible. They are creating jobs in industries from coffee and cut
flowers to athletic wear and data processing. By doing so they are spreading
knowledge and inspiring others to reach for their dreams.
As private enterprise expands in an economy, trade and investment grow to
dwarf official aid. Countries that won political independence years ago
finally win their economic independence as well. Government provides the
conditions for growth, but it is not the source of prosperity. Private
citizens 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, called
Affiliated Computer Services, Inc. ACS sells data processing services to
insurance companies in the U.S. It opened its office there in 2000, and
already it employs over 800 Ghanaians, paying an average of three times the
average wage in Ghana. 80% of the employees are women. The company now plans
to expand its operations to four new sites in Ghana and to increase its
workforce to over 1,000 people.
ACS employees start with a high school diploma and typing skills. The
training they receive creates a new knowledge base on which future employers
can build. As foreign investments like ACS show success, others are bound to
follow, and I am optimistic that increasingly advanced services, such as
software development, will thrive in Ghana and elsewhere in Africa.
In Uganda, I met a woman, Lukia Ssemonobe, who opened a restaurant with
micro-loan funding and a lot of hard work. This woman lost her husband a
dozen 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 that
and subsequent loans to build two businesses - a restaurant and then a
tailoring shop. Now she employs about a dozen of her neighbors, supports her
family, owns a home, and has become a leader in the community. Lukia shows
the kind of success that is possible.
I also visited a cut-flower factory, where local entrepreneurs are
diversifying Ugandan exports by growing beautiful flowers and air-shipping
them the same day to European markets.
In Ethiopia, an entrepreneur from Chicago invested in building a garment
factory that makes sports clothes and ships them to the U.S. under the
Africa Growth and Opportunity Act. The company now employs about 200
workers, each earning between three and 21 times the average Ethiopian
Jobs that deliver prosperity are created one at a time, by people like
Lukia, or the investors in ACS. They see opportunities and choose to take
the risks, confident they will reap the rewards of success.
Unfortunately, in too many cases, potential entrepreneurs and investors in
Africa are deterred by arbitrary laws, corrupt bureaucracies and government
favoritism. Africa is a continent of entrepreneurial enthusiasm - that's
what I saw. But these individuals have no chance for success without
governments that fairly enforce laws and contracts, respect human rights and
property, and fight corruption. Governments also must remove barriers to
trade - both internal and external - and open their economies to investment.
They must allow companies and entrepreneurs to compete without excessive
interference, including interference from government-owned enterprises.
That's no small order. But as private sector production takes hold in
Africa, and incomes rise, African growth will become self-sustaining. Africa
will be its own best market.
Coming back to my original question, what can we in the U.S. do to support
African success? Here in Washington, we need to push ahead with President
Bush's reform agenda, to improve the effectiveness of wealthy nations'
support for African development and promote the best efforts of our African
Many extol debt forgiveness as the path to African development. I would
agree that debt forgiveness may help, but it alone is not the solution.
Debt forgiveness solves nothing if we allow new debt to create the next
generation of heavily indebted poor countries a decade from now. President
Bush has proposed that up to 50% of World Bank and other development bank
funds for the poorest countries be provided as grants rather than as loans.
This proposal acknowledges the long-term development challenges facing these
countries, their vulnerability to economic shocks, and the reality that
essential investments in social sectors, such as education and health care -
investments in people - cannot directly generate the incremental revenue to
service new debt.
Replacing loans with targeted grants will eliminate the need for governments
to repay long-term investments in people. It will thereby eliminate the next
generation of debt service problems. It is time to end the sad cycle of
indebtedness for countries committed to success.
Second, it's a simple fact that is as true about an individual as it is
about a nation - even without debt, it's impossible to prosper without
income. Even if we forgave all debts, many of these countries still could
not fund their own budgets, and they would not be much better off. In Uganda
over 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 of
shortfall is internal economic growth. Local leaders must create the
conditions 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 of
American foreign policy " and he outlined a "new compact for global
development, defined by new accountability for both rich and poor nations
The New Compact for Development creates the Millennium Challenge Account and
proposes an additional $5 billion per year in official U.S. development aid
- a 50% increase over current levels - specifically targeting poor countries
that can use the money effectively. To access the Millennium Challenge
Account, a developing country must have a government that shows a strong
commitment to ruling justly, encouraging economic freedom, and investing in
people, as I have described.
Because results are what count, President Bush has created new incentives in
our development assistance programs to reward those that achieve real
improvements in peoples' lives. He has committed that as a reward for proven
results, the U.S. will increase funding for the African Development Bank by
18%, and will do the same for the International Development Association
(IDA), the World Bank program for the poorest nations. To receive these
additional funds, the programs need only show they are making a difference
in people's lives - a challenge these development organizations, their
supporters, and their beneficiaries should welcome.
In the long-term, domestic entrepreneurship as well as trade and foreign
investment are far more important for economic growth than official aid. The
United States has created the Africa Growth and Opportunity Act, or "AGOA,"
to open U.S. markets to exports from sub-Saharan Africa. As Uganda's
President Museveni said "If somebody buys what Uganda produces, then he is
rendering my country the best assistance possible."
I would also encourage all African nations to reduce trade barriers amongst
themselves, so that all can benefit from their different comparative
advantages, and relative proximity to each other. They should be their own
best 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 African
Consider this. Fifty-five years ago on this very date, U.S. Secretary of
State George C. Marshall gave a speech outlining the European Recovery
Program, later known as the Marshall Plan.
In it, he said: "I need not tell you that the world situation is very
serious. That must be apparent to all intelligent people. I think one
difficulty is that the problem is one of such enormous complexity.
Furthermore, the people of this country are distant from the troubled areas
of the earth and it is hard for them to comprehend the plight and consequent
reactions of the long-suffering peoples, and the effect of those reactions
on their governments in connection with our efforts to promote peace in the
He was talking about Europe in 1947. The words are just as true of Africa
I went to those troubled lands, and I believe this: with the right
combination of aid and accountability - from both rich nations and poor ones
- we can accelerate the spread of education, clean water and private
enterprise 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 the
challenge. I just don't think we should accept complexity as an excuse for
As Marshall said, "With foresight, and a willingness on the part of our
people to face up to the vast responsibility which history has placed upon
our country, the difficulties I have outlined can and will be overcome."
Together, we can produce results for Africa. We will tear down the walls to
prosperity. Not in the next generation, but right now. In this era of global
opportunity, no continent, no country, and no person should be left behind.
President Bush said it best - there are no second class citizens in the
human race. We must make his vision into a worldwide reality.