Economic Growh in Africa

8/3/2019 Economic Growh in Africa

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he primary goal o the Arican Growth andOpportunity Act (AGOA) — which wassigned into law as part o the larger rade

and Development Act in 2000 — was to helpincrease both the volume and diversity o U.S. trade

with sub-Saharan Arica.

“AGOA also promotes economic cooperation andtrade among the countries o sub-Saharan Arica by encouraging intraregional trade among AGOA beneciary countries,” Assistant U.S. rade Representative FlorizelleLiser testied at a recent congressional hearing. wo-

way trade between the United States and sub-Saharan Arica was $104.6 billion in 2008. Tis was more thantriple the amount in 2001, the rst ull year o AGOA implementation, she said.

otal U.S. trade with sub-Saharan Arica in 2002under AGOA totaled $23.92 billion, and it has riseneach year since then, according to U.S. governmentreports.

However, Liser said, the United States recognizes that

trade with Arica has dropped as a result o the globaeconomic crisis and declining oil and commodityprices. Many more Arican nations are takingadvantage o the liberal trade opportunities under

AGOA, she said, but some are acing signicanchallenges in their eorts to increase trade.

“We are continuing our eorts to increase the numbero AGOA-eligible countries taking advantage o theprogram, and we are also trying to address the many

AGOA Promotes Economic Cooperationrade in Sub-Saharan AricaBy Merle David Kellerhals Jr.

Durban, South Arica, prepares or the 2010 World Cup soccer tournament. (© AP Images)



supply-side constraints the Aricans ace, and to helpthem increase the range and quality o products beingtraded and improve Arica’s overall competitiveness,”Liser said.

Te 8th AGOA Forum, held August 4–6 2009 inNairobi, Kenya, is part o the AGOA law. Tere is

an annual meeting between the United States and Arican nations known as the AGOA Forum. Te August orum is the eighth such event. Its themeocuses on encouraging private investment that willhelp expand trade and economic growth or the

AGOA countries.

Liser said that i sub-Saharan Arica increases itsshare o global trade by just 1 percentage point to 3percent, it would generate additional export revenueso $70 billion annually. “Tis reects the importanceo trade as a critical platorm or Arica’s economicgrowth, which is nearly three times the amount o current annual assistance to Arica rom all donors”she said.

Economists believe that striking a critical balancebetween trade volume and diversity o the exports isessential to long-term regional economic development

and growth.

AGOA — which has been modied several timessince its original enactment — was designed toextend preerential treatment to imports rom eligiblecountries that are pursuing market reorm measures,said Danielle Langton, an international trade andnance analyst with the U.S. Congressional ResearchService, in a recent analysis o AGOA. “Data showthat U.S. imports under AGOA are mostly energy products, but imports to date o other products havegrown,” she said.

Te AGOA law also directs the U.S. president toprovide government technical assistance and trade-capacity support to AGOA countries, Langton said.Government agencies with roles in helping Aricannations include the U.S. Agency or InternationalDevelopment, the Ofce o the United States rade

Representative, the U.S. Overseas Private InvestmentCorporation, the U.S. Export-Import Bank, the U.Sand Foreign Commercial Service and the U.S. radeand Development Agency.

Liser said that exports rom the continent areconcentrated in primary commodities such as

petroleum, minerals, cocoa and coee. She addedthat “there is little o the manuacturing engine insub-Saharan Arica that has ueled economic growthand reduced poverty in other regions o the world.”

And Liser said that agriculture, which is regardedas Arica’s strong suit, has not been a positivecontributor to export trade. In 2005, she said, theregion switched rom being a net exporter to a netimporter o arm products.

“We believe that export diversication and urtherprocessing o agriculture products into higher-value exports could help improve ood security inthe region by addressing issues o availability andstability o ood supply,” Liser said.

U.S.-AFRICA RADE PROFILE

U.S. total trade with sub-Saharan Arica, whichincludes both exports and imports, rose 28 percentin 2008 rom the year beore, as both exports andimports grew, according to a U.S.-Arica trade prolepublished by the U.S. Commerce Department’sInternational rade Administration (IA). In 2008U.S. exports totaled $18.6 billion, compared with$14.4 billion in 2007, and imports in 2008 reached$86.1 billion, compared with $67.4 billion in 2007the IA report said.

Exports were driven by demand or machinery, vehiclesand parts, wheat, noncrude oil, aircrat and electricamachinery, which included telecommunicationsequipment. U.S. imports o Arican products wereled by crude oil and passenger vehicles, the reportsaid.



Inrastructure development is an essential building

block in Arica’s long-term economic growth and

development, and that goal can best be accomplished

through both a regional and continentwide approach.

Tis was the overriding theme expressed by a variety o specialists and experts attending the 2008 U.S.-Arica

Inrastructure Conerence, entitled “Connecting the

Continent,” which took place in Washington October

6–8. Te event was sponsored by the Corporate Council

on Arica.

Addressing the conerence were U.S. Department o

ransportation Deputy Secretary and retired Vice

Admiral Tomas J. Barrett and retired U.S. Marine Corps

General Anthony Zinni, who has worked in more than

70 countries worldwide and now serves as an executive

vice president in charge o business development or

DynCorp International.

While Arica is a continent o great potential, “unlockingthat potential remains complicated and an enormous

challenge,” Barrett told his audience o business executives

and potential investors.

“o make the most o the many opportunities and the

great potential that is there,” he said, “Arica is candidly

going to have to become a continent much more on the

move. Te inefciencies and the decits with respect

to transportation inrastructure are going to have to be

Inrastructure is Crucial to DevelopmentBy Charles W. Corey

Port workers unload a a cargo o rice in Conakry, Guinea. (© AP Images)



worked on and overcome a bit i the potential o the

Arican continent is to be realized.”

o that end, he said, the U.S. Department o

ransportation has been working both in the United

States and Arica to establish some eective transportation

partnerships — “partnerships that can be eective and

that can make a real dierence in terms o transportationnetworks and the people o Arica.”

During a recent Arican Growth and Opportunity Act

(AGOA) ransportation Forum in Cape own, he said,

both government and business representatives “renewed

a commitment to growth” and agreed on a series o

principles to aid in the development o integrated

transportation networks.

Integration o transportation networks is important,

Barrett said, because one o the major problems now

acing Arica is port inrastructure. He cautioned that the

issue is not just getting goods to the docks, “it’s getting

stu o o the dock into the country or rom the interior

o the country to the dock whether by rail, road or truck.”

For that to be successul, he explained, networks must be

integrated and work collectively.

Barrett saluted Arican governments or realizing the

important role that transportation plays in developing

economies and building nations. “I you look … back in the history o the United States, back to our ounding,

you will see things like the development o canals,

transcontinental railways and interstate highway systems

— networks i you will — to connect the country. We

think that encouraging that type o progress is essential

and a necessary precursor to growth.” In the United

States, he said, an increasing number o public-private

partnerships are helping to expand inrastructure in the

United States. “We think that [approach] can be done

highly eectively in Arica as well, i done well,” hesaid. “What we see … are projects delivered aster … at

lower costs. We see projects that make more sense to the

businesses that have to operate on those networks so they

become eective and efcient.”

Barrett pledged to help Arica “embrace a similar

approach.” While working and investment capital is oten

in short supply in the public sector, that is not oten the

case in the private sector. With its knowledge and unding

commitments, the private sector can be employed to help

Arica enhance its transportation networks. Whether it is

road, rail or ports, “the opportunity is there” to be seized

he said.

Te role o government, Barrett said, is to “set the

conditions or successul investment by these private

partners. You need positive and reliable conditions orinvestment … to succeed,” within a reliable environment

where contracts are honored and the rule o law is observed.

A regional approach and alliances to minimize costs and

maximize benets and saety are also advantageous

he said. In closing, Barrett reminded his audience that

“transportation is an underpinning o economic growth

… Working on those networks, making them efcient,

sae and reliable, is a path toward economic development

and growth.”

Also addressing the opening session, Zinni identied our

key actors necessary or Arica to build inrastructure

and encourage investors to become involved:

• One — e use of vision and strategic design on a

regional basis to construct commercial corridors that not

only transport goods rom point to point but also eed

smaller businesses and spur economic growth all along

the network. “It is important,” he said, “to mobilize

subregional organizations” that already exist across Arica

to address the issue o transportation inrastructure.

• Two — Building skills locally to develop capacity. “e

ability to plan, train, educate, to deliver the work orce”

rom the local population is essential. Local people mus

be invested in the system, he said.

• ree — e securing of resources and the

encouragement o investors to build or the long term

in such a way that those networks benet both investors

and the local population.

• Four — An environment of eective governance

security and regional coordination, which is essentia

to any investor. At this point, he said, everybody has a

role, rom Arican governments to investors to the donor

community, in ensuring that projects are meaningul

risks are acceptable and transportation networks are

sustainable.



A

cross Arica, new technologies are being joined with local customs to strengthen thecontinent’s inrastructure and economy.

Using inormation and communication technologies(ICs), such as mobile phones and the Internet, A-ricans are nding business and trade to be easier andmore aordable, said Sala Patterson, a policy analystat the Paris-based Organisation or Economic Co-operation and Development (OECD).

Patterson, along with representatives o the U.S.

Agency or International Development (USAID)the Arican Development Bank and Aricare, spoke

with Congressmen Donald Payne and Charles Ran-

gel and the European Commission’s Ambassador John Bruton June 18 on Capitol Hill. Te panediscussed the annual “Arican Economic Outlook,”a study that examines Arica’s economic develop-ment over the past year and makes projections orthe coming year.

In Arica, where communications networks havebeen limited, things are beginning to change, ac-

New echnologies Strengthen Arica’s Economy By Megan Nef

A vendor charges mobile phone batteries in Lagos, Nigeria. (© AP Images)



cording to Payne. New ICs, such as text messag-ing, are surpassing old communication networks in

Arica, which have been handicapped by geography and politics.

Tese new ICs are enabling Aricans to access inor-mation on health and agriculture and services such as

online banking, and to connect more eectively withthe rest o the world. European companies, such asthe United Kingdom’s Vodaone and France’s Viven-di and Orange, are turning their attention to the A-rican market, where only 40 percent o Aricans owna cell phone. By contrast, cell phone usage in Europeis at nearly 100 percent, said Laura Recuero-Virto,an economist or the OECD. Nokia, Intel and Mi-crosot are also investing in the Arican ICs.

Projected economic growth or Arica in 2009 is3 percent, down rom 6 percent last year, said Le-once Ndikumana, research director or the AricanDevelopment Bank. A report cited by the AricanEconomic Outlook study shows that increased useo ICs in Arica is helping to sustain parts o the

Arican economy during this time o economic tur-bulence.

For example, mobile phones in Niger, one o thepoorest countries in Arica, are being used as mar-keting tools. Farmers are able to text and use theInternet to communicate with markets around theirarm and nd the best prices or their goods. Tis hashelped to reduce prices and it allows armers to bringgoods where they are most needed and where they

will get the highest prot.

Online banking has also helped to sustain Aricancommunities through the recession, and there havebeen signicant strides in increasing the aordability o money transers. Where a Western Union trans-er o 1,000 Kenyan shillings (about $13) wouldcost the user a 500 shilling transaction ee, Patter-son said, with M-Pesa, a new money-transer serviceavailable between cell phones, Kenyans can send thesame amount with a transaction ee o 30 shillings to75 shillings (about 39 cents to 97 cents). Te lower

transaction ees oered by M-Pesa have attracted 5million users to the service in the past two years. M-Pesa is seeking to expand in East Arica and Aghani-stan.

Arica still aces challenges with Internet accessibilityand technical inrastructure. According to the panel

less than 7 percent o Aricans have Internet access,and the Internet that is available is inconvenient andexpensive, accessible only along the ber optic lineslaid along the west coast o Arica or through satel-lites. Limited Internet resources and lack o competi-tion among Internet providers have led to exorbitantcosts, the panel said.

But, Patterson said, broadband connections shouldbe more widely available in Arica as the inrastruc-ture expands. It is hoped that a web o ber opticcables will be able to connect all o the main metro-politan areas in Arican by 2012.

For this expansion to take place, the Arican Eco-nomic Outlook study ound, local government in-volvement will be extremely important to ensurethat price drops are passed on to the consumers, andthat ICs are properly integrated into overall inra-

structure development.



he ability to manage eectively, work hard

and continue to hold a sincere passion oryour business are the three most importanttraits or any entrepreneur, according to a businessconsultant.

Rachel Allgood, entrepreneur and chie creative o-cer o Isocurve, a consulting rm she ounded in1996, made that point in a U.S. Department o State webchat with women entrepreneurs March 19.Many o the webchat participants were rom Arica.

Allgood was one o three women business owner

who recently represented the United States at th2009 International Women’s Entrepreneurial Chal-lenge in New Delhi.

“I think it is imperative to love what you do,” All-good told women entrepreneurs in Zambia andUganda. “Tat is rst and oremost or me. Moneyhas never been a driving orce. … It is the excitemento working in new technologies and being a part oinnovative branding programs that promote one’s

Entrepreneur Shares Business ips with Arican Women

By Charles W. Corey

Businesswomen check their wares at an herbal medicine market in Lagos, Nigeria. (© AP Images)



particular brand o products,” she said.

It is also important, she said, “to be willing to men-tor and nurture employees and allow them to takethe spotlight whenever possible. Tat is what will al-low you to step into new areas and allow the businessto grow. I you try to control every detail, the busi-

ness will stagnate. So, you have to be willing to makemistakes yoursel and let others do the same. Tat ishow we all learn.”

Asked about starting a business, Allgood said any en-trepreneur rst must ask a series o questions: “Whatdo you want to do? And is there a market need or it?Do you have unding in place? Once you gure outthe nuts and bolts o your business model, then you

will nd your answer. You need to put pen to paperand write down all o your pros and cons, what youhave in place and what you need to do. Tis is nota decision you make eectively without doing thebasic homework rst,” she said.

Asked or some tips on how to run a business andkeep it healthy, Allgood said business owners mustensure they have enough cash on hand to operateand be able to maintain an educated, well-trained

sta. “A business is similar to the human body,” shesaid. “When one component is out o balance, therest tends to suer.”

She continued: “I think the reason many businessail is the inability to be agile. Nothing is absolute.Te world is constantly changing as is technology, asis business — the ability to move switly and adaptallows or survival.”

Asked what prompted her to start her own business, Allgood said “Entrepreneurship takes a certain kindo optimism. Not ake but real. Tere are challengesevery day, rom lack o cash to an employee with per-sonal problems. Each has to be tended to. At the endo the day, we have to nd a purpose in what we do— that helps light the way.”Many women entrepreneurs ace signicant chal-lenges when balancing home and business responsi-

bilities, Allgood said. “Some women seem to do thisvery well. Tey have extremely supportive amilies,husbands, and co-workers. Others struggle and getcaught in the cycle o being overwhelmed and nottruly succeeding at anything. Tis is a choice thateach woman has to make or hersel.

“Each person has to examine her internal and exter-nal resources and also her business choices — doesthe work require enormous amounts o travel, longhours, employees, or is it an idea that can be broughtto ruition part-time rom home?”

Asked what women entrepreneurs have contributedto the world, Allgood told her audience, “I think itis not just women entrepreneurs but women in alllines o work” who have made such contributions“Women have had to work under the radar or cen-turies — unneling scientic ideas through theirbrothers and husbands. Tese women have pavedthe way or all o us.

“Women entrepreneurs,” she continued, “haveound a way to make money and aect communityin unique ways — just look at Anita Roddick, theounder o Te Body Shop International [seller o

soaps and beauty products] and all the work she doesto help disadvantaged communities. And Mary Kay

Ash [the ounder o Mary Kay Inc., a cosmetics com-pany] who has helped millions o women nd a wayto own their own businesses.

“We all, men and women, need to remember thatour businesses are intrinsically connected to ourcommunities and it is our responsibility to give backand help those who may just need a helping hand,”she said.

Asked how women in business can unction during an international economic crisis, Allgood said“Crisis always brings opportunity. It is not just about

working hard, but smart. What do people need thatyou can oer? … Also crisis is a great time or inno-vation. People are more willing to listen when theyare in need o good solutions.”



A rica aces competition or U.S. investmentcapital in a highly competitive global market-place, but the continent also is seen by many

American business executives as a market that cannotbe ignored — the “last rontier or growth.”

Tose are two o the main conclusions in “A Conver-sation Behind Closed Doors: Inside the Boardroom.

How Corporate America Really Views Arica,” a reportrecently released by the U.S. Chamber o Commerce.

Te report’s authors polled top decisionmakers in 30leading multinational corporations in business sectorsrom aerospace and health care to media and transpor-tation. Anonymity was guaranteed to all respondentsTe U.S. Chamber o Commerce is the world’s largest

Arican Countries Must Compete orInvestment Capital

By Charles W. Corey

Four presidents arrive at the 2nd East Arican Investment Conerence, in Nairobi, July 29, 2009. From let to right: Ke-

nya’s Mwai Kibaki, Burundi’s Pierre Nkurunziza, Paul Kagame o Rawanda, Abied Karume o Zanzibar. (© AP Images)



business ederation, representing more than 3 millionbusinesses and organizations o every size, sector andregion, as well as 112 American chambers o commerce(American business groups) in 99 countries.

Competition or America oreign direct investment ishigh, the report says. “Countries rom all regions show-

case their advantages, align their oers to U.S. needs,clamor or attention, and invest in their own countriesto attract additional investment. Consequently, U.S.corporations do not lack investment choices, and rare-ly consider Arican nations.”

Te report states that news media reports about Aricaoten ocus on chaos and unrest, and “Arica is not ac-tive or aggressive enough about attracting investment;the voices o the ew countries that are making an e-ort get lost in the surrounding negative noise.”

However, the report credits some Arican countriesor making special eorts to assist oreign countriesthat invest in Arica and particularly praises Nigeria’sgovernment or regularly engaging local leaders o or-eign companies to help cut through cumbersome andsometimes meaningless bureaucratic requirements im-posed by local governments.

“U.S. corporations need a strong and specic drawrom Arica to make investment worthwhile,” accord-ing to the report. “Tis can be the lure o a robust mar-ket, or a belie that there is a competitive advantage toearly entry into Arican markets. Te survey data showthat ew o these pulls exist or are not sufciently entic-ing to be eective in the near term.”

ACCENUAING HE POSIIVES, OVER-COMING HE NEGAIVES

Te survey identies several key actors or inuencingand attracting oreign direct investment:

• a strong rule of law with an independent judiciary that can arbitrate any disputes in an unbiased man-ner;

• a pro-investment environment that breaks downtrade barriers and promotes the ree movement o peo-ple and goods;• a promise of rewards that outweigh the risks under-taken by investors; and

• a supportive business framework with transportation

and communication inrastructure, trained or train-able human resources, and equitable trade, investmentand employment practices.

Impediments to investment cited by the report includean image that many Arican countries are raught withdifculties such as poor investment climates and cor-ruption, with “the apparent lack o political will tocurb it.” Additionally, “executives do not believe thatthey are at a competitive disadvantage because they arenot investing in Arican countries” and thereore arereluctant to invest.

Te report, based on polling o private sector entities,is the rst o two planned on Arica’s investment cli-mate. A second will be based on a survey o the publicsector, which will be conducted over the next severamonths.

Arica is home to 14 percent o the world’s populationMore than 1,000 languages are spoken in Arica, andthe continent encompasses some 53 countries, covers20 percent o Earth’s total land area and contains about30 percent o its mineral reserves.

Yet U.S. investment in sub-Saharan Arica stands at a“very small percentage” o worldwide total U.S. invest-ment, according to a Congressional Research Servicereport to Congress published in 2008. At the end o2006, the report says, U.S. investment in sub-Saharan

Arica stood at $13.75 billion, or less than 1 percent ototal U.S. investment abroad.

U.S. investment in Arica is heavily weighted towardnatural resources, with 47 percent (excluding Egypt)in the mining and petroleum sector, compared to 13percent in manuacturing, 22 percent in holding com-panies and 5 percent in wholesale trade.



A

central objective o U.S. trade relations withsub-Saharan Arica is to create a platormor expanded Arican economic growth,

says a senior U.S. trade ofcial.

“Sub-Saharan Arica’s current share o global trade isless than 2 percent, down rom 6 percent in 1980,”

Assistant U.S. rade Representative Florizelle Lisertestied June 24 at a congressional hearing.

“I sub-Saharan Arica were to increase that shareby just 1 percentage point to 3 percent, it would

generate additional export revenues o $70 billionannually, which is nearly three times the amount ocurrent annual assistance to Arica rom all donors

Tis reects the importance o trade as a criticalplatorm or Arica’s economic growth.”

Liser said that exports rom the continent are con-centrated in primary commodities such as petro-leum, minerals, cocoa and coee. She added that“there is little o the manuacturing engine in sub-Saharan Arica that has ueled economic growth andreduced poverty in other regions o the world.”

United States Seeks Expanded EconomicGrowth in Arica

By Merle David Kellerhals Jr.

Women gather in a market in Niger. (© AP Images)



And Liser said that agriculture, which is regardedas Arica’s strong suit, has not been a positive con-tributor to export trade, and that in 2005 the regionswitched rom being a net exporter to being a netimporter o arm products.

“We believe that export diversication and urther

processing o agriculture products into higher-valueexports could help improve ood security in the re-gion by addressing issues o availability and stability o ood supply,” Liser said.

Liser said that the Arican Growth and Opportunity Act (AGOA), a U.S. trade law enacted in 2000 by the Clinton administration, is a tool that has helpedto increase both the volume and diversity o U.S.trade with sub-Saharan Arica. Economists believethat striking a critical balance between trade volumeand the diversity o the exports is essential to regionallong-term economic development and growth.

“AGOA also promotes economic cooperation andtrade among the countries o sub-Saharan Aricaby encouraging intraregional trade among AGOA beneciary countries,” Liser said. wo-way tradebetween the United States and sub-Saharan Arica

was $104.6 billion in 2008, counting exports andimports, which was more than triple the amount in2001, the rst ull year o AGOA implementation,she said.

However, Liser told the congressional hearing thatthe United States recognizes that trade with Aricahas declined as a result o the current global eco-nomic crisis and declining oil and commodity pric-es. Many more Arican nations are taking advantageo the liberal trade opportunities under AGOA, shesaid, but many more are acing signicant challengesin their eorts to increase trade.

“We are continuing our eorts to increase the num-ber o AGOA-eligible countries taking advantage o the program, and we are also trying to address themany supply-side constraints the Aricans ace andto help them increase the range and quality o prod-

ucts being traded and improve Arica’s overall com-petitiveness,” Liser said.

U.S.-AFRICAN RADE PROFILE

U.S. total trade with sub-Saharan Arica, which in-cludes both exports and imports, rose 28 percent in

2008 rom the year beore, as both exports and im-ports grew, according to a U.S.-Arican rade Prolepublished by the Commerce Department’s Interna-tional rade Administration (IA). In 2008, U.Sexports totaled $18.6 billion, compared with $14.4billion in 2007, and imports last year reached $86.1billion, compared with $67.4 billion in 2007, theIA report said.

Exports were driven by demand or machinery, ve-hicles and parts, wheat, noncrude oil, aircrat andelectrical machinery, which included telecommuni-cations equipment. U.S. imports o Arican products

were led by crude oil and passenger vehicles, the re-port said.

Te top ve Arican destinations or U.S. products were South Arica, Nigeria, Angola, Benin and Gha-na. U.S. imports rom the oil-producing countries

grew in every case rom Nigeria, Angola, Republico Congo, Equatorial Guinea, Chad and Gabon, thereport said.



he Arican Growth and Opportunity Act(AGOA) and the U.S. Millennium Chal-lenge Corporation (MCC) are cornerstones

o the Obama administration’s development policy

or Arica because they are complementary and havethe potential to stimulate trade and investmentacross the continent.

Jeri Jensen, MCC’s managing director o private-sector initiatives, and Jonathan Bloom, deputy vicepresident or Arica programs at MCC, describedthe importance o AGOA and MCC in a recent in-terview with America.gov.

Te MCC is an innovative and independent U.S.oreign aid agency that is helping lead the ghtagainst global poverty. Created by Congress in Jan-uary 2004 with strong bipartisan support, MCC is

changing the conversation on how best to deliverU.S. oreign assistance by ocusing on good poli-cies, country ownership and results.

Jensen said the trade preerences or some Aricanproducts under AGOA “are really only part o theequation.” Companies looking to invest in Aricaalso look beyond the trade breaks. For trade pre-erences to be eective, Jensen said, “they must go

AGOA, MCC Spur rade, Investment

Dock workers load bananas in Bukoba, Tanzania. (© AP Images)

By Charles W. Corey



hand in hand with the inrastructure that a company needs to lower costs, to increase competitiveness, toget [its] goods to market. Most MCC countries havechosen to invest in inrastructure, and that is sup-portive o the same goals that AGOA is trying toaccomplish in terms o increasing Arica’s competi-tiveness in the world.”

Currently, 11 o MCC’s 18 compact countries arein Arica, with $4.5 billion o its $6.3 billion invest-ed in Arica, Jensen said. A compact is a ve-yeargrant agreement between the Millennium ChallengeCorporation and an eligible country to und specicprograms targeted to reduce poverty and stimulateeconomic growth. MCC also awards smaller grantsas part o its threshold program. Currently, MCChas granted $440 million in assistance as part o itspoverty-reduction threshold program in Arica andcountries worldwide.

Jensen said these “programs combine agribusinessand inrastructure. Tere is no [other] program thatactually does both that I am aware o.” Increases ingross domestic product that come rom agriculture-related projects, Jensen said, provide twice as muchpoverty reduction as other types o projects provide.

Jensen estimated that 70 percent o MCC’s porto-lio is agriculture-related, and many inrastructureprograms the agency unds also boost agriculture insome way.

Bloom said MCC only does one thing: poverty re-duction through economic growth. “Tere are lotso other valid purposes or American assistance,” hesaid, “but that is all we do. It is pretty simple to state,but is pretty hard to do. It is ocused on generatingeconomic growth in poor countries or poor peoplein the country — which in turn benets the country and along the way the United States.”

Bloom said MCC operates on three key principles.First, MCC only works in countries with strong pol-icies supporting a ree political system and a soundeconomic system and that invest in their people.

Second, once MCC goes to work in a country, thecountry designs and owns the program it originatedTird, because results matter, the agency takes mea-surements beore and ater the program to create a“disciplined environment in which people want toinvest.”

MCC is oten the largest donor operating in a coun-try, using signicant grant unding that can total ashigh as $700 million, and it is predictable over veyears. I a business wants to take advantage o MCCor AGOA, there is certainty that the unds will bethere or ve years, Jensen said.

Illustrating that point, Bloom cited Ghana and Pres-ident Obama’s visit to the nation July 10–11. Tepresident’s message, Bloom said, “was that Ghanahas taken a lot o the hard steps toward good gover-nance. Tat made Ghana eligible as an MCC coun-try in the rst round. ... Ghana has built a strongpolitical and economic climate to encourage privateinvestment. Te MCC grant to Ghana o $547 mil-lion — which at the time we signed it [in August2006] was the largest to date — has a comprehensiveset o investments to build on the agriculture valuechain and in particular their trade capacity and to

attract private investors.”

Additionally, Bloom said, MCC is engaged in trans-port-inrastructure improvement critical or trade— such as roads in anzania that run to the Kenyaborder and the rehabilitation o important ports inBenin and Cape Verde, “both o which are criticaltrade hubs or both o those countries.” In Mali, hesaid, MCC is also supporting the rehabilitation othat landlocked country’s airport, which is its criticalink to the outside world.



Additional Resources:

http://America.govhttp://acebook.com/eJournalUSA http://www.youtube.com/user/Americagovhttp://blogs.america.gov/

United States Department o State / Bureau o International Inormation Program

Economic Growh in Africa

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