We speak to Virginia Gov. Terry McAuliffe (D) as he prepares to leave office after four years at the helm.
After the Cold War, most Washington policy-makers viewed sub-Saharan nations as charity cases. International oil and mineral companies extracted valuable raw materials, but most private corporations saw the continent as a shaky investment. But after a decade of record growth on the continent, the United States and other countries are beginning to look at Africa as a destination for investment and as a trading partner important for their own economic futures. We speak with the president of the African Development Bank and a top U.S. Treasury Department official about Africa’s evolving role in the global economy.
- Donald Kaberuka President, African Development Bank Group (AfDB); Minister of Finance and Economic Planning, Republic of Rwanda (1997-2005)
- Lael Brainard Under Secretary for International Affairs, U.S. Department of Treasury
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's the fastest-growing continent in the world with the youngest population. In the last decade, foreign investment has increased fivefold, and the private sector is now the main engine for growth. But Africa's 54 countries still include some of the world's poorest, and many confront familiar challenges.
MR. KOJO NNAMDIInadequate road and transportation networks and lack of reliable access to electricity are a drag on development. Against that backdrop, the U.S. is renewing its push for investment on the continent, separate from the long-time foreign aid model designed to help people in need. The U.S. Treasury Department promotes investment to spur development and help Africa help itself.
MR. KOJO NNAMDIThat investment helps finance new roads in Morocco, affordable housing in Uganda and power plants in Rwanda. With President Obama back from a week in Africa earlier this summer, we'll look at the U.S. relationship with the continent and the new attitudes about why Africa is a good place to invest and promote trade. Joining us in studio is Lael Brainard. She is undersecretary for international affairs with the U.S. Department of Treasury. Lael Brainard, thank you for joining us.
MS. LAEL BRAINARDThank you. It's a pleasure to be here.
NNAMDIAlso in studio with us is Donald Kaberuka. He is president of the African Development Bank Group. He was minister of finance and economic planning in the Republic of Rwanda from 1997 to 2005. Donald Kaberuka, thank you for joining us.
MR. DONALD KABERUKAThank you, sir. Thank you for having me.
NNAMDIIf you're interested in joining the conversation, you can call us at 800-433-8850. What do you think are the biggest development challenges facing Africa today? 800-433-8850. You can send us email to email@example.com or send us a tweet, @kojoshow. You can simply go to our website, kojoshow.org, ask a question or make a comment there.
NNAMDILael, you're just back from the Group of 20 meetings in Moscow where finance ministers from the group of industrialized and developing nations agreed to promote growth rather than embrace austerity as they try to keep the global economic recovery on track. How is that a victory, in a way, for the U.S.?
BRAINARDWell, look, I think we are seeing the U.S. recovery gathering strength. We still have a lot of Americans. We need to get them back to work. But, you know, coming off the biggest financial crisis really in a generation, the approach we took here in the U.S. -- which was to support job, support private demand and to really wait until the private sector was strong enough before we started to see fiscal consolidation -- that's an approach that I think the world is seeing works.
BRAINARDBy contrast, in Europe, we are facing the potential for years of contraction or stagnation. That is a prospect that the U.S. and the world really can't afford. And so we're encouraging our European friends to find ways to do as we did and put jobs and demand at the center of their policies and get their economies growing again. And, of course, it's important not just for us, but it's important for major markets like Africa.
NNAMDICreating jobs and development being, in the view of the United States, a more important priority than either cutting budget deficits or paying off debt.
BRAINARDYou know, actually, I think what our experience shows is that the best way to be able to see budgets come back to sustainable levels and to put debt on a downward path is to grow your economy and then do the consolidation once the private sector is strong enough to have a self-sustaining recovery. Europe took the reverse path. They cut into a recession, and when you do that, you actually exacerbate the contraction. And that's the tension that, you know, we saw debated at the G-20 this past weekend.
NNAMDIDonald Kaberuka, you said every African country is concerned by the worldwide economic recovery. What impact has the global recession had in Africa?
KABERUKAListen, of course, no part of the world can be an island from what's going on in the global economy. And so the current slowdown in emerging markets is of concern to us. However, up to now, the impact has been muted. Seventeen countries in Africa are growing at about 7 percent. Only five countries are growing at below 4 percent. The rest are in between.
KABERUKABut -- well, it took it a long time in terms of the sustainability, quality of growth and, of course, what happens in the global economy, which I hope, as Lael Brainard says, there'll be some return to growth. And, of course, Africa has to be part of the solution to ensure that a new center of demand comes up in this new structure of the global economy.
NNAMDILael, President Obama spent a week in Africa earlier this summer, with stops in Senegal, South Africa, Tanzania. It was a low-key trip in keeping with the somber concern over the health of former South African President Nelson Mandela. But what did that trip signal about American policy toward Africa going forward?
BRAINARDYeah. I think President Obama really emphasized, and the trip itself emphasized, that Africa is important to us as an economic partner, among other things. It is, as Don Kaberuka was saying, one of the engines that is now pulling the world economy. This chapter is not any longer about assistance.
BRAINARDIt's really about investment opportunities, and you'll hear it from American businesses. They are really looking in a different way at many of the African economies that are posting some of the highest growth rates in the world. And I think the president was encouraging America more generally to look at our partnership with Africa in a fresh light as providing a real opportunity.
NNAMDIDonald Kaberuka, how did Africans respond to the president's visit, and to what extent does it point to, well, greater American support for development in Africa?
KABERUKAListen, I think the president's visit was very much around growth, trade and investment, the kind of things which now Africa consider to be the center of our relationship with the rest of the world. For far too long, Africa's economic relationship with the rest of the world was one of aid and aid dependency. Now, if your country still need aid, some aid is still necessary.
KABERUKABut I think we're moving towards a relationship, which was well defined by President Obama's visit, which is how do we fight poverty through the private sector, through investment? How does Africa itself take measures needed to expand internal economy through economic integration, economic cooperation? And so we see some of the initiatives the president launched, including one on power, as part of this momentum of sustaining African economic growth, which is good for the world.
NNAMDIIn case you're just joining us, that's the voice of Donald Kaberuka. He is president of the African Development Bank Group. He was minister of finance and economic planning in the Republic of Rwanda from 1997 to 2005. We're discussing the U.S., Africa and the global economy, inviting your calls at 800-433-8850. How can the United States help promote jobs and growth in Africa? 800-433-8850.
NNAMDIAlso joining us in studio is Lael Brainard. She is undersecretary for international affairs with the U.S. Department of the Treasury. You can also send us email to firstname.lastname@example.org, or send us a tweet, @kojoshow. Seventy percent of Africans are under the age of 30, making it the youngest continent in the world.
NNAMDIAnd new projections from the United Nations Population Division say that in this century, Africa will see a nearly unprecedented population explosion, growing significantly faster even than Asia. What issues do a young and fast-growing population raise for development, government and resources -- or governance and resources in Africa? Lael Brainard.
BRAINARDWell, look, I think we have already a population of 700 million -- and, as you said, one of the youngest populations around the world -- at a time when even in parts of Asia, like China, we are anticipating a very sharp reduction in the working age population. So it is only natural that a locus of economic opportunity will clearly shift to Africa. I think the most immediate issue, of course, is jobs, jobs, jobs, just as it is here in the U.S.
BRAINARDAnd with a young population goes the need for education, for the jobs of the future, making sure that there are opportunities. And, of course, our interest, the U.S. interest in seeing those young people in Africa productively employed, is part of what we're promoting through our very important investment in the African Development Bank, which Don Kaberuka heads.
NNAMDIAnd, Don Kaberuka, we see that countries like China are increasingly looking to Africa. If this is indeed going to be the African century because of the population explosion that's likely to take place there because of the youth of the existing population, what do you see this meaning for Africa in general?
KABERUKAListen, as Lael says, there'll be about four big megatrends impacting Africa in the next two or three decades. The first one is demographic economy, a bigger, younger, more urbanized continent. And so the challenge for us is to invest in people so that you can get this so-called demographic dividend. The second one is the potential for leapfrogging technology.
KABERUKAYou simply have to see what the revolution in telecom has done in Africa over the '90s in bringing down the cost of doing business and the level of services. The third one will be the huge discovery of natural resources, almost everywhere. And so the link between Africa and many of the emerging markets -- that is, Brazil or Turkey, India and China -- are very much our natural resources and infrastructure.
KABERUKASo I believe this relationship, which has grown over time, now, we are trying to define those relationships so that we'll bring down the cost of business so that investment in manufacturing now comes to Africa, in the same way as manufacturing is shifted from Europe to the U.S., Southeast Asia, to China. Now, we think we need to make Africa ready as the next industrial power, and we know what has to be done, and the African Development Bank, with the support of the U.S. and other partners, is doing that.
NNAMDILael, the Treasury Department plays a key role in spurring development in countries around the world by supporting multilateral development banks, MLBs -- MDBs. It's an area of foreign assistance that a lot of people are not really aware of. Can you explain why the U.S. has recapitalized all the multilateral development banks this year and what those banks do?
BRAINARDYeah. So the African Development Bank, the World Bank and regional banks in Asia, in Latin American, in Central Europe -- those institutions are all investing really in both peace and the future prosperity of America by helping our partners around the world establish sustainable foundations, lifting up the lives of the poor. It is one of the best leveraged investments in development that we have.
BRAINARDWe looked back at our previous capital investment in the World Bank. It was in the really hundreds of millions of dollars back in 1988, before the fall of the Berlin Wall. Over the subsequent 25 years, we were talking about billions of dollars of investment into parts of the world that are now stable, democratic and market economies. Today, we have this wonderful event where we try to celebrate the best projects from these development institutions. And the African Development Bank was the only institution that got two of the prizes, which was quite a remarkable thing.
NNAMDIThat's something we'll talk about later in the broadcast. Right now, we have to take a short break. If you have called, stay on the line. We still have some lines open. The number is 800-433-8850. You can send email to email@example.com. Did you grow up in Africa? What's your experience of economic growth and opportunity there? 800-433-8850. You can send us a tweet, @kojoshow. I'm Kojo Nnamdi.
NNAMDIWelcome back to our conversation on the U.S., Africa and the global economy. We're talking with Lael Brainard, undersecretary for International Affairs with the U.S. Department of Treasury, and Donald Kaberuka, president of the African Development Bank Group, and taking your calls at 800-433-8850. Donald, you're in your second term as president of the African Development Bank, which has headquarters in Cote d'Ivoire but temporarily located in Tunisia. What kinds of loans does the bank make, and how is it boosting support for private sector projects in Africa?
KABERUKARight, right. Could I, first of all, say that multilateral development banks are good investments? We get value for money. We get results as we saw this morning with this development results -- prizes. Just look at the countercyclical role of these institutions during the financial crisis is billions who put out there, which minimize the damage on economies.
KABERUKANow, in the case of the African Development Fund, which is the softer window for low-income countries through which the U.S. provides about $600 million every three years, would build infrastructure, energy, transports, airports, we promote economic integration, therefore, expanding the markets, the size and diversity. We fund private sector, and it is by doing so with others that have contributed with this new momentum you see on the African continent.
KABERUKAAnd I believe that we're making it possible of a time to have in Africa, which can fund its own development and less and less independent on outside support and more and more dependent on the internal potential of Africa itself and 1 billion people and also on the growth, trade and investment. So we selected our projects carefully based on the number of criteria, development impacts and the rest of it.
NNAMDIWell, Lael made reference to this, so I might as well jump to it right now. The Treasury Department this morning gave the African Development Bank two awards for exceptional projects undertaken by a multilateral development bank. These were projects in Cote d'Ivoire and Uganda. Can you talk about that and what makes these two efforts award winners? First you, Donald.
KABERUKAThank you. We're very proud to receive these two prizes. The first one is in Cote d'Ivoire and it's about women, 15 percent of Africa. It's not simply about the women. It's about women and the impact of conflict on them, and what we need to do to ensure that this important capital -- that this precious capital is preserved and put to contribution. Nothing can happen in Africa with a lasting basis until agenda is at the center of what to do.
KABERUKASo in this project, as Cote d'Ivoire was recovering -- went in about $30 million to reconstruct the country. And we incorporated in this program agenda-based balanced component to ensure that we support those women and girls who suffered violence during the conflict. We provide support systems for them, but also we empower them economically.
KABERUKAThe second project was in Uganda. Why? Because of poor infrastructure, mainly roads. Farmers weren't able to get the produce to the market. Forty percent of the produce was being lost. Now, thanks to these infrastructures, two things have happened, prices have gone up, farmers all got high incomes. Post-harvest losses have been cut down.
KABERUKABut more important, farmers have moved up the value chains. They're no longer selling simply meat or selling milk or selling tomatoes, we provided equipment and machinery for them to move up in the value chain. And we think that given the role (word?) plays in Africa, it is important that we begin there as other nations have done. So we're proud of these two projects, and we thank of the U.S. Treasury for giving us recognition.
BRAINARDWell, I think these two projects that won awards at the U.S. Treasury this morning really exemplified the best of the work the development banks do. You know, in Cote d'Ivoire, after a sustained period of political crisis, nearly 65 percent of women had been affected by gender-based violence. It's just a staggering proportion. Of course, that is common in conflict and unstable places.
BRAINARDThe African Development Bank went in and both helped the victims of violence and also worked to create awareness across the authorities, across communities in need, a real transformational impact. We have quote from a woman who was part of this program who said, men respect me now that they know I'm protected by the authorities. So, really, a powerful work there.
BRAINARDAnd then in collaboration with the International Fund for Agricultural Development, another one of our development banks, the African Development Bank went into Uganda and put in place community-based agricultural development which, again, transformed the lives of these farmers and also produced greater agricultural output that is now available in the region and beyond by simple things, putting in agro-processing, infrastructure roads to get maize and milk to markets. But these relatively cheap investments have a multiplier impact in terms of development.
NNAMDIOn to the telephones. Here is Mathial (sp?) in New Carrollton. Mathial, you're on the air. Go ahead, please.
MATHIALYes, yes, Kojo, thank you very much for taking my call.
MATHIALAll of those factors that the gentleman has just talked about and the lady has just talked about is so prevalent in Africa. For example -- let me give you two examples. For example, a country like Sierra Leone, Sierra Leone has one of the poorest infrastructures that you can ever imagine. There are no transportation.
MATHIALPeople have been rode around by what you call (word?) bicycles and more durable (word?) to take people to different places. And they get accident and die. You know, the African leaders have really -- believe me, they have told the people, number one, with the coming of power, they do not have what you call a strategic focus that will enable the people to be mobile. Yes...
NNAMDIMathial, I would like to focus on the issue raised because it's one that both of our guests, I think, would like to speak to the issue of infrastructure. We also got an email from Dawda, (sp?) who says, "We have an abundance of food or raw materials in some parts of the continent but cannot transport them to the areas where they are scarce. It's easier to transport goods from Australia to Senegal than from Uganda to Senegal."
NNAMDIObviously, one of the challenges that you both are interested in is poor infrastructure including roads. Women often walk miles to get water for their families. Driving to a nearby city can take many hours because of the network of roads that's spotty. The African Development Bank has supported new roads to cut down on travel times. Where are some of these projects, and what impact have they had? How important priority you see this as having -- as being, Donald Kaberuka?
KABERUKAThank you. But let me respond to -- calling from Sierra Leone, first of all. In the 1990s, Sierra Leone went to war -- to civil war, one of the most brutal civil wars on African continent. The country is stagnated with some of the worst human indicators on Earth. Now, that it is -- has been -- the trend has been reversed, but Sierra Leone is not yet out of the roots. So it's not surprising that they still have so many problems. But now the country is back to recovery. We support the country through the Fragile States Facility.
KABERUKAIt will take some time for the country to maintain not only strong ways of growth but also to go back to what it was before the civil war and beyond. It will take leadership. It will take national creation. Now, it is true that one of the big constraints for Africa to maintain the current momentum is their (unintelligible) logistics, poor maritime ports, highway, electricity and the rest of it.
KABERUKABut we're doing quite a lot now, much has up in Africa. Part of the success you see in Africa now is because of growth of the intra-African trade. Just before I came here, we approved a project of about $300 million to expand the Port of Walvis Bay in Namibia by three times. That is an infrastructure which benefit the whole Southern Africa and beyond, we're doing more than that, but it will take time. That is why I work on the corporation of the U.S. so that the private business can also invest in infrastructure.
KABERUKAIt's kind of become public money alone. Look at what happened telecommunication in the '90s when those deregulation -- there was an explosion in the sector. So we think public money will be needed to solve the seizure of infrastructure and logistics. But we need now to make Africa even more safe for private investors in infrastructure.
NNAMDIYour turn, Lael.
BRAINARDWell, I think your caller was really on to something. I mean, you have these locations where you have repeated bouts of conflict and political instability. Connecting the dots between that and simple constraints on economic development like roads is precisely what the African Development Bank tries to do and why the U.S. gets such a great return on its investment in the African Development Bank.
BRAINARDAs Don Kaberuka was saying, we need just a basic infrastructure to connect communities to markets, to connect markets to capitals, and, of course, to connect the African countries to each other. And what we've seen over the last decade or so is trade within Africa exploding as these connections are made, as roads are built, as railroads are built. And it is those simple investments that we think have the capacity to multiply our investments and to create much greater political stability in these countries that are going to be so important to America's future.
NNAMDIOne of the points that Mathial wanted to make -- and Mathial, thank you very much for your call -- is that leaders don't create opportunities for jobs for the youth in Africa. And, Donald Kaberuka, I'd like to quote from something that I read that you said. "The biggest single important thing to do to ensure inclusive growth is to make sure that the children of poor people end up in education." Could you explain what you mean by that?
KABERUKAI was asked the question that if I had only one thing to recommend for inclusive development, what would it be, and I said it's to get children of poor people into quality education because you and I, yeah, maybe because we're able to get into educational quality. That is how you stop what we call the intergenerational transmission of poverty. So if you have girls and boys in quality education, you get two things.
KABERUKAFirst of all, you get direction -- direct reduction in poverty. Number two, you stop this transmission of poverty across generations. There are many more things you have to do for inclusion, include developing small businesses. I will -- but this for me is the number one thing we have to focus on, especially for such a young continent which is growing in size as well.
NNAMDIWe're talking with Donald Kaberuka. He's president of the African Development Bank Group. He was minister of finance and economic planning in the Republic of Rwanda. He joins us in studio along with Lael Brainard. She's undersecretary for international affairs with the U.S. Department of Treasury. If you'd like to join the conversation, give us a call. 800-433-8850 is the number.
NNAMDIDid you grow up in Africa? What's your experience of economic growth and opportunity there? What did President Obama's recent trip to Africa tell us about the relationship between the U.S. and the African continent? What do you think? 800-433-8850. Here is Blessing in Woodbridge, Va. Blessing, your turn.
BLESSINGThank you, Kojo, for taking my call. This is my first time, really. I'm interested in this topic. I grew up in Africa and I'm in United States now. Africa is developed. Africa has everything to develop itself. I would like United States to stop giving African leaders financial aid. They have everything to develop. They are too corrupt. They can develop their countries with the money they owe you. They have gold. They should focus on individual, private, you know, businesses.
NNAMDIWell, I want you to deal with the issue of corruption since you raised it. We also got an email from Moira, who says, "I love the idea of investing in African economies but wonder how the U.S. will deal with the problem of pervasive corruption. Corruption and bribes are a norm in everyday life at every level of business in many resource-poor countries." I'll start with you this time, Lael Brainard.
BRAINARDThe issue that I think is raised is a very real one and one that many African leaders are dealing with and one that is important to the U.S. in terms of our investments in the development banks and directly in Africa. For instance, in the African Development Bank, they've put in place a number of very powerful safeguards, not just for their own investments, but for procurement projects that they do in country with many of their African partners.
BRAINARDThe U.S. has been a very strong advocate for an initiative, which helps African governments publish the kinds of payments that they are receiving from resource development companies so that people on the ground can see how much of those revenues are going to fund teachers and school books and school buildings. And that has proven to be just a very basic transparency of revenues. And where they're going has proven to be a very powerful force for accountable democracy in many African countries.
NNAMDIYour turn, Donald.
KABERUKAI agree with Lael. Look, Kojo. The continent of Africa went to 50 years of difficulties including a decade known as the lost decade. So we have our responsibilities for stability, for governance, for use of natural resources in a judicious way as Lael Brainard was saying. However, I do think also that external partnerships, like we have with the USA to the African Development Bank, serves an important use leveraging private capital, leveraging knowledge, leveraging technology.
KABERUKAI think we should note and that has made the importance of that. Thirdly, I think it's also important to understand that Africa is part of a changing global structure of the economy. When I was a young student a long time ago, Asia was described in terms of the Asian drama. A famous economist said the Asian drama. India was a continent of starvation, food imports, all kind of problems. They have moved on since.
KABERUKAIf someone had told you at the heart of the caste revolution in China, then China wouldn't be what it is today. You would not believe it. So nations do move on. And I think some people are still stuck in the past, the Africa of the past. We still have tons of problems. But we are looking with our friends and partners, with African institutions to Africa of the future, which corrects the mistakes we have made but also takes advantage of the opportunities of the present.
NNAMDIBlessing, thank you very much for your call. You too can call us at 800-433-8850. Here is Ed in Arlington, Va. Hi, Ed.
EDThanks for taking my call. The question I have for your guests relates to how they prioritize their investment decision. So, for example, we've already heard about violence against women issues, transportation issues, corruption issues. I'm sure, as the show progresses, several other pet issues will come up.
EDBut a challenge I imagine is that if investments are spread across everyone's pet issues, it's difficult to make progress in a rational manner and end up making no material progress on any one issue. Is there a prioritization process to ensure that the most important issues are getting the most investment?
NNAMDIAnd, Donald Kaberuka, you're going to talk about the main goals of the African Development Bank within that context.
KABERUKAI think that's a very good question. For these institutions to be effective, it's important to make good, sound, strategic choices and avoid what you call in the business a mission spread, to try to do everything at the same time.
KABERUKAIn the case of the African Development Bank, we're focusing on the following areas: infrastructure -- because it reduces the cost of doing business, it expands the markets and increases the diversity of those markets -- economic integration -- we have 54 countries, some of them so small that we need to get together to create the critical mass for investment -- thirdly, governance because governance creates trust -- governance ensures that the returns of investment are in there at the moment -- private sector development, and finally, support of the fragile states because not only do they impose high cost in themselves that are huge spillover effects on the neighborhood.
KABERUKASo we focus on those areas because we think there's where we get the highest return. But I agree with the proposition that you can't do everything. Focus on where you have compatible strength.
NNAMDIEd, thank you very much for your call.
NNAMDIAnd speaking of infrastructure, Lael, let's look at some of the bigger challenges for development in Africa. One is lack of access to electricity. Last month, President Obama announced a new initiative called Power Africa. Its goal is to double access to electricity in sub-Saharan Africa. Tell us about that and why it's a priority.
BRAINARDWell, I think in really lifting up for the American people the Africa of the future, the president, in his travels to Africa, highlighted that it's going to be hard to get to the full future potential of Africa if still seven in 10 people don't have reliable access to electricity, to power. Without reliable electricity -- you look at the history of our own economy -- businesses can't invest, hospitals and clinics aren't prepared to provide consistent health care and schools can't teach on a consistent basis.
BRAINARDSo addressing the gap in power in Africa is a development-multiplying investment. The other thing, I think, that is very important about the Power Africa initiative is, of course, you can't look to governments to finance the energy needed to support over half a billion people. The private sector has to play a key driving role. And that's why Power Africa is very unique in bringing great companies like General Electric and Symbion Power to invest in meeting the very considerable energy needs of the African people.
NNAMDIGot to take another short break. If you have called, stay on the line. We will get to your call. If you're still looking to join the conversation, the number is 800-433-8850. If you were born in Africa and you go home on vacation from time to time, talk about the changes you see when you go home, whether it's in the traffic or cellphones. 800-433-8850 or you can go to our website, kojoshow.org. Ask a question or make a comment there. I'm Kojo Nnamdi.
NNAMDIWelcome back. We're talking with Lael Brainard. She is undersecretary for International Affairs with the U.S. Department of Treasury, here to discuss the U.S., Africa and the global economy with Donald Kaberuka, president of the African Development Bank Group. He was minister of finance and economic planning in the Republic of Rwanda. And we're taking your calls at 800-433-8850. You can send email to firstname.lastname@example.org.
NNAMDIWe got a long email from Brian, so please bear with me. Brian says, "I spent the last year working at a think tank in Kigali, Rwanda. One of our contracts was from OECD doing a case study of the effectiveness of aid for trade. What we found is very much along the lines of what you're discussing today. Aid needs to be less narrowly focused on support for social programs and expand to support for trade.
NNAMDI"The United States has taken steps towards this with legislations as the African growth and opportunity at allowing terror-free imports of certain items to the United States. The limited success of this act is not from a lack of products to export to the U.S. It's from a lack of knowledge about U.S. standards of products.
NNAMDI"In Rwanda, for example, there's an abundant coffee and tea but potential exporters in Rwanda need training on how to meet U.S. packaging standards, et cetera, in order to make good use of the act. This is where more aid money should be going, to technical assistance for potential manufacturers and exporters." I'm assuming this is close to Donald Kaberuka's heart, so I'll go to him first.
KABERUKAI would entirely agree with the speaker. I think that the way forward for my continent is to do what nations all over the world have done. Every continent on planet Earth was poor at some point, and they got out of it through growth, trade, investment. So Africa cannot be different. At the moment, what is happening are three things. It's the rise of logistics including infrastructure. It's absence of clusters which (word?) things to do.
KABERUKAAnd then of course this (unintelligible) of level playing field, so that the continent can trade its way out of poverty. We need to approach all those at the same time. I think our goal was a very good beginning. It opened up the markets for some African products. But we now need to do more, to ask the fundamental question which is, what does it take for African countries, African companies to join the high levels of the global value chains?
KABERUKAIt's an issue President Obama raised in Cape Town, and I think that is exactly what we need to think around on the issue of trade. Not simply market access but the global value chains and how to get higher and higher on those chains.
NNAMDIYour turn, Lael Brainard, on AGOA, the African Growth and Opportunity Act.
BRAINARDYeah. We, in the administration, really see trade and investment in roads and electricity all as one piece. So the African Growth and Opportunity Act was incredibly important, and it will continue to be at the very center of America's growing economic relationship with Africa. But we also need the very critical investments in agro-processing, for instance, that the African Development Bank is doing, the very important roads and railroads that the African Development Bank is helping countries in the private sector to work together to build in Africa.
BRAINARDAnd, of course, if you look at our Power Africa initiative, the African Development Bank's investments in the Lake Turkana wind farm in Kenya, they -- that's a three-fer. I It's both growth in Kenya, it is renewables, and it creates trade opportunities for the U.S. So we have to think about our partnership with Africa in a very integrated way, comprising trade, aid and bringing in the private sector through mechanisms like the African Development Bank for investment.
NNAMDIDonald Kaberuka, I get the impression there's something you'd like to add?
KABERUKANo. I think I agree with Lael Brainard. That's because one would think we have to do is to ensure that companies have enough power. I like to use the example of Liberia where the whole country has only 58 megawatts of electricity. Now, here in the U.S., the amount of power per person would be about 15,000 kilowatt hours here. In the place like Liberia, it's less than 100. So there's no way we can join the global value chains at that level.
KABERUKASo first things first, Power Africa addresses the real challenge of any (unintelligible) applicable, accessible, reliable and sustainable, and that's why we strongly support it. We will ourself put in $3 billion in some of those countries which I'm involved to ensure there's good business environment for investment, to ensure that private power developers can come in, including large American companies.
KABERUKABut to also to ensure that energy can be traded across borders, so that those who don't have enough power sources can buy from the neighbors. So it's a key initiative for Africa's internal trade but also for trade with the rest of the world.
NNAMDILet's go up from Liberia a little bit. We've watched the Arab Spring topple long-standing regimes in Northern Africa. We're watching yet another change of leadership in Egypt. What role does the African Development Bank play in encouraging and development in Northern Africa?
KABERUKAThank you. Forty-eight percent of all our commitments are in the North African region. We know the region very well. In Egypt alone, we're the leading actor in the energy sector. So we understand the causes of the transition of Africa. We see now that this transition is much more complex than we thought. Revolutions are never really in the processed. Now, we hope they can resolve the issues quickly because the key issue in North Africa, I think like the burden released, is about the job creation.
KABERUKAIt's about creating confidence for investors to come back so that young people can get jobs and become prosperous. So you have political issues to resolve, but fundamental is about jobs and opportunities for a growing, young population. And we shall do our parts once the coalition is in place for us to go back and work with our North African colleagues to get jobs in the economy.
NNAMDILael Brainard, what -- from the American's perspective, what role do you see the African Development Bank playing in encouraging both stability and growth in Northern Africa?
BRAINARDWell, you know, remember that the Arab Spring swept across Northern Africa starting in Tunisia, starting from a young man, a college-educated young man in Tunisia who was a fruit seller and couldn't get access to the markets, didn't see economic opportunity.
BRAINARDPrecisely. So the roots of the Arab Spring are complex. They are really a lack of opportunity across the board for the very growing young population of North Africa, lack of political opportunity but also lack of economic opportunity. So the U.S. has approached this, President Obama has approached this as both a political and economic transition.
BRAINARDAnd from the very first days, we've called on our partners at the African Development Bank, the World Bank and the European Bank for reconstruction development to come together in support of economic opportunity in the countries of Tunisia and Egypt of helping governments in these transitions to focus on what was really missing in the many years leading up to the Arab Spring, which was the opportunity to create businesses, the opportunity for young people to move from education into jobs.
BRAINARDA lack of growth in rural areas, those are still challenges that these new democracies are going to have to meet if they are going to succeed politically as well as economically.
NNAMDIBack to the telephones. Here is Ray in Washington, D.C. Ray, you're on the air. Go ahead, please.
RAYFirst of all, I'd like to say to you, sir, thank you so much for an outstanding opportunity to voice one's opinion and also to be well-educated from your program. And to your guests, (word?) as well as bonjour, and thank you for being guests on Nnamdi's show. First of all, I have experienced the success of travel to Ivory Coast. I was in Cocody, as well as Treichville. You generally may recall what that is. That is the community upside of Cocody. And I have come in contact with the first coup there, which was surprising for my visit to Ivory Coast.
NNAMDIRay, I'm afraid we're running out of time so you're going to have to get to your question pretty quickly.
RAYI do apologize. My question is when will there be an opportunity for young people to be invited to the table economics and decision making? If there is someone that could enlighten me on a summit that is possibly planned after the president's visit to Africa that's useful to our entrepreneurs in various African countries, can have an opportunity to meet with the World Bank and others for a summit...
NNAMDIFunny you mentioned that because we got an email from James that says, "Please address the issue of training future generations of African and African-American entrepreneurs. In the U.S., we have the institution of the historically black colleges and universities. They have access to the most advanced research.
NNAMDI"In Africa, we have the world's largest deposits of raw materials. Is there a way of establishing funding to focus on stimulating students and young people to learn what it takes to apply science and technology to the emerging markets in Africa?" And I guess what Ray is talking about is the youth of both countries. Your turn, Donald Kaberuka.
KABERUKAFirst of all, I think you picked a focus on an important issue, the youth. Now, something extremely interesting is happening over the last 15 years, the return of the young Africans from the (word?). They come back with the skills, the contacts, and they are helping creating jobs. And I think we need to make this happen more and more because the more young people coming from Silicon Valley to Africa, they bring those contact, the technology, and we in the bank are very keen to encourage that to happen and also to deepen the skills in the market.
KABERUKAOne of the excellent projects, which the U.S. Treasury had selected from the Inter-American Development Bank, matching skills and the market needs is exactly the way to go with some of those projects and the bank as well. And I want to welcome your caller to visit the bank beginning with our website and also come to talk to us in Tunis, and we'll be happy to engage him and his colleagues.
NNAMDIRay, thank you very much for your call. Lael, we don't have much time left, 30 seconds. The U.S. is the largest non-regional shareholder in the African Development Bank. How does the U.S. use that position to try to influence the bank's direction and the projects that the bank supports?
BRAINARDWell, we really care deeply about our investment in the African Development Bank, and it's increased in recent years. I think that reflects American Congress. The American people understand that this relationship for America is going to grow an importance as Africa grows in importance in the future. We use our influence to try to make sure that investments are transparent, that they meet the highest environmental standards that they push reform and that they have a multiplier on development.
NNAMDILael Brainard, she is undersecretary for international affairs with the U.S. Department of Treasury. Thank you for joining us. Donald Kaberuka is president of the African Development Bank Group. He was minister of finance and economic planning in the Republic of Rwanda from 1997 to 2005. Thank you for joining us. And thank you all for listening. I'm Kojo Nnamdi.
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