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Note: This document is from the archive of the Africa Policy E-Journal, published
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USA: Africa Economy Updates
USA: Africa Economy Updates
Date distributed (ymd): 990731
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
Summary Contents:
This posting contains a briefing paper from
the Association of Concerned Africa Scholars commenting on the
July 16 passage by the House of Representatives of the Africa
Growth and Opportunity Act (AGOA), which is still to be
considered by the Senate. It also contains press releases
from the Overseas Private Investment Corporation and the
Export-Import Bank on two new initiatives which are not
contingent on whether the AGOA becomes law or not.
A parallel posting today contains updates on recent
initiatives by African countries to shape a common agenda for
global negotiations on economic issues.
Additional links and background on these issues can be found
at:
http://www.africafocus.org/docs99/tr9902a.php
http://www.africafocus.org/docs99/tr9902b.php
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Association of Concerned Africa Scholars Briefing Paper
For more information contact:
Email: ACAS@prairienet.org
Web: http://acas.prairienet.org
Africa Growth and Opportunity Act Passes House
Efforts to Oppose Economic Conditionality Defeated
Opponents Focus on Senate
July 19, 1999
The House of Representatives in mid-July approved the Africa
Growth and Opportunity Act (H.R. 2489), legislation that if it
became law would link new trade preferences for Africa to
structural adjustment reforms and IMF style conditionalities.
The ACAS Executive Committee believes the legislation approved
by the House is worse than no bill at all and we recommend
members urge their Senators to vote against the bill when it
comes for a vote in that body.
Supporters of the Africa Growth and Opportunity Act (AGOA),
including the Clinton administration, most business groups,
Africare, the African American Institute, a majority of the
Black Caucus and the entire African diplomatic corps in
Washington, argue the legislation is a long overdue
recognition of U.S. interests in Africa and an important first
step in promoting U.S. trade and investment. The
conditionalities in the legislation, argue supporters, are
modest and in most cases are subject to the presidential
discretion.
But opponents such as Representatives Jesse Jackson, Jr.,
Maxine Waters and 12 other members of the Black caucus as well
as the 13 million member AFL-CIO trade union federation,
TransAfrica, the Sierra Club, Public Citizen, COSATU and a
coalition of African NGOs argue the legislation imposes
economic policy prescriptions without providing meaningful
development for the poorest continent in the world. (For a
full list of opponents see the Public Citizen web site at
http://www.citizen.org/pctrade/Africa/opponents.htm). Although
the South African government now supports the legislation,
Nelson Mandela's first reaction to the legislation was to call
it "unacceptable." An alternative trade bill proposed by Rep.
Jesse Jackson (and cosponsored by 75 other members of
Congress), that would expand trade preference, call for debt
cancellation and insist on minimal levels of continuing
development aid, was not even brought to a vote. Its
provisions should be reconsidered by the House and Senate.
What AGOA Does
The legislation approved by the House offers African countries
a series of rewards, including expanded duty free access to
American markets for certain products, equity and
infrastructure funds to support U.S. investment, and
establishment of a mechanism to promote and review U.S. trade
policy toward Africa. Yet to receive these benefits, African
governments must remove restrictions on foreign investment,
reduce corporate taxes and privatize state owned companies.
The benefits of these programs are, moreover, minimal. The
House bill would in theory allow duty free imports of
textiles, primarily from Kenya and Mauritius, if the textile
imports do not damage U.S. companies. But a March 1999
Congressional Budget Office study suggested that in reality 90
percent of African textiles would probably be declared "import
sensitive" and denied access to U.S. markets. The Senate
version of the bill, which has been approved by the Senate
Finance Committee but not by the full Senate, allows imports
only of textiles made with U.S. cloth and thread.
The legislation also provides authority for the president to
provide "duty free" access to U.S. markets for certain African
goods under a trade provision known as GSP. Yet according to
the Deputy U.S. Trade Representative, more than 29 African
countries already have GSP trade status and the real effect of
this provision is simply to encourage the president to
consider allowing "enhanced GSP" status for certain African
products if they will not damage U.S. manufacturers. Each
decision on each product would have to first be reviewed by
both the U.S. Trade Representative and the International Trade
Commission.
Supporters argue the real value of the bill is not so much in
the specific lifting of trade restrictions, but in the
framework it establishes for promoting trade with Africa
including the call for a free trade agreement between the U.S.
and Africa and the establishment of annual forums at which
trade and finance ministers from Africa and the U.S. meet.
Efforts to strengthen U.S. ties with Africa are indeed
welcome, and the Clinton administration has already
established a special trade office for Africa and the first
ever meeting of African and U.S. trade and finance ministers
was held in Washington in early 1999. But what are the
benefits to those who do not attend meetings of government
officials and other elites?
The Wrong Framework, the Wrong Symbolism
A closer examination reveals that the Africa Growth and
Opportunity Act approved by the House establishes the wrong
framework and is a step in the wrong direction. The
legislation passed by the House establishes a framework that
might at best help a few more economically advanced
countries-but will bring few if any benefits to the majority
of people in Africa. Indeed at its core are policies now
proven to increase poverty and decrease the provision of
public goods such as health care and education.
At the core of the Act is another attempt to force African
governments to prioritize a series of free market principles,
including cuts in government expenditures, privatization of
government corporations, new rights for foreign investors to
buy African natural resources and state firms without limits,
deep cuts in tariffs, and membership in the World Trade
Organization. (See the attached excerpts from the bill for a
list of the conditions.) Labor advocates did manage to force
the sponsors to add a provision raising the issue of labor
rights and there is a reference to the importance of respect
for "internationally recognized human rights," but eleven of
the twelve items on the checklist used to determine
"eligibility" for benefits under the legislation are designed
to open markets for U.S. investment and trade.
Such priorities were made starkly clear in the debate on the
House floor in mid-July, when the sponsors of this legislation
used a parliamentary maneuver to defeat an attempt that would
have allowed countries to import generic, lower cost drugs to
deal with national emergencies such as the HIV/AIDS crisis. At
the moment, the U.S. is vigorously threatening South Africa
with trade sanctions in retaliation for the South African
government's efforts to obtain low cost, generic alternatives
to drugs necessary for combating AIDS.
These policies are not new. The World Bank and IMF have been
imposing these policies on poorer countries in the world for
decades, but even the multilateral institutions have
acknowledged that these policies have not improved conditions
for the poorest segment of the world's population. In fact,
according to a new report by the United Nations Development
Program, the poorest countries have actually gotten poorer in
the last decade and that same report notes that 29 of the 34
poorest countries in the world are in Africa.
In summary: the Africa Growth and Opportunity Act passed by
the House is a step in the wrong direction. This legislation
is an attempt to force African countries to prioritize
macroeconomic policies that are not appropriate for the level
of development in Africa.
An Alternative Vision
Congressman Jesse Jackson, with the assistance of labor,
citizen and environment groups, drafted an alternative piece
of legislation-the HOPE for Africa Act (H.R. 772)--that sought
to focus U.S. Africa policy on debt relief, development
assistance and social programs. That legislation, however, was
never brought to the floor for a full debate. (For a full
comparison of that legislation with the Africa Growth and
Opportunity Act, see the Public Citizen comparison on the web
at:
http://www.citizen.org/pctrade/Africa/HOPE/comparison.htm ).
Defeat AGOA in the Senate
The Africa Growth and Opportunity Act must now be approved by
the Senate. The ACAS Executive urges members to write to your
senators and express your opposition to this legislation (see
the acas web page for addresses if necessary), and urge a new,
fairer deal for Africa-as proposed in key provisions of the
Hope Act.
Export-Import Bank
July 20, 1999
Contact: Ken Murphy (202) 565-3200
Web: http://www.exim.gov
$200 Million Ex-im Bank Africa Pilot Program Begins August 1,
Short-term Credit Will Be Available in 16 Sub-saharan
Countries
Washington, DC: The Export-Import Bank of the United States
(Ex-Im Bank) is implementing a $200 million Africa Pilot
Program, designed to make available short-term export credit
insurance in 16 countries including 11 countries where routine
Ex-Im Bank financing was previously unavailable.
$100 million of the proposed $200 million program will support
US export sales to Nigeria, based on current projected demand
for financing exports to that country. The remaining $100
million program capacity will be allocated on a first come,
first served basis for the other 15 countries. The effective
date of the one-year pilot program is scheduled for August 1,
1999.
The sub-Saharan Africa public and/or private sectors of the
countries impacted by the new Africa Pilot Program are:
Burkina Faso, Cameroon, Cote d'Ivoire, Chad, Equatorial
Guinea, The Gambia, Guinea, Madagascar, Malawi, Mali,
Mauritania, Mozambique, Nigeria, Sao Tome & Principe, Tanzania
and Togo.
Ex-Im Bank Chairman James Harmon stated that "under this pilot
program, Ex-Im Bank will be able to help small and
medium-sized companies in many African markets purchase the
U.S. goods and services needed in order to participate in the
global economy."
The Africa Pilot Program will assist businesses to obtain
financing for the purchase of US-made spare parts, raw
materials and agricultural commodities. The short-term export
credit insurance will generally be made available in the
private sector through irrevocable letters of credit from
credit-worthy banks in the respective countries. Coverage will
be provided primarily under Ex-Im Bank's short-term "Bank
Letter of Credit Policy." In certain markets, a single buyer
policy may be used, so long as the obligor's obligation
represents a reasonable assurance of repayment. Terms will
initially be limited to "sight" until there is sufficient
repayment experience. In the public sector, Ex-Im Bank will
generally finance transactions with sovereign guarantees.
Also, Ex-Im Bank will consider letters of credit issued by
credit-worthy public sector banks, operating on a commercial
basis, with satisfactory payment records.
This program is designed to allow Ex-Im Bank to optimize its
ability to support US exports to sub-Saharan Africa while
retaining the ability to minimize potential risk. This program
also offers correspondent banks, operating in the U.S.,
especially those currently active in this region, an effective
tool for mitigating risk, as well as expanding its
confirmation lines.
This year, in a continuing attempt to increase business in
sub-Saharan Africa, Ex-Im Bank also initiated an innovative
$10 million credit facility for Business Partners Limited
(BPL), for the purchase of U.S. goods by its membership. BPL
is a South African small-business development company, with
an estimated membership of 4,500 small businesses. Under this
agreement, BPL will on-lend Ex-Im Bank funds to small
businesses. Ex-Im Bank also approved $10 million in export
credit insurance for Tanzania Air Services and Zambia Flying
Doctor Service. Although Ex-Im Bank financing was technically
unavailable in both countries, Ex-Im Bank overcame that hurdle
by working with PTA Bank (The Eastern and Southern African
Trade and Development Bank), a supranational bank with its
headquarters in Kenya, which is the guarantor for this
transaction.
Ex-Im Bank is an independent U.S. government agency that
assists in financing the export of U.S. goods and services to
developing markets all over the world by providing loans, loan
guarantees, and export credit insurance. In fiscal year 1998,
Ex-Im Bank supported $13 billion of U.S. exports worldwide.
Overseas Private Investment Corporation (OPIC)
July 22, 1999
For further information, contact: Larry Spinelli (202)
336-8690 Jeremy Butler (202) 336-8744
Web: http://www.opic.gov
OPIC Launches $350 Million Fund for Investment in Africa:
Largest Single Fund in OPIC's History
WASHINGTON, D.C. -- The Overseas Private Investment
Corporation (OPIC) today launched a $350 million equity fund
for investment in sub-Saharan Africa -- the largest single
fund in OPIC's history. The fund was formally launched at a
Capitol Hill ceremony today sponsored by Congressmen Bill
Archer (R-TX), Charles B. Rangel (D-NY), Philip M. Crane
(R-IL), Sander M. Levin (D- MI), Sonny Callahan (R-AL),
Benjamin A. Gilman (R-NY), and Sam Gejdenson (D-CT).
The New Africa Infrastructure Fund responds to the commitment
made by Congress and the Clinton Administration to increase
private investment in sub-Saharan Africa. It is expected to
leverage an additional $2 billion of investment in Africa
which will create approximately 6,800 new jobs for Africans
and generate almost $50 million in annual revenues for the
countries of sub-Sahara Africa. It will also generate an
estimated $350 million in American exports while creating U.S.
jobs -- all at no cost to the U.S. taxpayer. Investments will
focus on basic infrastructure needs such as
telecommunications, transportation, and power.
"I commend the Congress and the Administration for identifying
Africa as one of the biggest growth opportunities for American
business in the world," George Munoz, OPIC President and CEO
said. "As this fund -- the largest in OPIC's history --
demonstrates, we are strongly committed to increasing U.S.
direct investment in Africa."
"OPIC is also committed to working with the nations of
sub-Saharan Africa as partners in growth and to help
facilitate the integration of Africa into the global economy,"
Muñoz continued. "The New Africa Infrastructure Fund is the
fourth OPIC equity fund supporting investment in Africa. OPIC
has signed new bilateral investment agreements with 14
sub-Saharan African countries since 1997. In addition, OPIC is
providing almost $900 million of support in approximately 20
countries in sub-Saharan Africa."
OPIC's Investment Funds program supports the development of
many important "frontier" markets, facilitating early access
to new consumers and paving the way for further investment by
U.S. companies. OPIC leverages private equity capital by
lending or guaranteeing long-term debt to the Fund. OPIC must
be repaid in full before equity investors receive returns of
capital or any profit. All fund investments must be submitted
to OPIC for approval and must meet OPIC statutory requirements
including protection of U.S. jobs, worker rights and
environmental requirements.
The New Africa Infrastructure Fund was established using a new
open and transparent process for selecting a fund manager. The
consortium of Sloan Financial Group (SFG), Taylor-DeJongh
(TDJ), and New Africa Advisers (NAA) was selected for its
expertise in private equity investment, infrastructure
knowledge, capital raising capabilities and sub-Saharan Africa
experience.
Sloan Financial Group, Inc. has roots dating back to 1898 when
the ancestors of Sloan Financial Group and the New Africa
Advisers Chairman, Maceo K. Sloan, founded North Carolina
Mutual Life Insurance Company. Through its subsidiaries, which
manage over $5 billion, Sloan Financial Group is the world's
largest black-owned diversified financial services firm.
Headquartered in Durham, North Carolina, and incorporated in
1992, New Africa Advisers is a subsidiary of Sloan Financial
Group, Inc. In anticipation of Nelson Mandela's call for the
end of sanctions and his invitation for renewed foreign
investment in South Africa, New Africa Advisers was the first
U.S. investment firm to be established in post-Apartheid South
Africa. With offices throughout Africa, New Africa Advisers is
the largest employer of pan-Africa investment professionals
and was the first firm to offer pan-Africa institutional
investment products. When the New Africa Infrastructure fund
is raised, New Africa Advisers and its affiliates will advise
assets of over $500 million.
Taylor-DeJongh is one of the world's leading firms for
infrastructure project development and financing. It has
advised on, structured, negotiated and financed major capital
projects in more than 60 countries, for investments totaling
more than $50 billion. The firm is consistently ranked in the
world's top 5 financial firms for advisory on power,
petrochemical, telecommunications and water project financing.
Taylor-DeJongh's headquarters is in Washington, DC, with
additional offices in London, Istanbul, Cairo, Bahrain and
Johannesburg.
OPIC is a self-sustaining federal agency that sells investment
services to small, medium and large American businesses
expanding into some 140 developing nations and emerging
markets around the world. OPIC's political risk insurance,
project finance and investment funds fill a commercial void,
create a level playing field for U.S. businesses and support
development in emerging economies. Since 1971, OPIC has
supported $121 billion worth of investments that will generate
$58 billion in U.S. exports and create more than 237,000
American jobs.
For more information about the New Africa Infrastructure Fund,
call 919-688-8092.
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen the policy debate in the United States
around African issues and the U.S. role in Africa, by
concentrating on providing accessible policy-relevant
information and analysis usable by a wide range of groups and
individuals.
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