Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
AGOA Forum 2006 Third Plenary Session
Washington, D.C.

Thank you, and on behalf of President Bush, welcome to Washington.

I'm delighted to see you again. I had the good fortune to attend last year's Forum in Senegal. And I must say it was one of the most interesting experiences I've had since joining President Bush's administration five and one-half years ago.

While my trip to Dakar was my first visit to Africa as Deputy Secretary, I hope it won't be the last.

First, let me thank all of you for inviting me to participate in this year's Forum. And a special welcome to the businessmen and women who chose to come.

You are the people that all Africans are counting on. You are the ones who have the power to bring about the social and political changes that are needed to put the African continent on a steady path of economic development. I hope you take home what you have learned, and put it to work in your businesses and communities.

As I said in Senegal a year ago, "What Africa needs today is new thinking by all nations and new policies that produce results. We need to move beyond good intentions and symbolic gestures. And we need, as President Bush says, 'partnership, not paternalism.'"

Economic development is something that communities do for themselves. They may get outside aid and encouragement. But in the end, you get the best results from your own efforts, and from partnering with private business and government.

So I find it particularly appropriate that the theme for this year's Forum spotlights the major role that the private sector plays in economic growth and development.

AGOA focuses on opening markets and empowering African entrepreneurs for a very simple reason: It is the private sector--the entrepreneurs and the risk takers--who create wealth and prosperity, not the government.

Government's job is to create the fundamental conditions for wealth creation to take place--conditions that include a respect for the rule of law and property rights--open markets where companies can compete free of undue government restriction, and free of corruption.

I cannot emphasize this enough. Government can assist private businesses by ensuring transparency, creating proper infrastructure, and defending the rule of law.

But it is the entrepreneurs who must drive economic prosperity. Your challenge is to find ways to help them by removing regulatory obstacles, which are greater in Africa than in any other world region.

Intellectual Property
A top priority for President Bush and the Commerce Department is helping entrepreneurs by protecting their intellectual property--things like movies, CDs, computer software, copyrights and brands--from counterfeiters.

Protecting intellectual property is vital to economic growth and global competitiveness. And it has major consequences in our ongoing effort to promote security and stability around the world.

And pirates know what a gold mine this is. Intellectual property theft is costing U.S. companies some $250 billion a year in lost sales and hundreds of thousands of lost jobs.

Let me emphasize that this is a global problem affecting both industrial nations and developing economies.

African entrepreneurs produce intellectual property. Whether it is Kente cloth from Ghana, music from Mali, the 2006 Academy Award winning movie "Tsotsi" from South Africa, or animation from Senega--all are intellectual property. And they need protection. Otherwise, African artists and entrepreneurs won't be as willing to create and innovate, and to prosper and thrive.

Consumers are also at risk. Fake auto parts, fake batteries, and phony pharmaceuticals cause countless injuries to consumers across Africa and around the world.

So we will continue to press this issue. And I hope to see more progress in Africa.

There are other issues on the table to improve the business climate.

Anti-corruption efforts must be redoubled. This is a big challenge. Globally, over $1 trillion in bribes are paid annually, according to the World Bank. Embezzlement, fraud and other corrupt acts raise the costs even higher.

All this makes it more difficult to get African goods to market, and raises their prices once they get to market. What is more, bribes divert scarce resources away from providing essential public services, such as education and health care.

When corrupt behavior replaces fair competition based on price, quality and innovation, the result is lost markets, lost jobs, and lost confidence by those you need the most: honest businesses and active consumers.

Rooting out corruption, protecting intellectual property, creating a stable and predictable business climate are the keys to attracting entrepreneurs and encouraging trade.

Investment
Trade is important, but investment of capital drives a nation's economy.

Foreign direct investment (FDI) in Sub-Saharan Africa has remained stable the past few years. According to the latest United Nations World Investment Report, investment inflows to Sub-Saharan Africa from all sources in 2004 topped $14 billion.

This stability is attributed to the continuation of investment-friendly policy reforms at the national and regional levels in several African countries.

These reforms focused on liberalizing legal frameworks, and improving the investment climate by simplifying regulations and increasing transparency.

An increase in the number of bilateral investment and tax treaties also helped to improve the investment climate.

However, when you look at manufacturing--a vital industry for any nation--the picture is very different.

African industries need more than a stable investment flow. They require a substantial injection of FDI to compete in today's global economy.

The 2005 World Investment Report said that failure to implement policies that attract FDI has resulted in historically-low levels of investment in manufacturing across Africa.

The report also said that programs like AGOA would have a greater impact on FDI if they were coupled with improved "development-oriented economic and social policies."

More broadly, another study, the African Growth and Opportunity Act Competitiveness Report--which I'm sure many of you have seen--identifies key reasons why foreign investors are reluctant to put more money into Africa.

They include: protection of property rights, lack of transparency, burdensome regulations, high trade barriers, inadequate transportation infrastructure, and unreliable, inadequate and expensive utilities.

So the bottom line on attracting investment is this: Good governance and business-friendly policies equal a better investment climate.

I know many of the government officials from Africa who are here today would love to see some of the investment that is currently going to China come to their countries.

Let me speak frankly. China is a huge market with vast potential, and will continue to attract a huge amount of foreign capital. India is also a major attraction. These trends will continue for many years to come as both countries reform their economies.

Nevertheless, you can compete for investment dollars. While India and China may be huge markets with 2.3 billion consumers, African nations could compete by lowering trade barriers among yourselves, and cooperating as a unified market.

Africa has tremendous potential. But much of it is hidden behind poor governance, overly restrictive business and investment climates, and, quite frankly, apprehension in the business community.

I promise you this: when you make the needed changes to your business and investment regimes, we will partner with you in telling the American business community about the opportunities that exist in your countries.

I would encourage you to attend the workshops later this morning after we break for coffee. All of them are about "best practices" for doing business in the private sector and for creating a competitive environment. And they take a global point of view, examining the business climates in many nations.

I believe you will find great interest and support among your businesses, especially your smaller businesses, in making it easier to compete.

When I was in Senegal last year, we held a workshop on exporting for small businesses. We had an excellent group of entrepreneurs who were very enthusiastic about getting into new markets beyond their borders.

In closing, let me say that I'm optimistic about Africa’s future.

We see more interest and support today from the industrialized world than we have seen in a generation.

Economic growth is at the highest level in eight years. Leaders have emerged from South Africa to Nigeria to Kenya, who are bringing old conflicts to an end. And more and more nations south of the Sahara are holding democratic elections, and committing to business-friendly policies.

And with these reforms have come our AGOA trade incentives. These have helped create tens of thousands of new jobs in Africa. And they have encouraged hundreds of millions of dollars in new investment.

We must work to ensure this progress continues and accelerates. Your participation at this conference is an important step. Leadership and a commitment to action at home are keys to real progress and increased prosperity for all Africans. President Bush and the U.S. business community remain committed to helping African nations achieve their full economic, civic and cultural potential in the 21st century.

Thank you very much.