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- 10/21/08: Remarks by Henrietta Fore, Administrator, USAID and Director of U.S. Foreign Assistance at the White House Development Summit
- 10/08/08: Remarks by Henrietta Fore, USAID Administrator and Director of U.S. Foreign Assistance at The President's Freedom Agenda
- 10/01/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at the Ceremony Marking the Full Operational Capacity of Africa Command (AFRICOM)
- 09/25/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at 2008 Millennium Development Goal Malaria Summit, New York - "U.S. Leadership in the Fight Against Malaria"
- 09/22/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at the White House Symposium on Advancing Global Literacy - "U.S. Commitment to Advancing Global Literacy"
 RSS Feed for Recent USAID Speeches and Testimony
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Andrew S. Natsios
Administrator, U.S. Agency for International Development
New Opportunities for Africa
Keynote Speech (as delivered) to the Corporate Council on Africa
September 14, 2005
STEPHEN HAYES: Mr. Natsios has served as USAID Administrator since May 2001. He was appointed by President Bush as Special Coordinator for International Development Assistance, Disaster Assistance and Special Humanitarian Coordinator for Sudan as well. Mr. Natsios first served USAID as director of the Office of Foreign Disaster Assistance and as assistant administrator for the Bureau for Food and Humanitarian Assistance.
The Corporate Council on Africa has a strong working relationship with USAID. We have two programs in Africa that are really benchmarks for small business development, especially between Africa and the United States. CCA was fortunate to have Mr. Natsios address our fifth biannual U.S.-Africa Business Summit in Baltimore, Maryland, in June and at the Summit he emphasized USAID's commitment to helping Africa address the challenge of poverty. I can assure you that the commitment is real. I think we're very fortunate to have Mr. Natsios as director of USAID and we're very, very happy about his commitment to Africa. He reiterated that commitment at the AGOA Forum in Dakar, Senegal, which CCA co-chaired, and I look forward to his remarks tonight.
Welcome, Mr. Andrew Natsios. (Applause.)
ANDREW NATSIOS: Thank you very much. I have a talk that we spent a long time writing and I really wanted to deliver it, but I tested it this afternoon and it's 45 minutes long - (laughter) - and I thought I would either have people drop during the - my remarks or leave, so I am going to speak extemporaneously.
I am among people who I know share my view of development of the world. We have a number of presidents from among the most progressive and reform-minded African countries. I don't want to mention them all because I'll forget some of them, but it is not an accident that these particular presidents are here tonight because they represent the new Africa - the new democratic Africa.
When people tell me stories about Africa being always in the middle of civil war, always in the middle of famine, I say, "Well, wait a second. Wait a second. You are talking about some countries in some parts of the world. Do not lump all countries in Africa in the same category. There are some countries that have had a democracy for a long time, that have very good economic policies and that are growing, and there are some countries that are a wreck. Let's not put them in the same category." That's true in Europe, that's true in parts of the United States. I don't want to compare one state of our 50 states with other states, but we have some states that are very badly governed. Again, I come from Massachusetts, one of the best-run states in the country - (laughter) - usually. I was the finance minister there, so I know how well run it was.
And so we need to look at Africa the way it is, not with the images in the West that in my view are simplistic and distorted. If I were to invest my own money personally, if I had any money - I have no money because I have been in public service too long, I would be investing it in Africa right now. I also have told the president that if you look at the polling data on where America is the most popular, where we have our best natural constituency, it's in Africa. The poll ratings for America in Africa are the highest of any region in the world. That's very interesting, and it says something to me: that we have a natural constituency, natural friends and allies there and that's where we should be putting our money.
And if you heard the president's speech this morning, which I have to say - of course, I'm biased. I've served the Bush family for almost 25 years now. I served in the president's father's administration. I think you know that the president personally is committed to development and he is committed to Africa, and he understands development. We now have 21 presidential initiatives in foreign assistance, 21 initiatives, and they are not small and they are not one million dollar initiatives. They're billions of dollars. The president announced before the G8 Summit, and we had a re-announcement tonight of the operational plans, a $1.2 billion new money initiative in malaria.
We have the Millennium Challenge Account - a most significant new direction in foreign assistance in any donor government, and I'm not being critical of anybody else, but it's a most significant new development in foreign assistance in decades. It makes a distinction between high performing countries who have good policies, who govern well, that are democracies, that have good economic policies that encourage investment, and that invest in the social sector so their people are healthy and educated.
And it attempts to makes distinctions. Now, I know in Africa and other regions of the world, people like to believe in solidarity. Everybody wants everybody else to work together. Well, we agree with that, but to treat every country the same is really not fair. It implies that people who really perform well and do the right things have the same level of risks as someone that is a disaster. Well, you know, we don't see this as charity, so you understand this. The president's view is we are making an investment in the future of the United States a personal investment in our future.
Now, we certainly believe in humanitarian efforts to help poor people around the world. We also believe it's in our interest as a country, in a stable, peaceful, democratic, prosperous world, in a global trading system which is open. That is the American view, that's the president's view, that's Dr. Rice's view, and we are making investments in countries that are going to push that vision forward - that share that vision with us. So the president has made a commitment and to show the commitment, we are the only donor government that has exceeded, dramatically exceeded our commitment that President Bush announced in Monterey. The president - when he entered office, we - our ODA - Official Development Assistance - was in 2000, fiscal year - calendar year 2000 - and by the way ODA - Official Development Assistance - measured by international organization out of Paris, OECD, and it is actual expenditures by calendar year. It's not appropriation levels, it's not commitments; it's what you actually spent - dispersed. In calendar year 2000, we dispersed $10 billion. In calendar year 2004, we dispersed $19 billion. And this year, we expect to disperse $23 billion. So we've increased our foreign assistance by a 130 percent in five years - five years. That is a significant commitment.
And a large portion of that is for the HIV Aids Program, shortly through the MCC program. I mean, some people criticize the MCC, and I sit in the board, because they wanted to move faster, but if you move too fast when you're designing a development program, you know what you have? Failure. You need to be patient and design the project properly in order for it to be a success. We've now got five compacts, there's $1 billion in those compacts and we're predicting they're going to be a success because they were initiated by the governments of the countries in which we are working as partners.
Now the other thing I wanted to mention tonight which is a central subject--there are two things we're spending money on. One is trade capacity-building because we want Africa to enter the global trading system - the new global economic order more aggressively, more fully because we believe that it will mean higher rates of economic growth and all of the literature and all of the research shows that.
And so we're spending $973 million - the United States government - around the world, much of it through AID in trade capacity-building. We now have three trade hubs in Africa and a fourth one we've just announced - Secretary Rice just announced we're going to open one in Senegal for West Africa, and these are going to help the countries of Africa more radically integrate into the global economy.
The African heads of state and finance ministers and business people are very enthusiastic about this initiative, but the less visible and in my view even more important initiative is in microeconomic reform. What does microeconomic reform mean? There are many countries that have very stable macroeconomic orders: they have balanced budgets, they have good balance of payments, they have low rates of inflation, they have low unemployment, and they're not growing, and they are functional democracies. They are not growing, and the question is why? Why is a country with good macroeconomic indicators that follow the Washington consensus not growing?
And the research we've done with people like Michael Porter at the Harvard Business School - by the way, President Bush had Michael Porter as a professor when he was a MBA student there. President Bush is the only president in American history to have an MBA, and Michael Porter is still a friend of President Bush. And Michael Porter is a friend of mine because the Massachusetts's economy - the state I came from - in 1990 was a wreck. It had a 14 percent unemployment rate and had one of the lowest credit rating of 50 states and it was on the edge of bankruptcy, and Governor Weld at the time asked Michael Porter to chair a committee in Massachusetts to rebuild the Massachusetts economy through microeconomic reform. So we are not testing these theories in Africa. We tested them in Massachusetts - my home state - and we - at the height of the prosperity in the 90s, we had a 2.8 percent unemployment rate, one of the lowest unemployment rates in the world, and next to, I think, Connecticut we had the highest income in the entire world per capita, with the highest literacy rate, the highest education rate.
The economy boomed because we followed these microeconomic principles. What is microeconomic reform? How long does it take to start a business? How much does it cost to start a new business? How long does it cost or take to settle a dispute between businesses in the court systems of your country?
Now, if you think this is irrelevant, let me just tell you a story. In the United States and Canada it takes on the average of 60 days to start a new business and it costs $200. I will not embarrass - the Prime Minister of this country is a friend of mine, he is not here tonight and I'm not going to tell you the country. It's a country in Africa and his country, one of the poorest countries in the world, it takes $2000 to start a new business and it takes two years in terms of time - two years.
The World Bank did a study on this. They came out with a report called "Doing Business" just today, and we went up to the prime minister of the country and said, you know, we analyzed this and we checked into it and it's true: $2,000 in one of the poorest countries to start a new business. You know why? Because someone in one of the ministries' brother owned the biggest newspaper in the country and the rules of this ministry said to start a new business you had to advertise in this newspaper with a big advertisement and it costs $2,000 to run that ad. (Laughter.)
Now, no one suggested that anybody was being - acting inappropriately, but it did enrich the newspaper, and no one could quite understand why it was necessary to advertise a new shoeshine shop in the capital city for $2,000. The person wouldn't make $2,000 in five years in the shoeshine shop, but if he wanted to have a certificate saying he owned the shoeshine shop, he had to spend $2,000 to put an ad in the newspaper. Now, when the prime minister found that out, he rescinded the rule overnight, and he said, what idiot wrote this rule?
Now, there is a professor at UCLA, an economist who is in his mid 80s. He's one the greatest development professors harbored in America. And what he did is, he did analyses of the countries that have had rapid rates of growth, and what he found was that it's not one rule that makes a difference. It's dozens of rules on top of each other. What's the business environment generally? Is the country welcoming to business or does it regard all capitalism, even free market capitalism as competitive - as predatory and evil and bad? We don't want - this if you do that, it will be reflected in all your rules - rule after rule after rule.
And if you layer the rules one on top of the other, it's almost impossible for a new business to start and prosper. Well, if you have that kind of a business environment, no one is going to invest in your country. And most heads of state and prime ministers don't understand that it's not one visible rule, it's not the Washington consensus in macroeconomic reform. Everybody knows there's high inflation or low inflation or everybody is unemployed but the microeconomic indicators are very small. But in the aggregate, when you layer them on top of each other, they have a profound effect on investment and on economic growth.
Now let me just show, we have started investing based on the World Bank indicators, and you should see your countries are in this report, so you ought to take the report. I think this is the third or fourth year. It's not produced by an American. Simeon Djankov is a Bulgarian economist and he is the one that runs that office, and it is a big controversy now.
Some people don't like what he's done, but the evidence is that the countries that have good microeconomic indicators - a lot of rules and legal framework, rule of law - have much higher economic rates of growth, and we have begun now in AID to invest hundreds of millions of dollars in policy reform in willing governments to try to improve these indicators.
Now, let me just give you three facts. The number of new companies registered in Serbia and in Vietnam jumped 42 percent and 28 percent respectively after the reforms were put in place. Slovakia's reforms in 2002 helped cut the number of people unemployed by 43,000, according to the research. In Columbia, which is in the middle of a narco-war, reforms of a employment and business startup regulations have created 300,000 new jobs in the formal economy - 300,000 new jobs just by a series of regulatory changes.
So I'm going to suggest to some of those heads of state who are here this evening to get the report of the World Bank and if you have an AID mission, you can tell the mission director that I'm giving them an order through you to help you, if you want. It's up to you because we can't do this ourselves. These are your rules and regulations, and if there's no commitment locally to reform of these rules, then we can't help you. It's a waste of money to help. But if you are interested in this, look at the World Bank indicators, talk to the World Bank representatives, and if you're an MCC country, you might even work some of these microeconomic reforms into your compact.
My suggestion is that you look at this issue. Look at the report and see how your country fairs. There are 11 indicators in the report and the Bank is now going to extend the number of indicators further to look at more of these rules and regulations and the regulatory climate and the climate for investment. Because if we make these changes in Africa, my view is, the economies will boom even more than they already have and the countries that have already done this are already seeing high rates of economic growth. Mauritius, for example, did many of these changes long time ago in the 1980s, their economy has been a spectacular success, so we know there are countries that have already done this successfully.
We are prepared to help you. The MCC is based on the notion of stimulating economic growth. And I know Paul Wolfowitz, my good friend, is looking very carefully at Simeon Djankov's research since it's from his own bank, and I know there are economists in your countries and your government that are looking at the same issue. We are there to help you because ultimately - and this is my final point - and I said this morning and I want to keep repeating it, because lots of people who talk about development sort of miss this. You can't have your social services paid for from foreign aid, loans or grants, forever. You got to support them eventually with your own tax revenues.
Where do you get tax revenues? From your own people, from individuals, from businesses, from sales taxes, from income taxes, from corporate, but you have to have a growing economy to have growing tax revenues, to support improved social services, so ultimately education and health and protecting the environment are dependent on a growing economy that produces more tax revenue to support them sustainably.
There is a direct connection between prosperity and economic growth and social services and community development. They are not separate things. They are intimately related to each other and we need to create the climate for rapid rates of economic growth because that's the only way Africa ultimately will be as rich and prosperous and powerful as the United States. You know, America 200 years ago was weak, poor, and unstable. Now you don't think of America in those categories, but read the history. We were on the edge of civil war just after the revolution. We had rebellions across the colonies. The colonies were almost ready to break up. There was poverty in different areas. There were huge rates of inflation. The economy was unstable. It was a new democracy. The European monarchies were counting on us to fail. People said this democracy thing is a joke. It's a fad. It'll never succeed. America is going to be weak and unstable and poor forever, and we can dismiss this craziness of the people ruling. People don't say that nowadays; people don't say that.
So ultimately I believe the great experiment is going on in many countries to move toward their own form of democracy, and their traditions and their customs, and toward a market economy is going to mean a more prosperous world with fewer poor people and less suffering, and a broader democratic consensus, so people control their own governments.
Thank you very much. (Applause.)
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