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- 11/17/09: Testimony of Mary C. Ott, Acting Deputy Assistant Administrator for Economic Growth, Agriculture and Trade, before the House Subcommittee on Trade - "Trade Capacity Building and U.S. Trade Preference Programs"
- 11/17/09: Written Testimony by Earl Gast, Senior Deputy Assistant Administrator for Africa, before the Senate Subcommittee on African Affairs - "Examining U.S. Counterterrorism Priorities and Strategy across Africa’s Sahel Region"
- 08/09/09: Remarks by Alonzo L. Fulgham, Acting Administrator, USAID, at the Second Annual Haitian Diaspora Unity Congress
- 07/30/09: Testimony by Earl Gast, Acting Assistant Administrator, Bureau for Africa, before the Senate Committee on Foreign Relations - "Responding to Humanitarian Needs, Supporting Peace, and Implementing Development Priorities in Sudan"
 RSS Feed for Recent USAID Speeches and Testimony
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This is an archived USAID document retained on this web site as a matter of public record.
Remarks by Andrew S. Natsios, Administrator, US Agency for International Development
AGOA Forum: A New Vision for Growth and Competitiveness
Dakar Senegal
July 20, 2005
I am delighted to be here today.
I would first like to thank President Wade for hosting the fourth annual AGOA Forum and to acknowledge the warm hospitality of the Senegalese people. I am honored to be in the presence of leaders from so many African countries involved in the AGOA initiative. I appreciate being able to participate with my sister agencies in the U.S. government and am grateful for the opportunity to share my thoughts with you on the role of USAID in developing and diversifying trade to promote growth and competitiveness.
The U.S. Agency for International Development (USAID) traces its origins to the Marshall Plan and the reconstruction of Europe at the end of the Second World War. In 1961, President John Kennedy formally created USAID and made it the lead federal agency providing foreign assistance and humanitarian aid to the developing world. Our involvement in the African continent principally dates from that time.
The hallmark of our efforts through the years has been to encourage the kind of economic reform that will help countries be more productive and autonomous. Over the past 25 years, a significant part of our work in advancing these goals has focused on building capacity in government and civil society, stabilizing financial systems, and promoting exports and trade. We do so in various ways according to the needs of individual countries and available resources. The AGOA Initiative that President Bush launched in 2000 is proving itself to be an historic milestone in this regard.
We have been working collaboratively with our USG counterparts out of three trade hubs in Africa - in Ghana, Botswana, and Kenya - and are designing and implementing programs that are building trade capacity and reducing trade barriers throughout the continent.
The U.S. and African countries have extensive ties that are growing and AGOA has played a significant part:
AGOA imports to the U.S. totaled $26.6 billion in 2004, an increase of 88 percent from 2003. While petroleum products account for the largest portion of total AGOA imports, with an 87 percent share in 2004, AGOA has helped African countries to diversify the range of products they send to the United States. Non-oil AGOA imports - including apparel, automobiles, and processed agricultural goods - have more than doubled since 2001 (the first full year of AGOA), reaching $3.5 billion in 2004.
My message today is a simple one. Without trade, there can be no sustained economic growth. Without economic growth, there will be no increase in tax revenues to support improved public services. Without growth and services, there will be no increase in wealth and reduction in poverty. Unless foreign aid contributes to economic growth, it is failing to achieve its primary mission.
We at USAID do not believe that sustainable growth can simply be built on handouts from benevolent donors no matter how large the amount or how well they coordinate their efforts.
On the contrary, we have come to see that achieving sustainable growth is fundamentally a matter of governance. It requires, first and foremost, the building of democratic institutions responsive to the people and capable of helping them effectively meet their needs. At end, the proper role of government is to create the enabling environment in which productive enterprise takes place. And the proper role of foreign assistance is to help governments and the business community to create a reasonable business climate for growth.
The history of the last century shows that rapid growth can be attained in the absence of democracy. But it also shows that such growth can not be sustained. Non-democratic societies have greater difficulty in responding to change and innovation. Moreover, the wealth they do produce is all too typically siphoned off by corrupt elites. This discourages any incentive for businesses and farmers and forces such societies to live off the wealth derived from their store of natural resources. In the circumstances, such elites are often tempted to turn to external war or internal coercion to stave off endemic stagnation and rebellion.
For these and other reasons, the issue of corruption has become central to the development mission of the United States Government. President Bush made a commitment to fighting corruption a key part of his Millennium Challenge Corporation, one of his signature foreign assistance initiatives. And he brought the anti-corruption message to the United Nations International Conference on Financing for Development in Monterrey, Mexico three years ago. In short, "corruption" is no longer a "taboo" subject it once was.
I have followed the lead of the President by inaugurating an agency-wide anti-corruption strategy this year which will move USAID's commitment to fighting corruption into all appropriate facets of agency operations.
We have long known that effective growth can not be sustained in the absence of a vibrant market economy. I can think of no other way to break the hold of stagnation and war than productive enterprise within the context of market economies. This is not theory or ideology. It is confirmed empirically by the experience of history - a "stern teacher" as the Greek historian Thucydides so aptly said some 2400 years ago. And here, commerce and trade, in our increasingly interconnected world, plays an increasing important role today.
This is why U.S. trade policy and U.S. development assistance have mainstreamed trade into our economic development efforts. Working in complementary ways, our trade policies and development programs assist countries in expanding their capacity to implement trade agreements and to use trade as a tool for economic growth and poverty reduction. To this end, we at USAID are actively pursuing ways to promote the diversification of exports. We are exploring the use of information technology in trade and investment; improving the capacity of African countries to remove crucial policy and regulatory barriers to trade and investment; and strengthening the skills to meet international animal and plant health inspection requirements.
The President's videotaped announcement of an African Global Competitiveness Initiative, a new five-year initiative, which builds on the AGOA work. It is an opportunity for USAID to collaborate with you to expand sales and economic opportunities for African businesses and farmers. We look forward to identifying the key priorities that will improve the business climate for trade and investment and strengthen the competitiveness of African businesses to trade with your neighbors, the region and the U.S. We need to build a program that shares the U.S. experiences and develops the infrastructure to support greater trade.
We've come to realize, however, that an effective response to trade opportunities entails more than an isolated project that exploits a country's comparative trade advantage. It requires assembling clusters of firms and support activities that allow producers to effectively compete in the global marketplace. And this ultimately requires a significant deepening of reform, affecting the business and investment environment within which firms operate and entrepreneurial risk-taking occurs. In other words, to take full advantage of external trade, significant changes must take place internally, within the borders of a developing country.
Sound macroeconomics is a part of this. But as the Latin American experience of the 1990's illustrates, without reform at the so-called "micro" level, poverty will stay entrenched and growth will remain elusive. Microeconomic reform refers to regulations and policies that affect the ability of firms to access credit, hire and fire employees, enforce contracts, process goods through customs, and meet environmental and health standards. It includes addressing the tax burden under which firms operate and a leveling of the playing field among competitors. And it refers to individuals and their right to own property, register businesses, and other everyday activities that create the environment for human enterprise.
Last June, I asked the 80 missions around the world where USAID operates to inventory all their activities to further microeconomic reform. We found more than 600 activities have been supported by USAID field missions and I am committed to expanding and accelerating their work.
Finally, I would like to conclude today with some remarks on new developments in foreign aid that we at USAID have pioneered.
As many of you know, USAID has been developing innovative partnerships with the private sector to support economic development. One way we have done this is through our Global Development Alliances. In FY 2002-2004 USAID funded 105 alliances in Africa, with over $315 million in USAID funding leveraging $1.163 billion in partner contributions. But we have also facilitated the development of other partnerships that truly demonstrate the power of cooperation over assistance and mutual benefit over charity in achieving growth and competitiveness.
The more innovative of these programs, as at the Moi University Medical School in Kenya, pool both know-how and resources from our governments, private sectors, civil society, and the Diaspora. This is, quite simply, a new paradigm of foreign assistance that holds much promise for the future as it marks the distance we have traveled from the past, when development assistance was largely characterized by government to government monetary transfers.
We stand at a critical moment in world history. Future generations will undoubtedly see this moment as a time of great challenge. But against the dark background of terrorism and pandemic disease, they may come to see this as a time when the fortunes of the world significantly brightened. In her eloquent confirmation testimony as Secretary of State, Dr. Rice spoke of daunting tasks but also of "hopeful signs," of which I would include AGOA.
President Bush and Dr. Rice are committed to Africa. This is because Africa, long relegated to the periphery of the world's attention, will play a central role in our common future.
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