USAID Acting Senior Deputy Assistant Administrator for Africa’s Opening Remarks for Panel Discussion on Prospects for Enhanced Economic Partnerships United States Institute of Peace, Washington, D.C.

For Immediate Release

Wednesday, September 13, 2017
Office of Press Relations

 
OREN WHYCHE-SHAW: Thank you. I too, would like to thank the USIP for convening this meeting. I think it's timely and certainly we at USAID are rethinking along with our partners and our colleagues at state about how we can be more equipped, more efficient, more effective, at dealing with some of the problems and those that have been addressed. They were raised here today.

As the U.S. government's international development in humanitarian assistance leader, our investments are being made to save lives, foster inclusive economic growth, reduce poverty, and strengthen democratic governance. I've just come from the first town hall meeting that AID had with its new administer, Mark Green. And I will reiterate what he just said that our assistance is a hand up and we are all working at USAID and throughout the government for the day when our partner countries will no longer need our assistance; that the dynamic of our relationship will change. We'll not just be giving development assistance but really being partnerships and so that is what AID has been doing and certainly the dynamic, the nexus of how we go forward will be emerging as we move on to sizes and the other things to go forward.

I'd like to share a few statistics that my staff put together and probably everyone in this room knows since you’re all African followers, but between 2015 and 2030, 29 million new entrants have joined the African labor market. That is huge. That is enormous. That is almost a tsunami even for the United States. That would be an enormous population to try to absorb. And by 2050, there will be two billion in Africa. When you compare that population of potential workers with the labor market and it becomes very clear that there is a disconnect between that population that is growing and the labor demand in Africa presently.

When you look at Nigeria, the official unemployment rate is 12.1. The government itself recognizes an additional 19.1 are underemployed. And specifically, the young people situation is even worse. The youth unemployment stands at 42 percent. However, these statistics do not take the whole picture. Good news is the continent of Africa is primed to be one of the great economic success stories of this century. How? Through investments in infrastructure and technology. The introduction of new technology is being able to leapfrog some of our older technologies to go into the global economy more competitive. Africa is home to seven hundred companies with revenues of over 500 million. So, again, that industrialization is beginning. But certainly, there is a need for greater acceleration of it. And the consumer spending is on track in Africa to climb to over one trillion dollars over the next four years. That's a very attractive market for any company, or set of companies and certainly for countries.

So, by 2050 it is possible that the continent will make up a quarter of the global economy. That's the potential. So, what does it mean for the economy and business growth in Africa? Well it means that will have a fast-growing middle class but is growing middle class going to be as inclusive as it needs to be for some of the issues that were raised?

There will be an expanding urban population. A sort of a natural evolution of development. We experienced it here in the United States from being an agricultural country to being an urbanized. That will inevitably happen in Africa and it is happening in Africa on various pace throughout the country. The continent, sorry. And there will be an enormous number of new young consumers who are watching MTV, who want to be part of that global world.

So, the private sector in Africa will and is making a crucial input to the continent’s economic development. Certainly, more than a decade ago when I was in Africa, when some of us were working in Africa. However, African countries, those governments are looking to private sector because we indeed have said, private sector has the technology and skillsets. But the African governments also are a challenge to make economies of scope and scale for those companies, whether it's for producing, whether it is for importing and having larger markets or whether it's for labor movement.

While there will be a huge population growth in Africa, the job market may not match where that growth is taking place. If you look at Niger, it has the highest population growth in the world. It is unlikely that Niger will be able to create the jobs needed for that population growth. And so, for Africa, African countries to be able to really accelerate growth inclusively, there's got to be movement of labor as well as products and services.

Narrowing the sub-Sahara African infrastructure gap will be critical, also. And you've talked about Power Africa. Power Africa has been stellar in our thinking certainly. A U.S. led initiative of 12 agencies. This is probably one of the better inter-agency initiatives that have taken place and is taking place. There is a diverse coalition of 140 public and private sector partners. We also have partners with other countries who are involved in the Power Africa initiative as well. We have created the Power Africa tool box which is a menu of 160 tools that can range from financial to legal to advocacy to try to make sure that the business environment that is needed for those investments will be there as well as providing governments with the technical assistance to effectively negotiate with those private sector partners so that they don't have this balance in the partnership.

For example, in Malawi, Power Africa is supporting a series of reforms that are helping the government of Malawi improve conditions for private sector investment. It's supporting ranges from helping the government arrive at cost reflective tariffs, to increasing the credit-worthiness of Malawi's energy off-takers. And the result is as of December of 2016, the government lost the country's first ever competitive tender in the power sector by using the procurement framework developed with the support of the Millennium Challenge Corporation.

There are 21 international companies that have submitted bids to develop 70 megawatts of new solar capacity. That is the key to get to that point by the Malawi government and it sees itself on a path to diversify its generation mix, to bring down costs for its consumers, and population and to open the door for further rounds of private investment not just in power but to expand it into other sectors of the economy as well.

With USAID support, African government civil society, the U.S., and African private sector are able to better realize the benefits of the Africa growth and opportunity. We partner with African companies to ensure that they meet the stringent U.S. requirement to import into the United States to meet the grades and the standards. We partner with companies such as Phillips-Van Heusen, which is the largest shirt manufacturer in the world to allow them and their other companies to source from Africa, predominantly in East Africa creating thousands of formal, predominantly for women, jobs.

Wal-Mart is expanding upon the 2.5 billion investment it made in Africa in 2011. Slowly moving out its Massmart chain across southern Africa. GE, clearly with Power Africa but in other domains as well, is seeing greater and greater business opportunities. And there's a U.S. equity fund that recently acquired an African trout producer. The way USAID is engaged with AGOA is that we provide three trade hubs which are, if you will, the technical arm to allow greater access under GOA by African countries and also to make sure that American companies know the opportunities that exist on the continent and to work with both to come up with transactions that are sustainable, that are to the benefit of all.

Another transaction that I will just throw out there because it’s not always textiles, we said to always think in terms of textiles but Namibia working with our colleagues at USDA. Recently, within the last year, we see the approval to start importing beef into the United States. That's huge. There's been no beef imported from Africa and yet Africa has an enormous amount of beef. And we are looking to see how we can expand that further. So, there is lots of opportunity. It does take work not only from us but also from the African governments.

While indeed it took 45 days to start a business in Kenya and it now takes five- that needs to come down. The competition in Africa is not a binary investment opportunity for many things. It is not coming from the private sector. We don't just think in terms of do I invest in Africa or do I not invest? It is, do I invest in Africa versus am I investing in Latin America or am I investing in Asia dependent upon the product? And so, Africa has to recognize and really arm itself against its competitors global.

Finally, I would say that China is indeed recognizing the investment opportunities in Africa and it has made 150 investments per year in the manufacturing sector in Africa, up from only to two in 2000.

What does that mean? It means that again we have to recognize our competitive competition. It is not just the competition that Africa faces going out but it's the competition coming in. And we have had many discussions within the inter-agency about how we can best tool or retool what we are doing to be more effective and more efficient in reaching out, making sure that the African countries are well tooled to be competitive and recognize their competitive advantage, recognize the need for the regionalization so that there are economies of scope and scale which in turn improves their competitiveness, as well as talking with the diaspora and private sector here in the United States about those opportunities. With that I think I will stop. And I'd be very happy to answer questions.

FEMALE SPEAKER: Thank you so much, Oren.

Last updated: November 13, 2017

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