Meeting of the President's Advisory Council on Doing Business in Africa
Good morning everybody. It. Says here I'm supposed to gavel, I don't have one so. To. Order again. Thank you all for, attending, this. Morning's, packed, DBIA, meeting, it's, a very. Strong. Indication, of the administration's. Continued. Focus on Africa, we. In the pack DBIA are very interested. In working, with the administration and really continuing, the focus on on working. Together and, bringing in. America, approach, in a United, States approach between the private sector and the USG. We've. Been working over. The last couple of months on. A. Task from, the, secretary. On identifying. Issues. Around. Approaching. Africa, competing, in Africa, and operating, in Africa and. We will address those today and the remarks, from. Our, colleagues, as we. Go through the morning around. Some of the issues that that. We see in those three three. Key areas and, we will then, then. Address, going. Forward how, to address, some of those issues and continue. To move forward from it driving. Economic growth, in. Africa, along. With continuing. To drive US business, activity, in Africa, as well so. I will again thank you all for attending secretary. Thank. You for your support, continued. Support, and I'm going to turn it over to Laura. Thanks. Jay and good morning everyone I am really. Pleased to be here today as part of the backpack DBIA. Because. I do truly, believe that collectively. We can accomplish great things together. To, advance an American, approach for the continent, my. Name is Laura Lane and I'm honored to serve as the vice chair for, the PAC DBIA. And like, all of you my career, has given me an incredibly, deep appreciation for, all the good that comes out of boosting, the trade and commercial relationship. Between countries. Particularly. In the African, continent, and in, this case we're focused on the sub-saharan Africa, with all of the diversity of opportunities and, challenges that, exist in the markets, that brings, opportunities. For American, companies but, requires, that partnership, with government to really realize, those opportunities, so, we have, an incredibly, esteemed, group of public, and private sector representatives, coming, together today, and under. Your leadership mr., secretary, to, find the solutions, and mutually, beneficial opportunities. For growth so I look forward to reviewing the report with, everyone, this morning but, let me turn it back over to You mr. secretary, well, good morning and thank, you Jay and Laura for, your leadership, on this council and I thank all of the members of the council, for, your ongoing, work and. Finally, I thank the National Security Council for, graciously. Hosting, this meeting that's, their fourth time doing so during, the three years that the PAC DBIA, has. Been in existence. I'm. Pleased, to finally meet the PAC DBIA, in person, it. Has been three months since we all met by phone and I, posed to you on behalf of the president, a set, of tasks, intended, to channel, your, varied, experiences. I asked. You to make recommendations. That would inform, US. Government's strategies, to, help make American, companies. Pursue. Win. And, execute. Business, opportunities. In Africa. Specifically. I asked, one what. Are the three biggest factors. That, keep American. Companies. From. Approaching African. Markets, 2, what. Are the biggest obstacles, to. The success, of American, companies, already. Competing. In pfaff Rica third. From. The perspective, of American, companies, already. Established. In Africa, what, are the three characteristics, of, African, markets, that, most hindered the ability, of, American, companies, to operate effectively. And. Efficiently. Today. You, have convened, to adopt a report, that, I hope provide. The answers, to. These questions we'll. Be discussing, each of the nine issues in, the report in some detail, which, means we have quite a bit of business to, do today. So. I'll stop here and just say, I'm looking forward to an interesting, and active discussion, with you thank. You, Thank. You mr. secretary, appreciate, those remarks. Cyril. Would you like to make a few remarks as, well. Okay. Great. All, right as I said the report, has been worked on between. The. PAC DBIA. Companies. As well as the government. Agencies. And, we. Want to introduce that report, to the to, the committee and. Again. The context, was the secretary, mentioned was.
Around What. What are the obstacles. Issues. Potential. Around. Approaching, Africa, competing, in, Africa. And then operating, in Africa for US companies so I'll turn it over to Laura to work. Us through the report, mr.. Secretary, in order to pursue win, and execute, on deals in Africa, the council got together and focused on those three areas of approaching. Competing, and operating, in this market, we're, gonna focus first on the first set of issues with respect to approaching. Business. In Africa, what, are the key issues that companies, face when they're considering, expanding into, Africa, and this, includes American, firms that are looking to export. Their products, into African, markets, as well, as those that are thinking about putting in a physical, presence or concluding, business, contracts, with partners, in in various. Countries in sub-saharan Africa. And the, principles, of the council, identified. The. Idea, of distinguishing. Between not, just perceived, but those actual, market, risks because both of them come into play in terms of limiting, the types of companies that decide, to approach the African. Market as a possibility, and really, harnessing, markets, and demand as the core issues, for, approaching. The continent, for those opportunities so I want to turn it over to Barbara for some initial comments along those lines. Thank. You Laura, and Jay and thank. You fellow. Councilmembers and commerce. Staff we really appreciate, you convening, this, mr.. Secretary, as a small business owner operating, in Africa, for the last 20 years I've. Had a first-hand understanding of. The obstacles, facing American business in doing business in Africa however. I am still there but. In summarizing, what our council has determined are the obstacles other US businesses, have, in following us to the continent, we, have identified, that the aspects, of risk perceived. Versus, actual is, a significant. Element in and of itself it. Is clear that African markets offer multiple opportunities for US businesses to. Grow their operations on the continent as this.
Is Being done by businesses, from other nations as well yet. The rate of expansion does not reflect the potential, growth for American companies in Africa as I. Mentioned as a group the council identified, risk both perceived and actual as a concern for US business in. My experience, the actual risk are not that different from any other part of the world yet. US companies continued, to be reticent to compete or even consider the content I believe. That we need to reignite the pioneering, spirit that is a core American value, and overcome. These obstacles and, head east to Africa, the. Perceived risk an - actual, risks we categorize. Under the following headings, legal. Regulatory, risk for. An exchange risk, liquidity. Risk. Political. Risk and headline, risk. What. Do these risk categories, mean to businesses, as they consider approaching, African, markets the. Legal and regulatory risk, can be defined, as the rules of the road when. Learning to navigate in African markets the perceived risks, are found in the enforceability, of contracts. The dependability, of the regulatory, and tax process, and the. Consistency, of the legal process for, many US companies considering, Africa, the rules of the road are perceived as weak or difficult to navigate, for. An exchange risk, liquidity, risk. Perceived. Or actual risk, money. Is the fuel of business and the perception, that central, bank functions, that. Support free movement of funds along, with economic controls, to, have stable currencies, is a major issue for companies considering, Africa. The. Political, risks there's a perception, that the political, environment is not stable and regime change is not democratic. The, reality, is that several key countries in Africa have gone through several peaceful, democratic electoral. Cycles and, finally. What we described as headline, risk this. Can be defined in the, loose analogy I've been putting in place as the road signs on. The, road the stop Argo signs and which come in the ways of news headlines about, anti-money. Laundering violations. Office, of Foreign Assets, Control sanctions.
Or Other prominent, events in summary. We identified, these four areas under the broad category, of risk in the evaluation, stage being, done by companies as they approach African, markets so, thank you for this opportunity. In, all of them one of the first things of small and medium-sized businesses consider, is where should I go there, are over two point two million exportable. Companies, here in the United States and only 330, thousand, of them actually export. And the majority of those places, are to Canada, to, Mexico, and, to China and we. Look at this and we say why aren't they doing more, and I think one, of our roles is to look. At how we can help them and influence, them in reshaping, the image, of Africa. Perhaps not even as a continent, but as individual, countries and, and. Promote those and promote those opportunities, and I think the leadership of the US companies, that have already been there and blazed the trail if they can help work with us to, identify. Areas where, there. Are opportunities. For these small and medium sized companies because, I think that's the way that we we can do it there is risk and they definitely, feel it. Thank. You Erin um Eric, Meyer of the Treasury Department did you want to interject, as well thank. You Thank You Laura and, as pleasure to be here today I. Think. I think one, of the important parts you made Barbara was that, the there are risk and there, are risk in Africa like there are everywhere, in the world that American businesses, are active. Or trying to be engaged. The. The, challenge, in Africa, as you said is a perception, that. For. Some reason the bar is so much higher and. I think it's, really important that you all have put out and began to draw out in, more detail what some of those perceptions. Are, so. That we can work, together to try and find ways to. Clarify. And. To bring light on - on to what those issues are so. I think it's. Really important that you've highlighted some of these I think regal legal and regulatory risk is one that we hear very frequently, when we are meeting.
With American companies that are either interested, in or actually active on the continent, and I think that's a that's really important, I think. I can just be brief right now and as we're gonna talk a little bit later on about some of the foreign exchange and. Liquidity. Risk issues so I don't need to to. Go into that a whole lot more I did. Think it was interesting and your headline risk that, you all highlighted, things like, anti-money, laundering violations. And. US. Sanctions, and, I think that, points to. It. Points to a I. Think it points to a real risk but. It's a real risk that's everywhere and, I, think, from our experience I. Wouldn't, say that our the, the use of sanctions or, the violations, that we've seen are. Disproportionately. In. Africa. So. I think that is an area where we need to try, and get some clarity but. You do point out an issue which is for us a macro, economic. Fundamental, issue which is that, countries, across the continent need to be investing. In their legal and regulatory regimes. So. That they are able to operate at the highest standards thank, you. We. Can open the floor for any additional, comments, that anyone might have. Otherwise. Let me recognize Fred, Susanne to, present on underdeveloped, capital, markets, and some of the challenges, that presents for approaching the, continent, thank. You Laura and. Thank you mr. secretary for for, having us, Capital. Markets be provide a conduit for private sector funds to flow through to African. Projects, what. We've seen as we've seen a good, a, good. Scenario Africa, growth has really now started, outpacing. The ability, of public, sector funds to keep up with the growth, but. Capital markets, the. Investments, present, a substantial opportunity. To US businesses, to. Provide goods and services to African, customers. The, private sector has a desire, to participate in, this growth but. The capital markets need to real but. Efficient, capital markets, are needed to realize, realize. This investment interest, there. Are a few the. Council has identified the, following barriers, to efficient, private. Sector. Capital, to Africa. One. Is the. Access, to access. To you in the cost of capital.
Currently. Currently. Capital, is not readily. Available in, all markets, and the cost of that capital, are sometimes. Pretty, prohibitively. High, for. The investments, number. Two, markets. Lacked the financial, transparency data, and standards. Needed. To attract private sector capital to those markets, number. Three debt. And equity market, liquidity a shallow or like the liquid in in. Many of these markets the. Capital. Markets, are. Fairly. Underutilized. They. Don't have a lot of external, participation. And that. Doesn't create the. Momentum. That, are needed, to finance. The projects that are happening within those markets. Number. Four, basic. Financial infrastructure such as telecommunications and, Internet is missing, or or, needs, improvement. In. Many of these areas, for. Example, the. Data transfer required, for capital markets in order to keep them to. Keep them flowing smoothly. It's. Just, is running over antiquated. Systems, they're. Not able to communicate internally, effectively. Or externally. Which. Arrest confidence, from private, sector. Number. Five regulatory. Framework, frameworks. And institutions. Are underdeveloped, and lacks standardisation and. I, think that this is more of an education, issue in many of these markets the. The. Capital markets are relatively, new they're. Managed. Sometimes, by folks, that are not as educated or, as, experienced. In Western, capital markets and so, what ends up happening is. The the. Frameworks, that are required to gain confidence from external, investors, aren't, necessarily, there so. Confidences. Conferences. And impacted. That. Concludes my statements. Thank. You very much, let me say a couple things at the outset. USAID. Takes this input from, the PAC dbi a very seriously, and. We. Really appreciate, the coordinated. And strategic. Inputs, of the report. We. Work. With African countries with. Economic, communities, and with the private sector to. Reduce barriers to trade and investment and, also, to foster linkages. Between US, and African. Firms and, we. Do this in a number of ways including our, regional, trade hubs that we have in Nairobi, Accra and. South. Africa, and also through, power Africa's, whole-of-government approach. In. Africa's. Energy sector, so, in terms of the report I. Think. For us it, would be very helpful to, prioritize. The subtopics. And, really. Highlight the binding, constraints. So. That we can understand, where we can be most constructive. In supporting. American, businesses. And. Then just one other thought is that on. Information. Communications. And information. Communications. Technology it. Might be broken out as a separate subtopic. Because. It. Has such a broad nature and also, this, this. Is a, sector, that's so important, for Africa's. Development Thanks. Just. A quick reminder for everyone since this is live it'd, be important. That everybody turn on their microphones, so that they can catch it on the livestream and everybody, can hear the valuable comments being made let, me turn it over to David O'Hagan from OPEC because, I know you have some good insights. Share related to, the. Underdeveloped capital, markets and ways in which OPEC, is partnering, great. Thank You Laura and thank you for the council, for this great report I would just highlight this through the spectrum, of an investor, before I did, it through the opaque lens which is everyone. In this room understands. That it's a risk reward ratio, for. Investors, and that, the. Report does a nice, job of, highlighting the. Rewards. And all, of you who are building an infrastructure, in telecom, and healthcare there, understand, that well, what I believe governments, in Africa have failed to understand. Is the perceived, an actual risk they're creating by trying to manage. Their risk whether, that's currency, exchange, or interest, rates it's, an important, factor, for the US government, as part of its commercial, diplomacy. Aspect. To ensure that we're talking. To folks who are less experienced, in economics, and some of our people. Here one. Thing that OPEC is doing in that regard is, as secretary. Ross serves on our board he'll be seen a. Board. Deal come up with a. Foreign. Currency, exchange.
Deal. Which these capital, markets particularly, underdeveloped, we've seen private equity players get, into. Africa. The. The depth the capital, markets aren't there and in particular, it's, stunning to me to find that you can't find this sort of five or ten or twenty year tenor that you might need and local currency, exchange which, typically falls on the most vulnerable so. I think that's our aspect, to the report that I believe, should be highlighted as well so thank you for your work there. Thank. You David, Kimberley. Do you want to provide some additional thoughts, as well thank. You so. My, company, amethyst, technologies. Is, a small business we. Represent, a US pharmaceutical. Company, who, manufactures. Their works in Asheville, North Carolina and. We, distribute, their product in Ghana the. Advantages. They had in Ghana were. Approval. In the FDA there, took about three months and, cost less than $10,000. The. Challenges, we have as a small business, our, access. To capital. 90. Plus days, for, payment. If. We're, lucky in many cases, and we. Have to pay 13, to 15 percent interest rates, for. A line of credit so. If. There are programs, that are right size for small businesses, that, can, provide access to capital at, a, low cost. Also, programs, that don't require significant. Time, to, implement, that, would be very beneficial for. Small. Businesses, in all businesses, in Africa, thank. You. Any. Other comments, that anyone would like to add yeah. Yes. I would like to add one thing one of the things that I've seen over the last seven, years there. Especially. In Kenya but also in other countries, Nigeria. Etc, is a tremendous. Entrepreneurial. Small. Business. Focused, by both, Americans. That are there as well, as the, African, people. And it's around, innovation. They. Are solving, problems they've got tremendous. Capability. And. Developing. Tremendous, solutions, especially solar, home systems, etc and the, reason I bring this up is because one of the things that is a real. Constrictor. Of their growth is the. Underdeveloped, capital. Markets the cost of money. Number one the acts accessibility. Of money and as, we think about environments. That spur, innovation here. In the US the. Ability to exit. If you will or to continue to get investment, going forward so though under, liquidation. Or that I should say the lack of liquid liquidity, in the markets, where. The typical, venture capital, of what we see here in the US is somewhat, non-existent. There are people that do it but. There's, also a real potential, to really draw drive, growth both both, in, Africa as well as here from some of the the, products, that are being developed here, as well. Thank. You Jay, one. Of the other important, elements, in terms of approaching, Africa, is that. Analysis. About market, size and whether the demand is there and whether there, is a readiness for US business, both to enter those markets, and thrive in those markets, so now let me turn it over to. Tech remelt aha me so. Thank You Laura and thank you mr. secretary for the time and support you're giving to the council.
So. Africa, is an attractive. Market. And is, a long-term, growth, opportunity. However. There are several. Issues that slowdown. US, businesses, approaching. Africa. Two important, ones are diversity. And competition, so. Africa is home today, to over 1 billion, potential. Consumers. By, 2050. Its. Size will increase by an additional, 1.3. Billion people. Estimated. To house. 26%. Of. The global population, however. Africa, is not one market, the, diversity, and variations. Of market conditions within. And, across. The, 49, sub-saharan. African, countries make. Approaching. Africa, challenging. For US companies. One, solution, often does, not. Fit. Every, country's needs and conditions, scaling. Business, is. Hard, and. Smaller, market, size often, equates, to smaller. D sizes, which stresses, the. Business model of some. Larger. US companies, also, small and medium US businesses, are challenged, to assess. And navigate. The size dynamics. Do. You. Impart. To lack of skilled market. Research. Firms, who. Can advise, on market, preference, and tailoring. Products. To a market, and the, expense, of doing so. For each potential. Market, they are. Exploring. For. Entry. Now. On the side of competition. Some US companies, are. Supporting. Better health, and disease prevention. Initiatives. IT. Enablement. Ecosystem. Development. Education. And skills. Development and. More. To increase market. Size within, countries, for, example, earlier. This year the, IBM CEO announced, the. Digital, nation Africa, initiative which, will support 25. Million, African. Youth with, access, to three skills development, programs, around. Much, needed. Technology, skills like digital, cognitive. Cloud. Application. Development, data, analytics, and, intrapreneurship. Historically. Companies, that had helped countries, in this manner have, benefited. From a spillover, effect. Of larger. Market size goodwill. And demand. For, their company's, products. And services. Today. Such, US company. Investments. Spillover, is being diluted, by, increased, competition, in, corporate. Social, responsibility. Especially. From companies, in China and India, whose. Corporate. And service, and, social responsibility, programs. Were. Nascent, or non-existent. Just a decade ago. Further. While the US government also has. Numerous. Impactful. Programs to support market, creation, opportunities, for US companies the. Chinese government, is also providing. More assistance, the. Chinese aid centers. Really, centers. The. Chinese aid centers rely heavily on concessional. And semi concessional, loans for. Infrastructure. And export. Credits but support, for their social development projects. Are on the rise so. As more. Nations, join, the u.s. in market, creation, efforts across the African continent, the, corresponding. Awareness, demand, and goodwill, for. Products, and services could likely migrate. Away from the, u.s. toward, the newly engaged nations, as, a result, US companies, will receive fewer, positive spillover, effects. From. Their investments. Despite, some, of the, ongoing efforts. From the US government, to facilitate market. Opportunities. In the region, so. The size and spillover. Market, dynamics, dissuade. US, companies, from. Approaching, and growing. The, presence, in Africa. Mr.. Secretary, in your current role you, have. A lot of, opportunities. To advance these, initiatives but you've also got tremendous isn't, his experience. Could. We get your thoughts on approaching. Africa, and some of the opportunities, and challenges there. One. Of the topics, that intrigues, me is how, can the business, community, or how can we in US government.
Facilitate. The, kind of market, integration. Market. Coordination. That, would help overcome, the scale problem. What, are the real reasons why, there. Aren't free trade agreements, that have better why. Are there differences. In customs, procedures. Non-tariff. Trade barriers and. How, can we deal with this because a lot of the issues you're raising our. Issues, of a lack of lack, of homogeneity, in, practices. Among them it seems to me so. Has. Anybody given real thought, to. What mechanism. There is or what series. Of strategies we, could apply to. Try to deal with that issue. I'm. Gonna offer some thoughts at the end but David. Not. Just to understand, the problems, but, have a path towards, solutions. David. Do, you want to interject. Sure. On on the demand. Side I'm, not going to recite, to you the demographics. And again. The the markets, that are being developed but. I think, we take for granted in a country, where, the Commerce Department, developed the notion of GDP, the, fact that these signals are harder to come by and, not at a not, necessarily sort of pan-african, context, but on a country-by-country basis, it's harder, for companies, to know where the real prospects, are I think, as we view it from an OPEC, perspective. Those, are primarily, around the, commodity. Space where we need to ensure there's the infrastructure, there both, roads. And, telecom, and. Other. Ways of being able to move, goods up the value chain to, be able to co-locate, on processed facilities, and truly move goods and services, across markets, and. OPEC. Stands ready to help with, product finance the, political risk insurance as, well as support for private equity funds and. Also want. To echo two creams point, on the. Competition that's going on in Africa. Right now in a geopolitical basis. As. The president said recently on, his Asian, trip we need to ensure that. Eurasia. Remains, open, and free to us goods and services I think the same thing is true of Africa. The, competition, that's going on there is, about American, prosperity, but it's also about American, security, so I encourage, companies to seek out opportunities that.
Promote Both of those as well. Thank. You Lauren thank you for, this committee for this reports, it's very helpful to get it get it get it the, industry - I think there's a real opportunity here, Inc, having. Spent the last 20 years working in Africa recognized, firsthand the competition, that, this report talks about it's, an area that USTDA. And, commerce have worked well together in the past is. Picking. Some priority, countries and, figuring out looking, around the table here the different government agencies, the private companies, are investing, in these, companies our, competitors, are going, in as a monolithic, here's, what we are providing, and we, are going kind of in a fragmented. And I think us TV and Commerce had been, successful, in China and India making, the case of here, is the u.s. presence, I think that the. Pack dpi has a real opportunity to come together pick. Some priority markets and make, the case of here's what the US government here's, what the private sector is bringing, so, it's we. Start to overcome this competition, issue of China's, doing this but the u.s. is doing this system this because I think there's some, real benefits, we can gain if we work together through. This pact EBI initiative. To, create a single, message, of what is the commitment to African countries so, we're, seeing as a more. Monolithic US approach. Thank. You mr.. Secretary I want to answer your question, directly why. Is there, not free-trade, occurring. Why is it not happening in these regional pockets, ups. As a company, we operate in 220. Countries and territories we, cross borders, every day we operate in 51, of the 54, countries, in sub-saharan Africa. And you know what a lot, stops, at the borders the border, processes, are one of the biggest impediments to, trade because, the reality is those processes. Involve, a lot of delays they involve. Outdated. Procedures, nothing. Is really done electronically. Which allows for efficiency, and security screening. And the kind of movement. Of goods across borders, that we I would say take for granted in more developed countries and the, reality, is we have an agreement that has already been. Agreed. On by a vast, majority of the members of the World Trade Organization, the trade facilitation agreement. And, that agreement. Represents. That. Foundation. From which we can build more trade opportunities. If we, can work, with the countries, in partnership, with the World Customs organization in, the World Bank the World Economic Forum, as well, as companies. Like UPS IBM, and many others in the room here that are working in partnership to. Help these countries improve, their border processes. I, believe. That once you transform, those processes, you allowed more trade to happen because, one of the challenges that exists. Is in, those processes there's. So much corruption, and, bribery at those borders, there's a lot of security, risks that occur there if we, can turn those processes. Electronic.
Bitstreams. Don't ask for bribes we, can move goods, across borders, and you know what that takes the risk out of the supply chains and those, supply, chains then can create more opportunities. For American. Goods to go into these markets and create new. Manufacturing. Opportunities and, grow, with. Them and that's fundamental. So start there and drive, that process that, would be something meaningful are. The government's, aware, of that problem and do they care about it it's, mixed so we've got some countries, that are willing to work in partnership and that's why the prioritization. Then I know the NSC, wants to give to a handful. Of countries that, this government, works with let's, make them the pilots, and in many way those positive, examples, of when, you create the right, customs. Processes, you create a lot more economic, opportunity, and that's their obvious, candidates. To be the test, cases. There's. A number of countries, that are already in the pipeline. Morocco. I know is one of them that has been working in partnership, we have activities. Underway in Kenya, there's a number, of others that have indicated. An interest in working in partnership, we can follow up with a specific list. But. If. There's, countries, that are willing to address those border, processes. They, represent. A good Ally for us in terms of addressing some of the challenges, that keep American. Companies, from exporting. And growing in those markets, so we can get you a more detailed list, okay. Because that might help as a shopping, list for the trip we're planning, in, 2018. Because. I think to make that trip worthwhile, we. Really need to have specific agendas. Specific, targets. Specific. Things that we want to get done, because. At the forty thousand, foot level we, can go on forever we. Need to do things at the ground level. Does. Anybody else want to add some additional comments. Yeah. That's. Okay, so. I just want to echo what she said we here at the NSC were doing. Research. On better electronics. No. I. Can. Yell I'm from a big family. So. The. Connectivity, issue is huge. And, I think people don't quite understand, how much this traps. Africa. Into, a lot. Of really bad things as a feedback loops are really, really bad with this. So. You. Know the the economic research, shows that if you double the efficiency of two ports, that. It's it's it has the economic, effects same economic. Effect is having, the geographic, distance between those ports. And. So in some sense Africa, is very far, away from. The rest of the world because. Of these connectivity, issues whether that is the physical, infrastructure. Or the the, processes, at the border or anything, else that slows it down and. The. Reasons for this is not simply that it costs, a little more to ship things. By UPS or even, quite a bit more, but. That if you have unreliable. Supply chains that companies have to hold tremendous, amounts. More inventories, the, research shows that companies. In these these countries, that poor connectivity have, this huge additional, cost of inventory carrying, and. Given the cost of capital is very high, either. Explicitly. Or implicitly, in these companies in these countries, you. Are imposing. A, tax, on those countries. Of several percentage, points of GDP just. From that one effect, alone and then, in addition to that we. You know we talk about the the resource curse now I pondered, this quite a bit with you know with Africa where it's. Hard to get them out of this resource curse situation. And the economics, of that are, difficult but then the politics, of that are as well you encourage, the corruption, in the bribery, where, there's this one or, two commodities that you can have very corrupt deals, about who, gets to access that and on what terms. But. You cannot have development, of more complicated supply, chains where Africa, gets integrated into, the rest of the world.
Without. Improving, the logistics, significantly. And once you do that then the economy is not solely dependent, on this on the, the vagaries, of commodities, markets, which then implies, tremendous. Volatility, the currency, is somebody said down here I couldn't see who it was but. His currency, issues that then result, from that and so, then you have a lot of risk that, investors, perceive, and so investors don't want to invest because there's this huge currency, risk and so you just have this whole, series of dominoes that fall over from. This problem so I think a, bigger. Focus on that. Would. Be helpful, I notice that it's mentioned, in the in the back of the report I would put it in front of the report, because. I think it's it's quite an important, issue we should focus on. Thank. You yes. Hi. I'm Connie Hamilton, from USTR, I just wanted to comment on this, discussion, I think we sometimes forget that we're talking about 55. Independent. Sovereign, nations, they, are not monolithic they're, not joined. Together even, then we talk when we talk about their regional integration in, their regional, organizations they still act very independently. So, the fact that they're working on a continent-wide. FTA, and we all have reservations. About what that's going to do and what that's going to mean but, by the end of 2017, they, hope to have at least in place a framework where. They're working together to address some of these issues they recognize, the challenge that they have in being small markets, and diverse and they're. Trying to deal with that and so I think that if we look at if we try to work with them carefully, on how they plan their FTA, this, continent-wide, thing, that we engage with them and offer ideas and capacity-building assistance to. Help them get to a place where they should be as they're putting together this package I think that would be helpful and help address some of these issues. Thank. You, anybody. Else yes, this. Session is, generating, with a. Lot. Of interest sorry, with. State Department just. To come back home what Connie said when, chairman Paki just visited for the ministerial, with secretary Tillerson he. Raised the issue of the Rex as well so. What the AU is going to start doing starting, next June is. Convulsion. 'el economic. Units. To their their au meeting and the, idea there is to push, forward with with, customs. And border issues, and others, the things that you were talking about what's, happening at the border and how can they get in traffic and trade your, report touched on the fact that it's at 16% its. Suboptimal, it's, really hampering their growth and so, this goes into the, the free trade but, as well a you fully, understanding, that and trying to work with the Rex to get regional, energy behind that and that's something that we support. Any. Other additional, comments I. Think. It's good time to move on to the next section, focusing. On competing, in the African. Market and here the council explored. The, biggest, issues, that, come. Into play in terms of ensuring, a level playing field for American businesses as, they grow, and expand, across the continent, and fundamentally. The obstacles, are there because there's an aggressive, approach by, foreign governments, with. Previous. Colonial, interests think the French think the Dutch think the Belgians, think the Germans, and, think about the Chinese, expansion. Into and, across the continent, and a, lot of the advocacy efforts, that go in support, of their businesses competing, in the continent there's also obviously the local content, requirements and. Some, of the most burdensome, public.
Procurement Procedures. That. All put US, companies, at a tremendous disadvantage, and. So really, focusing. On those. Issues is going, to help ensure, that quality. Goods, and services, that American, companies are known for are not, unfairly, hindered, because. The playing, field just isn't level and so I'd, like to turn to our Chairman. Ji Arland to, comment, on that, whole of government ecosystem. That enables, US companies. To be able to compete, effectively. Thanks. Laura. When. You look at the the, whole-of-government approach. We. See many, other governments, from, around the world in Africa. Competing. In a way that we do not, and. That that, can be as as. Far. Ranging, as bringing, a fully financed. Deal. With. The, associated. Companies. In their country. Into. The deal and presenting, it to the government, as a as, it with a concessionary. Loan, that. Gets that basically. Usurps. The public procurement role, role, because, it's a government-to-government deal, so. We see that we also have. Aspects. Of certain. Aid. That gets provided. To countries, around healthcare that, would be tied to, from. Governments, that. Then bring their their home country, products, or companies in. As the sole provider for the, equipment and services, around that so. It's it's not just China, or the East it's also. Europe. Germany, has a Marshall, Plan utilizing. The g20, focused. On Africa, it's. Mainly now focused, on around six countries these. Are the things that we, we, continually, see as a competition. Another. Way to think about it is from. A standpoint of, speed, is that. We an American. Company would come in put, together a deal put the pricing, together present. That potential. To the, government, whether. It's a, power plant a road or rail and then. Go try to get financing, and put a financing, package together it, takes quite a long time the. Competition. Comes in as a whole-of-government approach, with, here. It is it's done go, and we can start and break. Ground in a project within, within. Six, months or whatever so it's a very impactful. One for a president, for a company's. Head of state or a country's, head of state is, looking at different election cycles, as well to get things accomplished, so, as we look at what we can do as the US government and US companies is, to again, marshal, the resources, that. We have which, are very substantial. Between. USTDA, OPIC. Exim. MCC. USAID. Etc. Which which, now, operate. In somewhat, of a disparate, manner and really, focus, through on a strategic notion. Of what we want to do in development, finance and, it doesn't always have to be loans that can be certain, credit enhancement, facilities. Insurance. Not, just a political risk but also which we do have a product with. OPEC but also on on, credit, risk as well and. I think there's a lot of opportunity, for all of us to. Work together to really provide that capability and, really have a stamp, if you will of, projects. Around countries.
That, Says you, know here's, what a combination, of the US government, and US. Companies can bring to the, economic, growth of that specific, country. Thanks. Jay mr., secretary would you like to add some, thoughts. All. Of those entities, exist. Why, is it that they haven't been able to be accessed by, you fellows. I. We. Have been able to access it, it has not it's not in a question, of access it's, a question of of how, we go to market so. We've. Done projects, with without, plenty of projects with OPEC plenty of projects with XM, and we. Put together the project. All. Of the price let's say, an independent, power project all the pricing, etc the environmental. Work, that has to be done and then, we look at a topic, or XM, to fund. The debt or the equity and they. Go through their underwriting process. And. At that point in time so it's, a combination of, that speed number, and number. Two is we're worth sourcing, the deals which is fine but then there's also the potential, to. Work underneath a. Government-to-government. Discussion. Which. Then somewhat, alleviates, a lot of the can. Enhance. The speed but also alleviates, a lot of the competition I don't know Andrew if you want to comment on the one you have in Kenya, yeah. I think I mean Kenya's a great example of where there was an MoU put in place by by commerce and, we were able to work, directly with the government with, with Exim, OPIC. Commerce. And state and putting together this deal and that was one of the deals that we signed in August I think is a great example of that of having that MOU structure, in place two years ago and then we came in worked with the government on structuring, the deal and tying, the different agencies I'm putting in together that whole value chain and, if we can do more of that and we've talked a little bit about what, other mo use could we put in place and other strategic countries. To, be able to utilize that same approach. You.