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Date: Wed, 5 Jun 2002 23:17:33 -0700
From: International Bicycle Fund <[log in to unmask]>
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To: an WASAN <[log in to unmask]>
Subject: [WASAN] Treasury Sec. O'Neil'sl Africa Speech

Treasury Secretary Paul H. O’Neill
“Caring Greatly and Succeeding Greatly: Producing Results in Africa”
Remarks to the Carnegie Endowment for Peace
Washington, DC
June 5, 2002

[Note to Secretary O’Neill: on June 5, 1947, Secretary of State George
Catlett Marshall announced the European Recovery Program, later known as the
“Marshall Plan” at Harvard University.  Today marks the 55th anniversary of
that speech.  See conclusion.]

Good morning.  Thank you, Jack (DeGioia, President of Georgetown
University), for that kind introduction.  I also want to thank the Carnegie
Endowment for International Peace for arranging this opportunity to discuss
my tour of Africa.  And thanks to Georgetown University for accommodating
this crowd!  It’s encouraging to see so much interest in this important
subject.

I went to Africa last month to listen and learn; to meet African leaders in
and out of government, to meet doctors, farmers, teachers, students, and
entrepreneurs.  I went to hear their insights into the obstacles to Africa's
prosperity.

I also went to find a real-world basis for recommendations to the President
on how to allocate funds from the newly created Millennium Challenge
AccountFund.  But most of all, I went with an open mind, and one one pivotal
question: How can the people of the United States and the developed world
best help Africans and their elected leaders achieve prosperity at last?

It is too soon to announce policy recommendations from the trip, but I
certainly learned a great deal, and I want to share some of my experience
with you.

Some would say my trip was a little out of the ordinary.  The Treasury
Secretary traveling with the rock star.  The “odd couple.”  Bono even had
tee-shirts made portraying Jack Lemmon and Walter Matthau.  But we really
weren’t so odd.  In fact, I think Bono and I found a lot in common.  We both
desperately want to see the people of Africa – in fact, the people of the
worldentire globe – living to their full potential.

I did try on the famoushis blue shades during the trip.  And Bonohe sang the
occasionala song here and there.  Between these lighter moments, though, I
have to say this was the most intense twelve days I’ve ever experienced.  I
metMeeting people like Sister Benedicta, who runs a hospital and orphanage
in Ethiopia.  She maintained an incredible radiance, even as she told us how
many people die in her hospital every day –, how many children die in her
hospital every day.  To witness that strength of spirit is a truly profound
experience.

I can’t begin to describe all the emotional moments during this trip.  They
confirmed three things for me.  First, a truth we’ve always known: All
people everywhere can do great things when they are given the tools and
incentives for success.  Second, that with leadership --– honest,
accountable, and committed to progress --– everything is possible.  Without
leadership, nothing is possible.  And finally, that in the right environment
focused on growth, enterprise and human development, aid works.  Knowing
that it can work, we have a moral imperative to demand as much.  Assistance
should make a real difference in people’s lives.

I met leaders across Africa who are beginning to create the conditions for
economic success, such as President Kufour in Ghana, and President Museveni
in Uganda.  We in the developed world must support African leaders who are
creating the conditions for success –those who rulinge justly, encouraginge
economic freedom, and investing in their people.  And we must ourselves take
a leadership role in demanding results.

The impoverished people of Africa --– and in poor nations everywhere --–
require a new kind of help, that goes beyond the well-intentioned but
disappointing results of assistance programs over the past fifty years.

If our assistance is not making a difference, or if we cannot measure our
results to know what difference we have made, then we have to change our
approach.  We owe that to the people of Africa.

In Africa, I saw signs of progress everywhere.  Programs are working, aid is
helping, and standards of living are improving.

But there is a long way to go.  The progress I saw deserves praise, but it
just isn’t enough.

Let me highlight thehree areas in which we witnessed progress.  In
particular, I saw  -- three kindsaspects of of investmentsing in people that
arethat are vital to realizing Africa’s potential: clean water, primary
education, and fighting HIV/AIDS.

Clean water is, surely, one of the most essential elements of a dignified,
civilized life.  No aspect of infrastructure is more basic.  Yet 45% of
sub-Saharan Africans lack access to clean, safe water.  T -- that’s about
300 million people – more than the total population of the United States.
In Ethiopia, that figure is 78%, or 50 million people in that country alone.

One insight from my Africa tour is that local leaders, with some engineering
and financial support, could develop clean water sources for their towns and
villages fairly quickly.  For example, in one Ugandan village I saw a
concrete basin installed to protect a natural spring.  T providing water to
the village, so the women of the village could collect the water directly
from the basinspring instead of collecting it after it has sprilledead
across the muddy ground.  The concrete basin cost a thousand dollars to
install.

But the local chairman for the project told me that the greatest hindrance
to installing the system had been local fears that a snake was protecting
the spring, and that the snake would become enraged by any tampering and
would take away the water.  He had to spend considerable time persuading his
fellow villagers to go ahead with the project.  It took his leadership to
get the project finished.

Or consider another village, where women were trekking to a muddy river to
obtain water, even after a well was dug in the village.  AOnly after the
well was built, did anyone inquire of the women wouldn’t use itwhy they
weren’t using it.  It turns out that they women valued their social time
down by the river, and so they chose to continuekeep collecting dirty water
from the river, rather than clean water from the well.  When the water tap
was relocated further from the village, providing an opportunity to
socialize, they started to use it.

In these and other cases, only local leadership couldan tailor development
projects to suit local cultures and customs.  With support from the rest of
the world, these small projects can make a quick difference.  And iIn so
many of these cases it was sometimes shocking to seewitness the disconnect
between the aid bureaucracies with their 15-year plans and the availability
of more immediate solutions.

You cannot airdrop solutions to local problems.  You can only offer air
support.  Local leadership must implement the solutions on the ground and be
accountable for success.

If we can figure out a way to support African leaders in bringing clean
water to their nations – , and I think we can do that -- much faster and
cheaper than these endless studies say we can --– we can vastly curtail the
prevalence of debilitating diseases and liberate hundreds of millions of
people, especially women and children, from preventable, debilitating
illnessill health and meaningless, wearisome labor work.  They would be free
them to pursue their dreams for a better life for their families.

The second important investment I saw African leaders making was in raising
primary education enrollment.  I believe that in Africa, in the United
States, and in every part of the world, children by the age of about ten
years old should and can have the tools to be life-long self-learners.  But
that requires that we get them into schools at an early age, and keep them
there, with adequate materials.

In Uganda, they’ have had tremendous success increasing primary school
enrollment.  Primary school enrollment has increased from about half (55%)
of the children in 1994 to nearly all of them (94%) in 1999, and nearly half
of the students are girls.  Education quality is improving as well.  But
there is still a long way to go.  I visited schools where they have gone
from a ratio of 16 students per book down to six per book.  That’s progress,
but it’s not good enough.  We must never be satisfied with the progress we’
ve made – wWe must always set our expectations higher.  Surely, we can get
every student his or her own book.

Similarly, one study in Uganda found that where only 230% of non-wage
spending for education was actually reaching schools in 1991.  money
allocated for education was actually getting to the students -- Tthe rest
was lost to corruption and bureaucracy.  Following reforms enhancing
transparency and accountability for government spending, -- over now 90% of
school spending is now getsting to the schoolstudents.  That’s a huge
improvement. But again, we can do betterthat’s not enough to allow us to be
satisfied.

The third, perhaps most crucial area for investment in people is health
care.  Nowhere is this more urgent, and more heartbreaking, than in the
struggle against AIDS.  In South Africa I saw mothers with AIDS caring for
babies with AIDS, even when proven, inexpensive drugs are available to stop
transmission between mother and child.  I saw the dedication of nurses and
doctors treating people with AIDS, and their patients’ struggle to survive.

Certainly, prevention of further HIV contagion is the utmost priority,
especially to keep the next generation of newborns free from disease.
Uganda, in particular, thanks to President Museveni’s leadership on this
issue, is one of the few tohas reduced the portion of the population
afflicted with AIDS.  It is the only country in Africa to have done so.  But
aAmong the many challenges facing those who fight AIDS in Africa is that in
many countries, there is a social stigma attached to even testing for the
disease.  They need more leaders like President Museveni, towho tackle this
issue head-on.

This is our challenge: to focus the attention of the world on getting
results.   Caring greatly is not enough.  We must also succeed greatly.
Starting today -- not in a 15-year plan. Starting today.

I’m glad to see progress, but we should not confuse progress with success.
We must challenge ourselves to aim higher and concentrate our efforts so
that international assistance advances the progress taking place on the
ground.

I’m glad to see progress, but we should not confuse progress with success. I
refuse to be satisfied.  We must challenge ourselves to aim higher and
concentrate our efforts so that international assistance advances the
progress already taking place on the ground.

Providing the framework for basic health and education is crucial
fundamental forto enabling people toensuring a population that is prepared
to realize theirits potential.    When governments are investing in their
people, providing clean water, education, and health care, and  when the
other aspects of good governanceleadership are present –-- ruling just
rulely and encouraging economic freedom --– show their value, and prosperity
can blossom.

In fact, the private sector is already growing in parts of Africa.  I
visited entrepreneurs who are grabbing the opportunities that good
governance hasand economic freedom have made possible.  They are creating
jobs in industries from coffee and cut flowers to athletic wear and data
processing.  By doing so they are spreading knowledge and inspiring others
to reach for their dreams.

As private enterprise grows expands in anthe economy, trade and investment
grow to dwarfreplace official aid.  Countries that won political
independence years ago finally win their economic independence as well.
Government provides the conditions for growth, but it is not the source of
prosperity.  Private citizens create prosperity through enterprise.

And in Africa, where the conditions are right, citizensthey are doing just
that.

For example, in Ghana I visited a successful U.S. investment, called
Affiliated Computer Services, Inc.-Business Process Solutions.  ACS sells
data processing services to insurance companies in the U.S.  It opened its
office there in 2000, and already it employs over 800 Ghanaians, paying an
average of three times the average wage in Ghana.  80% of the employees are
women.  The company now plans to expand its operations to four new sites in
Ghana and to increase its workforce to over 1,000 people.

ACS employees start with a high school diploma and typing skills.  The
training they receive creates a new knowledge base on which future employers
can build.  As foreign investments like ACS/BPS show success, others are
bound to follow, and I am optimistic that increasingly advanced services,
such as software development, will thrive in Ghana and elsewhere in Africa.

In Uganda, I met a woman, Lukia Ssemonobe, who opened a restaurant with
micro-loan funding and a lot of hard work.  This woman lost her husband a
dozen years ago, and had to feed four children without income.  Indomitable,
she borrowed $50 from the local branch of a branch of FINCA, an
micro-finance NGO, and used that and subsequent loans to build two
businesses --– a restaurant and then a tailoring shop.  Now she employs
about a dozen of her neighbors, supports her family, owns a home, and has
become a leader in the community.  Lukia shows the kind of success that is
possible.

I also visited a cut-flower factory, where local entrepreneurs are
diversifying Ugandan exports by growing beautiful flowers and air-shipping
them the same day to European markets.

In Ethiopia, an entrepreneur from Chicago invested in building a garment
factory that makes sports clothes and ships them to the U.S. under the
Africa Growth and Opportunity Act.  The company now employs about 200
workers, each earning between three and 21 times the average Ethiopian
income.His [many] employees earn well above the average Ethiopian wage.  I
also saw a local company that has produced and exported coffee for decades.

Jobs that deliverand prosperity are created one at a time, by people like
Lukia, or the investors in ACS.  They see opportunities and choose to take
the risks, because they are confident they will reap the rewards of their
success.

Unfortunately, in too many cases, potential entrepreneurs and investors in
Africa are deterred by arbitrary laws, corrupt bureaucracies and government
favoritism.  Africa is a continent of entrepreneurial enthusiasm – that’s
what I saw.  But these individuals have no chance for success without
governments that fairly enforce laws and contracts, respect human rights and
property, and fight corruption.  Governments also must remove barriers to
trade – both internal and external – and open their economies to investment.
They must allow companies and entrepreneurs to compete without excessive
interference, including interference from government-owned enterprises.


That’s no small order.  But aAs private sector production takes hold in
Africa, productivity and incomes rise, in Africa, African growthit will
become self-sustaining.  -- Africa will be its own best marketit’s own best
market, just as the U.S. is its own best market, and Europe is its best
market.


CBut coming back to my original question, what can we in the U.S. do to
support African success?  Here in Washington, we need to push ahead with
President Bush’s reform agenda, to improve the effectiveness of wealthy
nations’ support for African development and promote the best efforts of our
African partners.

Many extol debt forgiveness as the path to African development.  I would
agree that debt forgiveness may help, but it alone is not the solution.

Debt forgiveness solves nothing if we allow newanother build up of debt to
that only creates the next generation of heavily indebted poor countriesthe
HIPC program a decade from now.  President Bush has proposed that up to 50%
of World Bank and other development bank funds for the poorest countries be
provided as grants rather than as loans.  This proposal acknowledges the
long-term development challenges facing these countries, their vulnerability
to economic shocks, and the reality that essential investments in social
sectors, such as education and health care --– investments in people --–
cannot directly generate the incremental revenue to service new debt.


Replacing loans with targeted grants will eliminate the need for governments
to repay principal and interest on long-term investments in people.  It will
thereby eliminate the next generation of debt service problems.  It is time
to end the sad cycle of indebtedness for countries committed to success.

Second, it’s a simple fact that is as true about an individual as it is
about a nation --– even without debt, it’s impossible to prosper without
income.  Even if we forgave all debts, many of these countries still could
not fund their own budgets, and they would not be much better off.  In
Uganda over half of the government budget comes from foreign aid.  Think
about that.  It is not a self-sustaining situation.  The only way out of
that kind of shortfall is internal economic growth.

And too many African nations, even after their debt is forgiven, have to
rely on foreign assistance for an enormous chunk of their government’s
income.  That only continues a dependency relationship.  We must do much
more – we must encourage the Llocal leaders mustwho are createing the
conditions for self-sustaining prosperity, not further dependency.

Thatis is a premise of President Bush’s New Compact for Development.  In
March, the President said, “the advance of development is a central
commitment of American foreign policy ” and he outlined a “new compact for
global development, defined by new accountability for both rich and poor
nations alike.”

The New Compact for Development creates the Millennium Challenge Account and
proposes an additional $5 billion per year in official U.S. development
aid --– a 50% increase over current levels --– specifically targeting poor
countries that can use the money effectively.  To access the Millennium
Challenge Account, a developing country must have a governmentleadership
that shows a strong commitment to ruling justly, encouraging economic
freedom, and investing in people, as I have described.

Because results are what count, President Bush has created new incentives in
our development assistance programs to reward thoseprograms that achieve
real improvements in peoples’ lives.  He has committed that as a reward for
proven results, the U.S. will increase funding for the African Development
Bank by 18%, and will do the same as a reward for proven results in the
International Development Association (IDA), the World Bank program for the
poorest nations.  To receive these additional funds, the programs need only
to show they are making a difference in people’s lives – a challenge these
development organizations, their supporters, and their beneficiaries should
all welcome.



In the long-term, domestic entrepreneurship as well as trade and foreign
investment are far more important for economic growth than official aid.
The United States has created the Africa Growth and Opportunity Act, or
"AGOA," to open U.S. markets to exports from sub-Saharan Africa.  As Uganda’
s President Museveni said “If somebody buys what Uganda produces, then he is
rendering my country the best assistance possible.”

I would also encourage all African nations to reduce trade barriers amongst
themselves, so that all can benefit from their different comparative
advantages, and relative proximity to each other.  They should be their own
best markets, not their worst.

The Africa I saw on my journey is already changing.  We stand ready to help,
eager and impatient to assistchieve real improvements in the lives of the
African people.

Consider this.  Fifty-five years ago on this very date, U.S. Secretary of
State George C. Marshall gave a speech outlining the European Recovery
Program, later known as the Marshall Plan.

In it, he said: “I need not tell you that the world situation is very
serious. That must be apparent to all intelligent people.  I think one
difficulty is that the problem is one of such enormous complexity…
Furthermore,…  tThe people of this country are distant from the troubled
areas of the earth and it is hard for them to comprehend the plight and
consequent reactions of the long-suffering peoples, and the effect of those
reactions on their governments in connection with our efforts to promote
peace in the world.”

He was talking about Europe in 1947.  TYet the words are just as true of
Africa today.

I went to those troubled lands, and I believe this: wWith the right
combination of aid and accountability – from both rich nations and poor
ones --– we can accelerate the spread of education, clean water and private
enterprise throughout Africa.   We can help the African people create
vibrant, self-sustaining economies and a rising standard of living.  And we
can do it right now.

Development is complicated.  I know that. and  I don’t underestimate the
challengeit.  I just don’t think we should  accept complexitythat as an
excuse for delay.

As Marshall said, “With foresight, and a willingness on the part of our
people to face up to the vast responsibility which history has placed upon
our country, the difficulties I have outlined can and will be overcome.”

Together, we can produce results for Africa.  We will tear down the walls to
prosperity.  We will tear down the walls to prosperity.  Not in the next
generation, but right now.  In this era of global opportunity, no continent,
no country, and no person should be left behind.

President Bush said it best – there are no second class citizens in the
human race.  We must make his vision into a worldwide reality.

Thank you.




[Non-text portions of this message have been removed]


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