- The Washington Times - Wednesday, September 22, 2004

Poor infrastructure, bureaucratic red tape, and fears of political instability have made some American companies skittish about doing business in sub-Saharan Africa.

J. Joseph Grandmaison wants to change that.

A U.S. Export-Import Bank board member, Mr. Grandmaison helped organize an international conference in Johannesburg next week to bring together U.S. and African businesses. The Wednesday-Thursday meeting, co-sponsored by the Corporate Council on Africa (CCA), will focus on ways to increase capital flows such as machinery and equipment to the continent by boosting U.S.-African trade connections.

“Africa is becoming increasingly important to the United States when it comes to international trade,” Mr. Grandmaison said. “And infrastructure development is key to Africa’s economic growth.”

Bolstering trade between the United States and sub-Saharan Africa became a priority for the bank after Congress recently mandated that it direct more financing to African projects.

The Ex-Im Bank offers financing tools and protection for U.S. exporters. It also helps creditworthy African entrepreneurs import U.S. goods by extending medium-term financing at 8 percent interest, as opposed to the 26 percent rate offered in many African countries.

Last year, the bank helped finance a record $700 million in U.S. exports to sub-Saharan Africa. That financing can make all the difference, according to Mr. Grandmaison, managing director for U.S.-based Harris Corporation’s Africa and Middle East Microwave Group.

Harris Corporation recently won a $17 million contract to install a new wireless network in southwestern Nigeria for Odu’a Telecoms Limited. The project would probably not have materialized without a $10.4 million loan guarantee provided by the Ex-Im Bank, Mr. Joseph said.

“You have to bring financing,” he said. “Otherwise, in most cases, the project doesn’t go through.”

He added: “The Export-Import Bank has basically helped pacify some of the stiff competition we get from our European competitors.”

Over the past few years, interest in Africa’s markets has grown steadily among U.S. businesses, said Anita Henri, CCA vice president. As evidence, the organization’s membership has more than tripled since 1999 to 195 companies. The council represents businesses in the United States and Africa and strives to foster trade between them.

The CCA has also teamed up with other experts to draft a 10-year strategy for increasing capital flows to Africa.

“I think that as African governments become more democratic, I think as they put in regulatory frameworks that protect the foreign investors, and I think as U.S. investors and others get high rates of return, more and more people are looking at Africa,” Miss Henri said.

Imports from sub-Saharan Africa to the United States have nearly doubled since 1998. Some credit the African Growth and Opportunity Act (AGOA), passed in May 2000, with stimulating interest in African products. The legislation gives preferential trade access to African countries that work to open their economies and build free markets.

President Bush recently extended AGOA until 2015. His administration also initiated the Millennium Challenge Account, which offers aid to countries that govern fairly, invest in their people and encourage economic freedom.

Despite these efforts, business in Africa remains risky, said George Ayittey, American University visiting associate professor of economics specializing in Africa.

“It is a very, very unfriendly place to do business right now,” Mr. Ayittey said. “The main obstacle to increasing trade … is African government. There are many governments in Africa that are very anti-capitalist, anti-market.”

The United States has pumped huge sums into the continent over the past decade in hopes of promoting democracy and free markets. After the Cold War, Washington revamped its Africa policy and set conditions under which African countries could qualify to receive aid, Mr. Ayittey said.

The result, he added, was primarily cosmetic governmental reforms by African countries.

AGOA marked a new approach to African economic policy by offering the carrot of open access to U.S. markets.

“The trade between Africa and the U.S. has picked up,” Mr. Ayittey said. “But the beneficiaries of AGOA have only been a few countries.”

The key to planting the seeds of capitalism in Africa, he said, is supporting young African entrepreneurs.

“The ruling elite are not serious about economic and political reform,” he said. “They have too much to lose if they implement real change.”

Although much work remains to be done, Mr. Grandmaison is optimistic that Ex-Im Bank efforts will pay off over time.

“We need to accept the fact that the situation will not change dramatically overnight, but that a thoughtful strategic plan can and will, over time, be successful,” he said.

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