US Secretary of State says only African nations hospitable to private sector will stimulate necessary economic growth
Liberating Africa’s Entrepreneurs
SPEECH BY MICHAEL R. POMPEO, SECRETARY OF STATE, ADDIS ABABA, ETHIOPIA, UNITED NATIONS ECONOMIC COMMISSION FOR AFRICA, FEBRUARY 19, 2020
SECRETARY POMPEO: Good morning everyone. Vera, thank you. Thank you for the kind introduction. Thank you all very much for welcoming me. Let’s see, there we go. Vera, I think we got the lapel mike. Here we go. Good morning. Really, good morning again. It’s great fun to be here with you all. This is very special. I’m in a very special place. I’m happy to be here with my wife Susan and the team that’s come along with me. I have been humbled on my entire trip by the astounding warmth and the generosity of all the people of Africa and especially here in Ethiopia. It’s great to be here.
I just left a amazing discussion with some really awesome entrepreneurs and business leaders, and I hear we’ve got a few more of you in the audience today. I’m a former entrepreneur. I love what you do. I love risk takers. I love those people who are willing to go out and just crush it every day.
With us here today are three very special ladies. Azalech Tesfaye is right here. She has a coffee business that employs 50 people and exports all across the world. Her business has been able to expand thanks to a loan from the White House’s Women’s Global Development and Prosperity Initiative. Azalech, I’m glad you could be with us here today. Thank you for joining us. (Applause.)
Also with us is Meseret Warner. Very nice to see you. It was wonderful to meet you this morning. She is developing a crowd funding platform to channel capital from the United States to businesses in Ethiopia, and throughout Africa. Don’t take all of our capital, all right. Best of luck to you.
We at the State Department are proud that Ethiopian chapter president of the Africa Women’s Entrepreneurship Program is here.
And then we also have Samrawit Fikru. She’s with us as well. She founded RIDE, Ethiopia’s version of Uber. She’s created jobs for more than 11,000 drivers and 300 permanent employees. That’s amazing. Congratulations. (Applause.) She’s a distinguished alumnus of one of the State Department’s great international programs, the International Visitor Leadership Program.
Let’s give all of these amazing entrepreneurs one more big round of applause. Congratulations to you. (Applause.)
Stories like this, success stories, entrepreneur stories like this remind me of America’s founding too. These aren’t just feel good moments,. They define a nation’s future. These entrepreneurial activities will define Africa’s future, too.
We believe that in the United States. I believe that. I believe, as I know most of you do, too, that every human being – African, European, American, you name it – wants similar things.
We want basic security for our families. We want opportunity and reward for the hard work that we invest in. And we want the freedom to do whatever we want to do wit h our own lives.
It’s how we get there that matters an awful lot.
I’m here today about – to talk to you about a couple of things. Most importantly, I want to talk about the next liberation, economic liberation, a true liberation for Africa’s entrepreneurs. I’ll talk about this briefly, then I’m going to take questions from Vera.
Look, for starters, I think we can all agree that the poverty rate in many African countries remains way too high.
And while effective foreign aid can help to alleviate the problem, it’s very unlikely that it will solve it. We see this in places all across the world, even in America. Government spending often can’t attack the very basis of the problem.
Centralized planning hasn’t worked – look at the failed socialist experiments of years past in Zimbabwe, in Tanzania, and right here in Ethiopia. Even now, even as we stand here today, South Africa is debating an amendment to permit the expropriation of private property without compensation. That would be disastrous for that economy, and most importantly for the South African people.
Socialist schemes haven’t economically liberated this continent’s poorest people.
But we all – everyone in this room – everyone in this room know the right way forward. Basic strong rule of law, respect for property rights, regulation that encourages investment – we talked about that with these entrepreneurs this morning. You need to get the basic laws right so that investors can come and invest their capital. We also need women’s full participation in this economic liberation. And we need governments that respect their own people. These are the fundamental ingredients for true and inclusive, sustainable economic liberation.
We all know the history of the Asian Tigers. The Asian Tigers lifted themselves up in a span of just a few decades, because they liberalized and they opened for trade.
That can happen right here too – and indeed, I would argue that it must. More than 60 percent of the population in Africa is under the age of 25. Only nations hospitable to the private sector will stimulate enough growth, enough opportunity, enough resources, enough capital that will deliver jobs and prosperity on the scale that this continent needs and over the timeframe that it requires.
And to African leaders today – future generations are depending on stable, corruption-free environments that attract foreign investment.
As the Ethiopian proverb says, “A partner in business will not put an obstacle to it.”
Indeed, some countries have already taken steps to enhance freedom for entrepreneurs: Rwanda has exempted small and medium-sized businesses from certain taxes, it slashed construction spending several times, and it’s upgraded its power grid.
Togo has knocked down similar bureaucratic hurdles on fees, wait times, permitting, and other impediments for business owners.
On a broader scale, I just came from Angola, where President Lorenco and his team are courageously turning the page on corruption and are privatizing hundreds of state-owned businesses.
And right here in Ethiopia, right here in Ethiopia citizens pushed for change. Prime Minister Abiy’s bold reforms stimulate private sector growth that can help set the tone for the entire continent.
None of this is easy. If it was easy, it would have happened long ago. The United States recognizes this.
But it’s moral, and it’s right. And it’s necessary. There is nothing more noble than allowing our people to have the dignity of work. And the United States, you should know, everyone – we believe in you, and we’ll be with you every step of the way.
With the right policies and leadership, we believe that true economic liberation will happen here in Africa.
If you will all focus on the basics – if you’ll get it right, if you’ll get transparency right, good governance right – American businesses will come. We’ve been in Africa for an awfully long time. More capital will flow.
Just these last few days in Senegal, we signed an agreement where Bechtel, America’s – one of America’s finest engineering companies, will build a road from Dakar to St. Louis, transforming infrastructure and creating opportunities. I was proud to be part of the signing ceremony there in Dakar, along with the signing of four other major agreements with American businesses that are going to invest in Senegal and in the Senegalese people.
In Angola, Chevron and others are exploring offshore natural gas fields, bringing jobs and economic growth right along with them. When American capital comes, it hires local.
Here in Ethiopia, Coca-Cola is expanding a new $300 million investment, and companies like FedEx and Citibank are exploring new opportunities as well.
As for the American Government, the Trump administration wants these trade ties to continue and to expand. We’re committed to it.
If there’s one thing you should know about our President, my boss, you should know that he loves deals. He wants more to happen. He wants more to happen between the United States and nations all across Africa.
That’s why the United States launched our new Development Finance Corporation. I’m sure I’ll get a chance to talk more about this with Vera. It’s now just one month old, but it’s well-resourced, well-funded, and well-structured. The goal is very simple. The goal is to catalyze private sector investment in developing countries, focusing heavily on priority areas like agriculture, like energy, and infrastructure. Sixty billion dollars of capacity, $60 billion of finance capacity, it will help here in Africa.
And there’s more. The U.S. under President Trump launched Prosper Africa – the Prosper Africa initiative, which is opening opportunities for businesses on both sides of the ocean.
We are pushing forward, too, the W-GDP program, with the goal of economically empowering at least 50 million women by 2025. We expect more than half of those women to be right here in Africa.
USAID, one of our traditional assistance mechanisms, is integrating the private sector into its core development work in ways that it’s never done before.
We support the African Continental Free Trade Area, and we remain committed to our partnership with the African Union.
Look, not every nation doing business in Africa from outside the continent adopts the American model of partnership. Countries should be wary of authoritarian regimes with empty promises. They breed corruption, dependency, they don’t hire the local people, they don’t train, they don’t lead them. They run the risk that the prosperity and sovereignty and progress that Africa so needs and desperately wants won’t happen.
Real simple. The United States stands for local jobs, environmental responsibility, honest business practices, high-quality work, and mutual prosperity.
Don’t take my word for it – look at the facts, look at the history. We stand for true partnership, true economic liberation.
I want to save plenty of time to have a conversation with Vera today, so I’ll close up quickly.
So many of you here today I can see from all walks of like – we’ve got entrepreneurs, political leaders, media voices, I’ve got a group of alumni from State Department programs ? you, you are the forces that will ensure that those with power who promise liberation understand what that truly means. Hold onto that.
True economic liberation delivered the greatest economic growth in human history in the United States of America. It can do the same for you.
My country will proudly walk that path in partnership with you.
I look forward to our conversation today.
And may God bless all of you.
May God bless Ethiopia.
And God bless all of the people of Africa. Thank you. (Applause.)
DR SONGWE: Thank you. Thank you so much for that brilliant speech. Can we give the Secretary another round of applause. (Applause.)
SECRETARY POMPEO: Thank you.
DR SONGWE: Thank you for saving the time for questions. We have three or four for you, so hopefully you can take them.
SECRETARY POMPEO: Great. I’ll answer almost anything. (Laughter.)
DR SONGWE: That’s a great (inaudible). I want to start – you have mentioned some of it in your speech already, but this is one of your first trips to Africa. You picked three very interesting countries, Senegal, Angola, and Ethiopia. Why the choice of countries?
SECRETARY POMPEO: So, yeah, I’ve been to Africa a handful of times before. It’s the first time I’ve had the chance to be here as the Secretary of State. The three countries I chose were all at unique moments in their own development history, very different, different cultures, different parts of Africa, different histories. But in each case, too, with real leaders who are prepared to do the right things to help their countries move forward. And when I say “real leaders,” that certainly includes political leaders, but it’s broader and deeper than that. It’s the wellspring of the population who’s demanding these changes, these transformations. Whether that’s in Senegal or Angola or here, I can see it, I can feel it, I can hear it.
Leaders in the business community, leaders in the entrepreneurship world, finance leaders, nongovernmental organizations who understand that the things that have been done in these countries in the past didn’t deliver the outcomes that these people so richly deserve and are determined to push back where there were problems with corruption, are determined to deliver these outcomes, and are prepared to take real risk to get these fantastic outcomes for their own people.
And so that’s why we went to each of these three places. It’s been fascinating to see and get to meet and get a glimpse into what’s really going on there. And I leave here even more optimistic than I came.
DR SONGWE: Wonderful. We can feel the energy as you answer the question. My second question is linked a little bit to the U.S. announcement that it will be reducing military aid on the continent, and I think it’s linked to the fact that you’re also increasing economic aid.
But on the military side, you went to West Point. West Point, I think for those in the military field, is the Harvard of the academics.
SECRETARY POMPEO: I’ll tell the team back there that you said that. They’ll be very proud of that.
DR SONGWE: Free publicity for West Point.
SECRETARY POMPEO: Exactly.
DR SONGWE: But I think on the continent we do need peace to have development. We do need peace for security. And so the question is: Is it possible that we have the U.S. work with Africa to build a West Point on the continent so that we can do exactly what you have done, is bring more technology, the transfer the knowledge, but have the peace builders here with American support. Is this something that we’ll someday we have a West Point of Africa with U.S. support?
SECRETARY POMPEO: I don’t know if that’s exactly the right model here, but your point is very, very well taken. Two things to say. One. We are, we’re constantly – the United States has military all across the world. We are constantly reviewing our structure. Are we delivering value? Are we really increasing security? Is the model we had for the last 10 or 20 or 30 years working? And so we’re looking at that. We’re looking at Africa. We’re looking at other places in the world as well. We’ll complete the review. We’ll work it out. There won’t be big surprises.
We will work along – I’ll say this: I appreciate, as someone who was the director of the Central Intelligence Agency, I understand the risks and the (inaudible) what goes in Libya. I know what’s happening in the Lake Chad region, and I see the challenges from al-Shabaab in Somalia, and (inaudible) in Ethiopia. We’ll be (inaudible) to provide what – the support that is needed.
Your point is very well taken, too. Whether it’s a West Point or training at our institutions in the United States, or training at other western militaries to make sure that that technology – and importantly with security, leadership and intelligence sharing are really the bedrocks of our capacity to deliver.
I said this in my remarks yesterday or the day before. In the end, African security will be generated by Africans. We have the responsibility and we have the capacity to help African nations to do that, to build up their own forces, to build up their own capacity. Your point’s very well taken. If we can’t get security right, these economic opportunities will be much more difficult to come by.
DR SONGWE: Thank you, Secretary. I see that you’re continuously thinking about the idea, so we will come back to that. It is an important point for us on the continent.
Moving to that, you talked a little bit and with a lot of passion, you have yourself started two businesses, so you know exactly –
SECRETARY POMPEO: I started three, but I don’t talk about the one that failed. (Laughter.)
DR SONGWE: (Inaudible) says we should talk about that one, too. So you know better than most what it means to start a business, what it means to live and do business in a liberated economic environment. As you look at the continent, we just had PIMCO here last week at the Economic Commission for Africa trying exactly to crowd in U.S. business more into – onto the continent. What are the two or three things, first as a businessman and then as a policy maker, that you think American business will be looking for so that we can crowd them in? Of course, the buildout is going to be particularly important because it will help leverage that business, but we do need real capital coming in.
And what do you think when you go you can say to U.S. businesses about Africa, and what can you say to our leaders about what U.S. business is looking for in Africa?
SECRETARY POMPEO: Yeah. Look, I think you all know this. There’s a handful of things that American businesses want. They want to know that their investment, if it fails it’s because they had a bad business model, not because of political risk that’s attached to it. They want to know that there’s a rule of law and the capacity for dispute resolution in a way that’s fair and equitable. Equally importantly for American business especially, we need educated, talented workforce.
When these American businesses come, they want to hire the best and brightest, from Senegal, from Angola, from Ethiopia. From whatever they’re investing, they want to hire the best and the brightest. They need a workforce trained, skilled. The people that I’ve met on my trip, I am very confident you all will get there. It’s got to be scaled up, right. We’ve got tens and tens of millions of jobs to create, and we need to make sure that the workforce has the skillset that matches what these American companies will want.
And then the third thing, and I say this often, you should all know, when American businesses are thinking about coming to someplace, they’ll call the State Department and say tell me about it, tell me about what’s going to – what I’m going to see when I get there. The most important thing that they’ll do is they’ll call their buddies.
Look, all they’ll call is they’ll call those who came to that place before and say, “What was your experience like? What were the people like? How was it?” And so it is very important for African countries to be responsive to and nurture those businesses that are already here so that there are models for success, there are pathways that can be chartered. It will take down that risk enormously. And so not only will you see capital, we talk about capital coming, but you’ll see capital that is affordable, that is the cost of capital. Whether it’s a bond fund or a leveraged financial institution or angel investor or a private equity fund, the rate of return that they’ll demand turns on the risk that they perceive. And so demonstrating a capability to create opportunity, not certainly, not guarantees – American companies are perfectly prepared to take risk. But know that they’ll be able to identify those risks, measure them, and that they won’t have surprises from political outcomes that they simply can’t deal with and control.
DR SONGWE: Thank you very much. And the risk adjusted rate of return on the continent is 8 percent. In the U.S. now it’s 1 percent. So this is the —
SECRETARY POMPEO: It’s much less than that, yes, exactly.
DR SONGWE: Exactly. So we hope that they can come, and we hope that you will be one of those ambassadors.
I want to ask a question on something that you worked in a few years back. You were not yet Secretary of State. That was on information, financial transparency. One of the things that the continent is suffering from, and a lot of our investments on the continent would still be public investment and public capital, however, because of illicit financial flows and corruption, we tend to see a lot of our resources going out of the continent.
In 2016 or thereabouts, you actually talked about creating a more sort of financial transparency index so that we could track the resources. You have gone to three countries that they’re working very hard on trying to ensure that they can forestall corruption and track resources. What do you say, and how can the U.S. with your experience help us to improve this fight on illicit financial flows? We do need to stem it at some point.
SECRETARY POMPEO: This is, too, I potentially should have mentioned, but it’s really not something that businesses think about. It’s about institutions, governments, places like this that you all work so diligently on. It’s a thing that America thinks about a lot. We want to make sure that we understand where cash is going. This is a significant economic factor, but it’s also a massive security factor, too, because these go to drugs and trade – drug trading and narcotrafficking and trafficking in persons – some of the most horrific things that happen in our world. If we can find where the money is going, we can stem it and reduce that risk.
So the United States is committed to the international processes that are connected. As you see with the Financial Action Task Force, you see how our global institutions – the IMF and the World Bank – always put at the center of their programs transparency and accountability not only for the host nation that they’re supporting, but they want it in the private sector, the commercial sector that they’re working in as well.
I think the world has made progress. I, frankly, think Africa has made progress as well. The leaders that I spoke with in every country all took on board the desperate they need they had to control that illicit financing. They see it. They see that it escapes their capacity to control. They know that it’s bad for their people, that it deteriorates from their tax base to generate even further opportunity for their people. Each of those negative ramifications are serious matters.
We’re committed to – that we will – we will come to countries when we provide foreign assistance, and we’ll often come with technical help. In addition to the resources, the money, we’ll embed members of our team in financial institutions or in central banks or in other governing agencies, law enforcement, the equivalent of our Justice Department who work on these illicit cashflows or finance ministries. We’ll put our people, our technical knowhow. These are complicated issues. They are international issues. They extend far beyond the borders of any one country. We collectively have to get it right.
I spent a lot of time when I was the CIA director working on the information side of that to make sure that the data set was available. I haven’t spent as much time working on the regulatory piece of it, but I know the United States is committed to that, and it’s important to get right here I Africa.
DR SONGWE: The African Union and all of the African heads of states believe that without this sort of attacking this kind of corruption and illicit financial flows, we will never be able to meet the taking of action, which is the scale. But the taking of action must happen with women. You started your conversation recognizing, I think, very brilliant Ethiopian businesswomen. So it’s women and it’s business, and I’m sure that we all agree that we cannot move this continent forward without the women.
The U.S. has been very forward looking in terms of supporting women business and women entrepreneurs. What is the message to Africa’s women as you leave? And you see last week we just launched the African Women’s Leadership Fund, which is a fund, not a – sort of supporting women business with the idea of supporting and hopefully getting a lot more billions to women businesses. And we know that the U.S. is working on that, and you have been yourself a passionate (inaudible).
SECRETARY POMPEO: Yeah, no, I do. I care about it for multiple reasons. My wife is sitting to my right, who was a banker who helped provide capital to people in South Central Kansas, rural parts of Kansas. So we know the challenges that women often face.
We’re committed to this. We’re committed to all across the world empowering women in multiple ways. So we first begin with getting the baseline right to make sure that there aren’t legal prohibitions, right, there aren’t barriers, legal barriers that prevent women. Some countries still have those.
And then we go attack the history, because women didn’t – don’t start from the same basis oftentimes. There are cultural barriers in many countries, and then there’s just the simple fact that women have historically taken on a lot of roles where they didn’t participate in the economic lives of their nations.
And so across each of those various pillars we’re working hard to make sure that women like these have every opportunity they can. Some of them are going to fail. And many, many of them will keep at it and they will ultimately succeed. They will drive enormous success for themselves, for their families, for their community, and for their country.
If we don’t get this part right, if we don’t give a hundred percent of the people in every country this chance to go live their dream and use their minds for the betterment of their community, for their country, we will leave enormous amount of the opportunity on the table.
So it’s something that the United States is very focused on. We’ll try and drive it programmatically. We’ll try and drive it through our commercial programs as well. Collectively, if we can get this right, we will take growth from wherever it would have been absent, then to multiples of that.
DR SONGWE: Thank you very much. We also know that Madam Pompeo is a strong and avid supporter of women and men in politics because you’re here with us. So we hope that she can also support those women in politics agenda.
Final question. This is your last stop before you leave the continent. Tomorrow, the G20 ministers of finance and governors will be meeting to talk about the state of the world. What is the message from Africa that you will send to them?
SECRETARY POMPEO: There is enormous opportunity not only for Africa here, but for the world. It is a continent that is growing. It is a continent that has been behind the power curve in its capacity to achieve all of its opportunity, not only the economic opportunity that we have spoken to, opportunities for religious freedom, opportunities for all of the things that humanity cares so deeply about.
I would urge them to recommit to this. It will have massive economic benefits to places like the United States of America. If we get this right, the young women that I was with this morning were all exporting to our country.
What does that mean? That means that someone in America decided that there was a value proposition to purchase that product that was made right here in Ethiopia. The seller benefitted here in Ethiopia, and that American consumer benefitted as well. That trade, that commerce, that opportunity will benefit our entire world.
We need to get it right here as well. And when we do, that it’s mutually reinforcing, too. Economic growth and security are mutually reinforcing. If we get the economic piece of this right, the fewer folks that decide that they want to go create unrest, cause trouble, create problems for nations. So we’ve got to get them both right.
I hope those ministers will all take seriously what I saw on my three visits here in Africa.
DR SONGWE: Wonderful. Thank you very much. Recommit to Africa. There is value here is the message from Secretary Pompeo –
SECRETARY POMPEO: Amen.
DR SONGWE: — to Africa and to the rest of the world. Thank you so much for being with us. And thanks for the proposition.
SECRETARY POMPEO: Vera, thank you. Thank you all. (Applause.)