India & Africa
Need Each Other

Rosa Whitaker, President & CEO of the Whitaker Group, served in Africa as an American diplomat, a senior trade policy advisor in the US Congress. She was one of the architects of America's African Growth and Opportunity Act (AGOA). Ms Whitaker was also the first U.S. Trade Representative for Africa in the administrations of both Presidents Bill Clinton and George W. Bush, in which capacity she was responsible for implementing AGOA, the cornerstone of America's policy toward Africa. Subsequently Ms. Whitaker set up the Whitaker Group to facilitate direct exports and investments for its client countries in Africa. Following are excerpts from Ms. Whitaker's address at the India-Africa Partnership Conclave, October 2006.

At The Whitaker Group, we believe that trade and investment are the most reliable engines for achieving shared economic growth and broad-based development. After working on African trade and investment issues for over 20 years, I founded the Whitaker Group in 2003. The creation of my company, which is entirely devoted to facilitating trade and investment in Africa, was inspired by a new dynamic sweeping the continent. The new millennium found Africa charting a new course for its development. In nation after nation, old policies and paradigms were being replaced by a new business-friendly reforms, competitive investment incentives and pro-growth business environments. Good economic and financial sector progress has driven down inflation in sub-Saharan Africa (SSA) to a 30-year low. It has also produced an overall economic growth rate in sub-Saharan Africa of 5.0 percent. Again, that's an average; some countries are doing significantly better. Uganda has averaged above 6.0 percent growth over the past decade; the SADC region is averaging 7.0 percent this year and Nigeria, for example, is expected to top a 7.0 percent growth rate in 2006. Unlike a decade ago, the vast majority of SSA's 700 million people live under democratic rule.
Africa is the world's last frontier of untapped markets and vast potential. There is now broad global recognition of SSA's promise. Sub-Saharan stock exchanges have become some of the fastest growing in the world in recent years with Ghana leading the way. Numerous African countries have received sovereign credit ratings, with several investment grades.
These reforms have been recognized by cutting-edge businesses such ADM, Daimler-Chrysler and Tata as well as other governments who have provided Africa with the world's most generous preferential market access through programs such as America's African Growth and Opportunity Act (AGOA) and the EU's Everything But Arms initiative.
I served Africa as an American diplomat, a senior trade policy advisor in the US Congress, where I was one of the hands-on architects of AGOA and subsequently as my nation's first U.S. Trade Representative for Africa in the administrations of both Presidents Bill Clinton and George W. Bush.
The creation of that post was testament to what you might call America's new relationship with Africa. As the Trade Representative for Africa, I was responsible for implementing AGOA, the cornerstone of America's policy toward Africa. Through AGOA, for the first time in history, the United States eliminated duties and quotas on virtually all products from eligible sub-Saharan African countries. This was an unprecedented policy move in support of Africa as it not only addressed duties and quotas on commodities, but also eliminated duty-escalation, tariff peaks and made products such as apparel, footwear and other import-sensitive products duty-free. In short, AGOA provided Africa with the most favorable access to America's $11 trillion economy than any other region in the world. All 48 African nations embraced this initiative. President Museveni of Uganda referred to AGOA as “the best gift from the West in 500 years.” AGOA was complemented by new US Ex-Im Bank and other financing schemes from OPIC as well as funding for to build trade capacity in Africa to address supply-side constraints.
As a result of AGOA, exports from Africa to the US market increased by over 100 percent. While most of this was oil, there was a corresponding 20 percent increase in Africa's non-oil exports to the US. From example, Africa's apparel exports increased from about $350 million in 2000 to $1.6 billion in 2004. Significant export growth has also occurred in chemical products, agro-processing; footwear; electronic goods; automobiles and horticulture. AGOA helped to generate over 300,000 jobs in the region.
It's now been over five-years since AGOA enactment and while much progress has been made, there remains untapped potential and need. Africa's future depends on diversified global trading partners from the US, to Asia, the Middle East and South America.
I believe that the strength of the world's trading system will be highly dependent upon Africa's development and stability, which is inextricably linked to growth.
China, for example, is quickly recognizing Africa's potential. An estimated 900 Chinese projects are underway in Africa to date, from infrastructure in Uganda to telecoms in Kenya and Nigeria, copper in Zambia to rail lines in Angola. Chinese companies have invested an estimated $3 billion in Africa.
India's appreciation of Africa's promise is nothing new. In fact, your country has one of the world's richest histories in trade partnership with Africa not to mention a rich diaspora of over 2 million Indians who live in East and southern Africa.
Many of them are successful entrepreneurs driving growth in both the African and Indian economies. In fact, Winston Churchill recognized this unique relationship nearly a century ago when he said, “It is the Indian trader who, penetrating and maintaining himself in all sorts of places to which no white man would go or in which no white man could earn a living, has more than anyone else developed trade and opened up the first means of communication.”
Today, India has made significant investments in Africa. India has invested $200 million in South Africa alone. This is soon projected to reach $500 million. Nigeria has attracted $6 billion in agreed Indian investment in power projects. According to the Ethiopian Ambassador to India, Indian firms have $380 million in Ethiopia. India also has significant investment in Mozambique fueled by a $20 million investment in an electricity grid as well as an apparel factory in Senegal. The Government of India is also giving the kind of aid that supports trade, such as India's pledge of $500 million to help create a railroad network to connect Benin, Togo, Burkina Faso and Niger.
These investments are generating jobs, exports, and income in Africa and India. As promising as these developments are, they still represent untapped potential. According to the World Bank, Africa's exports to India account for only 3.0 percent of Africa's total exports equaling $4.7 billion, while India's exports to Africa totaled $7.2 billion. Even with all the new activity from the US, China and India, Africa still only receives 1.8 percent of global FDI flows. This again is untapped potential.
I so appreciate CII and this conference as it brings together major players in the private and public sectors to develop strategies to realize this untapped potential.
Indian companies are well-positioned to compete in Africa because of your successful transition from cash crops to high-techfrom the margins to the mainstream of the global economy. You have the history, you have a geographic advantage and there is already a large Indian community established across Africa. Indians are known world-wide for innovation and entrepreneurship. Many African economies are where India's was 40 years ago. Africa needs India as India needs Africa.
Opportunities currently exist in Africa for Indian companies in agri-business and allied activities, generation and distribution of electricity; apparel and textile manufacturing; hotel and tourism development; infrastructure and construction and transportation services such as regional airlines. It is promising that the Indian Ex-Im Bank is working to realize opportunities in these sectors.
Earlier I mentioned how AGOA was driving US-Africa trade. AGOA is also helping to strengthen India-Africa trade by providing access to the US market. These opportunities under AGOA should not be overlooked. By partnering with African companies or setting up manufacturing operations in AGOA-eligible African countries, Indian companies can expand their share in the U.S. market and save billions of dollars in duties and quotas.
For example, the U.S. still imposes an average 16 percent duty on cotton apparel products and 34 percent on poly-synthetic products from India. However, if an Indian company were to manufacture apparel in Lesotho, an emerging hub for apparel exports, that company could expand its exports to the US without paying duties or worrying about quotas. Africans would gain jobs, income, technology and training.
Last year, India paid over $1 billion-dollars in US tariffs and perhaps much more quota on apparel exports to the U.S. If all of that apparel were part of an African partnership, India would have had to pay nothing. That's what can happen with under a three-way AGOA partnership. India has already benefitted from AGOA by providing much needed fabric to African nations producing apparel under AGOA.
In AGOA's non-oil growth sectors, Indian companies are global leaders. Tata, a leader in transportation, could follow the Dailmer-Chrysler model and assemble trucks and vehicles in Africa and open up new market opportunities in the US. In the first 6 months of 2006, $231 million in passenger motor vehicles came into the US duty-free under AGOA. According to press reports, the Indian flower company Karuturi Networks Limited experienced 195% growth over the past year. I have heard that Karuturi's Africa operation in Ethiopia and Kenya is driving a lot of this growth. Profit margins on roses are growing even more with the direct importation from Africa to the US under AGOA, as the Ugandan firm Rosebud Ltd. has done. Floriculture is Uganda's fifth largest exports and the Uganda Flower Exporters Association expects sales of $30 million this year. There are also significant opportunities in tea production and processing in Uganda.
Under AGOA, Africa enjoys duty and quota free treatment in the US for practically all its agricultural products. Last year, over $270 million agricultural products from Africa entered the US duty-free under AGOA. This represented untapped potential because many more products could have come in if African companies had more capacity and technology to meet US SPS requirements. Indian companies have the technology and capacity, but are constrained by US quotas and tariffs. If Indian companies partnered with African companies, they would achieve significant savings, while both gaining market share and income as well.
AGOA guarantees treatment under the US Generalized System of Preferences program, which India currently enjoys. As you may know, there are many members of Congress who believe India has graduated from GSP and they don't want to extend that advantage any longer. Partnership with Africa could solve this potential problem for you.
The United States is India's largest trading partner. More and more, too, Americans are being choosey with their spending. They're looking for socially conscious companies to do business with. In fact, I just read a report that says U.S. college students, who have about $46 billion in discretionary money to spend each year, are demanding products that represent some social responsibility like organic fruits and vegetables, fair trade coffee, what they call “sweatshop-free” clothing, and natural fibers. African Americans spend about $550 billion a year and are increasingly directing this spending to support Africa's development.
All of this says “Africa.” So, the current-day marketplace is not only receptive to African products, but the future marketplace is crying out for Africa too. An increasing number of American consumers generally feel that a dollar spent on a product made in Africa is a dollar invested in developing the poorest region of the world. Many celebrities are championing this cause such as Bono, Chris Tucker and Angelina Jolie.
Of course, doing business in Africa certainly has its challenges. But I have seen challenge after challenge addressed. The fact that Africa enjoys the highest rate of return on investment in the world is a tremendous incentive to find creative ways to do business in the region.
The Whitaker Group has facilitated millions of dollars in direct exports and investment for its client countries in Africa and we've helped our clients obtain grants and loans of over $600 million. We have also assisted the multinational corporations we represent in enhancing and expanding their operations in Africa thanks to our comprehensive services, which include trade and investment facilitation, business and policy intelligence, advocacy and communications strategies.
We work throughout Africa and currently are honored to represent the Governments of Cote d' Ivoire; Ghana, Lesotho, Nigeria and Uganda in their trade and investment work. If any companies here are interested in doing mutually-beneficial business in these countries, we would be honored to support your efforts as well. One of our upcoming activities will be to lead a US-Asia trade delegation to Africa. A major focus will be on Lesotho's emerging apparel and textile sector.
The Whitaker Group is also in the process of organizing a three-way partnership the US-India-Africa Trade and Investment Alliance to create the kinds of partnerships and provide the kind of business intelligence and project development required to take advantage of these exciting opportunities. Many American companies are very interested in exploring joint ventures with Indian and African companies to develop projects in Africa. This type of partnership would share and mitigate risks and expand opportunities for financing through US, Indian, African and multilateral sources.
If you are interested in partnerships and projects I have outlined, please see me and my colleague Ms. Aubrey Hruby, my Director of Trade and Investment at the Whitaker Group. (Aubrey stands)
As many of you know, I have been a long-time champion of Africa. As an African born in America, I believe in Africa's promise and have witnessed its potential. Africa needs the world, the world also needs Africa. Imagine industrialized nations with their consumer hunger without Africa's coltan to power mobile phones. Where would the world be without Africa's diamonds for wedding rings and laser technology; or without Africa's phosphates for fertilizers; or without Africa's iron ore or cashews or shea butter or exotic flowers. Imagine the world without Africa's petroleum or the rich contributions of the African people to history and mankind. Without Africa's riches, the world would be poor.