Compendium working group on u.s. investment in africa

Working Group on
U.S. Investment in Africa

COMPENDIUM OF ACTION PLANS
AND BRIEFING MEMORANDA

ORIGINALLY PREPARED FOR

ADVISORY COMMITTEE ON AFRICA
MITT ROMNEY PRESIDENTIAL CAMPAIGN

PUBLISHED JANUARY 1, 2013

Assembled with Introductory Materials By
Peter C. Hansen
Chair, Working Group

Law Offices of Peter C. Hansen, LLC
1725 Eye Street, NW, Suite 300
Washington, DC 20006
(202) 349-3780 (-3915 Fax)
phansen@peterhansenlaw.com

Compendium – Table of Contents
All page numbers refer to the “C” (“Compendium”) numbers set in the lower-right corner.

Introduction to the Compendium ................................................................................................. 1
List of Contributors ...................................................................................................................... 2
Observations of the Chair ............................................................................................................ 4
I. The Present State of U.S. Private Investment in Africa – A Brief Introduction .............. 4
II. A Précis of the Contributors’ Shared and Divergent Views on Major Topics ................ 9
Section A – Thematic Summary of Action Plans ...................................................................... 13
Section B – Thematic Summary of Briefing Memoranda ......................................................... 26
Section C – Contributor Action Plans, Memoranda and Profiles .............................................. 55

DETAILED TABLE OF CONTENTS FOR SECTIONS A–C

SECTION A – THEMATIC SUMMARY OF ACTION PLANS ............................................ 13

Introduction to the Working Group’s Action Plans ............................................................. 14

Part I – Top-Level Strategy and Diplomacy .................................................................... 15

U.S. Geopolitical Interests in Africa .............................................................................. 15
Principles ................................................................................................................. 15
General Proposals ................................................................................................... 16
Specific Principles – Somaliland ............................................................................. 16
U.S. Relationship with African States ........................................................................... 17
Principles ................................................................................................................. 17
Proposed U.S. Expectations for African States ....................................................... 17
General Proposals for U.S. Role in Relations with Africa ...................................... 17

Specific Legislative Proposals for U.S. Role in Relations
with Africa – Vulture Funds .................................................................................... 18

Part II – U.S. Private Investment in Africa ..................................................................... 18

Principles ....................................................................................................................... 18
Executive Policy Proposals ............................................................................................ 19
General Legislative Proposals ....................................................................................... 19
Specific Proposals – Fighting Corruption ..................................................................... 20
Specific Proposals – Investment, Tax and Trade Treaties ............................................. 20

Part III – Aid Reform ........................................................................................................ 21

Principles ....................................................................................................................... 21
Executive Policy Proposals ............................................................................................ 21
General Legislative Proposals ....................................................................................... 22
Specific Legislative Proposals – AGOA ........................................................................ 22
Specific Legislative Proposals – PEPFAR .................................................................... 22

Part IV – Bureaucratic Reform ........................................................................................ 23

U.S. Agencies Generally ................................................................................................ 23
Principles ................................................................................................................. 23 P
Executive Policy Proposals ...................................................................................... 23
Legislative Proposals ............................................................................................... 24
Multiple Agencies or Bodies ......................................................................................... 24
Specific Agencies and Other Bodies .............................................................................. 24
Millennium Challenge Corporation (MCC) ............................................................ 24 P
Multilateral Development Banks (MDBs) ............................................................... 24 P
Overseas Private Investment Corporation (OPIC) .................................................. 24 P
U.S. Embassies and U.S. Commercial Service ........................................................ 25 P

SECTION B – THEMATIC SUMMARY OF BRIEFING MEMORANDA ........................... 26

Introduction to the Working Group’s Briefing Memoranda ................................................ 27

Part I – Overview of Conditions Affecting Investment .................................................. 28

A. Africa’s Potential ..................................................................................................... 28
B. U.S. Corporate Approaches to Africa ...................................................................... 29
1. Analysis of Situation and Issues ......................................................................... 29
2. Proposed Solutions .............................................................................................. 30
a. Proposals for Coaching Programs (Both Private and Publicly Supported) ... 31
C. African Business and Political Conditions .............................................................. 32
a. The Scourge of Vulture Funds ...................................................................... 33
D. Trade and Investment Treaties Between the U.S. and Africa .................................. 36

Part II – Competition Facing the U.S. in Africa ................................................................... 37

A. Competition from Countries Other than China .............................................................. 37
B. Competition from China ................................................................................................. 37
1. Analysis of Situation and Issues ............................................................................... 37
a. Doubts About China’s Ability to Build on Its Present Success .......................... 38
2. Proposed Solutions .................................................................................................... 39

Part III – The Official U.S. Stance on U.S. Investment in Africa ........................................ 40

A. Overall U.S. Government Strategy Toward U.S. Investment in Africa ......................... 40
a. Compassionate Aid as a Counterbalance to Investment-Focused
U.S.-Africa Relations .......................................................................................... 41
a. Specific Proposals ............................................................................................... 43
B. U.S. Priorities Favoring Specific Countries and Economic Sectors .............................. 44
1. Proposals Concerning Specific African Countries ................................................... 44

a. Proposal to Recognize Somaliland, with an Eye to U.S. Investment There ....... 45
2. Proposals Concerning Specific Economic Sectors ................................................... 45
C. Improving Access to Credit for Both U.S. Investments and African Businesses .......... 46
D. AGOA ............................................................................................................................ 48

Part IV – U.S. Aid Agencies and Programs ........................................................................... 50

A. Overview of U.S. Aid Programs .................................................................................... 50
B. U.S. Aid Agencies – USAID .......................................................................................... 52
C. U.S. Aid Agencies – Other than USAID ........................................................................ 54

SECTION C – CONTRIBUTOR ACTION PLANS, MEMORANDA AND PROFILES ..... 55
Emmanuel Aghimien and James M. Blazewicz ........................................................................ 56
Action Plan ........................................................................................................................ 57
Memorandum (by James M. Blazewicz) .......................................................................... 59
Profile of Emmanuel Aghimien ........................................................................................ 65
Profile of James M. Blazewicz ......................................................................................... 66
David Baxter .............................................................................................................................. 67
Action Plan ........................................................................................................................ 68
Memorandum .................................................................................................................... 70
Memorandum (Addendum on Diaspora) .......................................................................... 78
Profile ................................................................................................................................ 79

James R. Blaze ........................................................................................................................... 80
Action Plan ........................................................................................................................ 81
Memorandum .................................................................................................................... 82
Profile ................................................................................................................................ 89
Stuart H. Deming ....................................................................................................................... 90
Action Plan ........................................................................................................................ 91
Memorandum .................................................................................................................... 93
Profile ................................................................................................................................ 95
Conal B. Duffy ........................................................................................................................... 98
Action Plan ........................................................................................................................ 99
Memorandum .................................................................................................................. 101
Profile .............................................................................................................................. 106
André du Plessis ....................................................................................................................... 107
Action Plan ...................................................................................................................... 108
Memorandum .................................................................................................................. 109
Profile .............................................................................................................................. 113
Jumoke Fajemirokun ................................................................................................................ 114
Action Plan ...................................................................................................................... 115
Memorandum .................................................................................................................. 116
Profile .............................................................................................................................. 117
Tamara K. Gaw ........................................................................................................................ 118
Action Plan ...................................................................................................................... 119
Memorandum .................................................................................................................. 120
Profile .............................................................................................................................. 128
Peter C. Hansen ........................................................................................................................ 129
Action Plan ...................................................................................................................... 130
Memorandum .................................................................................................................. 131
Profile .............................................................................................................................. 150

David Humphries ..................................................................................................................... 151
Action Plan ...................................................................................................................... 152
Memorandum .................................................................................................................. 153
Profile .............................................................................................................................. 161
Justin Mahwikizi ...................................................................................................................... 162
Action Plan ...................................................................................................................... 163
Memorandum .................................................................................................................. 165
Profile .............................................................................................................................. 170
Francis Joseph Mills IV ........................................................................................................... 171
Memorandum .................................................................................................................. 172
Profile .............................................................................................................................. 173
Emeka Nwankwo ..................................................................................................................... 174
Action Plan ...................................................................................................................... 175
Memorandum .................................................................................................................. 177
Profile .............................................................................................................................. 186
Laban Opande .......................................................................................................................... 187
Action Plan ...................................................................................................................... 188
Memorandum .................................................................................................................. 189
Profile .............................................................................................................................. 192
Rick Orth .................................................................................................................................. 193
Action Plan ...................................................................................................................... 194
Memorandum .................................................................................................................. 195
Profile .............................................................................................................................. 198
Jon Vandenheuvel .................................................................................................................... 199
Action Plan ...................................................................................................................... 200
Memorandum .................................................................................................................. 202
Profile .............................................................................................................................. 203

Introduction to the Compendium
This Compendium blends together in one volume the two sets of advisory documents prepared
by the members of the Working Group on U.S. Investment in Africa at the request of Amb. Tibor
Nagy on behalf of the Romney Campaign’s Advisory Committee on Africa.

The Working Group is a non-partisan, technical working group that represents the avant garde of
the Sub-Saharan African investment field. Its members include supporters of the two opposing
presidential candidates of 2012, as well as political independents and non-Americans. The
group’s composition was commendably deemed acceptable to the Romney Campaign’s Advisory
Committee on Africa. It was further agreed that since the Working Group’s products were not
part of an electoral effort but rather aimed at developing a governing policy, the Compendium
would be forwarded to officials of the incoming administration, whichever this happened to be.

The Working Group began this project by producing sixteen briefing memoranda for Amb. Nagy
on a broad range of subjects relevant to U.S. investment in Sub-Saharan Africa. Amb. Nagy then
met with the Working Group in Washington, D.C. on September 14, 2012, and requested that the
Working Group prepare action plans that would turn the briefing materials into a comprehensive
policy program. The Working Group subsequently did so. All of these materials are reproduced
in Section C of this Compendium, along with the professional profiles of their authors. Preceding
this collection are in-depth thematic summaries and other introductory materials.

The Contributors to the Working Group’s efforts were: Emmanuel Aghimien (action plan only),
David Baxter, James R. Blaze, James M. Blazewicz, Stuart H. Deming, Conal B. Duffy, André
du Plessis, Jumoke Fajemirokun, Tamara K. Gaw, Peter C. Hansen (Chair), David Humphries,
Justin Mahwikizi, Francis Joseph Mills IV (briefing packet only), Emeka Nwankwo, Laban
Opande, Rick Orth and Jon Vandenheuvel.

On behalf of all those who will benefit from the wealth of useful suggestions and thoughtful
analysis to be found in this Compendium, I would like to extend my grateful thanks to the
Contributors. It has been a pleasure to work with you, and I hope that our joint efforts will bear
fruit in the form of a true and profound U.S. partnership with Africa.

Peter C. Hansen
Chair, Working Group on U.S. Investment in Africa
Washington, D.C.
January 1, 2013

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List of Contributors
The persons listed below are the Contributors who provided action plans, briefing memoranda,
or in nearly all cases both, for the Working Group on U.S. Investment in Africa which assisted
the policy-development work of the Romney Campaign’s Advisory Committee on Africa. In
performing this public service, the Contributors acted in a purely personal capacity. They did not
speak for any organization or entity for which they work or provide services. Any mention of
their affiliations herein is intended merely to describe the nature of their current work.

It must be observed that no political or ideological litmus test was applied in the selection of the
Contributors. Nor is this Compendium intended as a political tract. Indeed, some Contributors
were declared independents, and at least one openly expressed his support for the re-election of
President Obama. In addition, not all Contributors were U.S. citizens. Such political and national
affiliations were deemed perfectly acceptable for the purposes of this effort.

The Contributors were asked to participate on the understanding that the Working Group would
act as a purely technical advisory group to the Romney Campaign, with no formal connection
thereto. The Contributors in this spirit presented pieces as professional insights and technical
proposals for increasing fruitful U.S. private investment in Africa. Their individual action plans
and briefing memoranda have in turn been presented in this Compendium in their original and
unedited form, and summarized fully without regard to the views expressed.

The Contributors

Emmanuel Aghimien
President and CEO, The Esentier Group

David Baxter
International Business Director, Jacobs

James R. Blaze
Director of Strategic Planning, Economics and Railway Operations
Harsco Rail Zeta Tech

James M. Blazewicz
COO, The Esentier Group

Stuart H. Deming, Esq.
Deming PLLC

Conal B. Duffy
Vice President, Alliant Emerging Markets
Alliant Insurance Services

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André du Plessis
Business Development Manager, Schweitzer Engineering Laboratories (SEL)

Jumoke Fajemirokun
Nigerian Attorney, U.S. LLM

Tamara K. Gaw
Washington, D.C. Attorney and Author

Peter C. Hansen (Chair)
Principal Counsel, Law Offices of Peter C. Hansen, LLC

David Humphries
Director of Communications and Congressional Relations
CHF International (now Global Communities)

Justin Mahwikizi
Founder & Managing Principal
Push54, LLC

Francis Joseph Mills IV
Licensed Professional Engineer

Emeka Nwankwo
President, Vertical Optimization, LLC

Laban Opande
The Opande Law Firm

Rich Orth
Business Lead for International Defense and Diplomacy (IDD)
SOC LLC

Jon Vandenheuvel
President and Co-Founder
Africa Atlantic Holdings Ltd

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Observations of the Chair
Peter C. Hansen
Law Offices of Peter C. Hansen, LLC
From Briefing Packet, September 11, 2012

It has been a privilege to organize such a cadre of experts, whose pieces represent so effectively
the thought of the avant garde in the field of U.S. private investment in Sub-Saharan Africa.
What puts these experts in the vanguard is not their pro-investment sensibility when considering
U.S.-African relations. Such a sentiment is shared by most U.S. businesses and certainly by the
overwhelming majority of ambitious and Web-connected Africans. What makes these experts
stand out is their expert knowledge of relevant technical subjects, their hard-won practical
expertise in investment matters, and their willingness to express views contrary to Washington’s
conventional wisdom.

The debate over U.S. investment in Africa has been settled everywhere but where it matters the
most. Private parties on both sides of the Atlantic, and even most African governments, are
clamoring for increased U.S. private investment to flow to the continent. This call is being taken
up even by the most stolid and phlegmatic U.S. multinationals. In Washington, however, the
official vision of Africa has remained essentially unchanged since the “We Are the World”
concert of 1985. While the bureaucracy airily repeats pro-investment rhetoric, the reality is
instead one of aid programs that funnel money to an ineffective aid industry and that shut private
investment out of African markets by encouraging African dependency on public handouts.

With U.S.-African economic relations held captive by a bureaucratic-industrial aid complex, and
mired in stale ideologies of decades ago, the cutting edge of the debate over U.S. investment in
Africa is to be found at the Beltway’s edge. Within its perimeter, the policy battle must be joined
and fought with enormous vigor to overcome the deep ranks of those with vested interests in the
status quo. The consequences of this struggle are not merely theoretical or ideological. What is
really at stake is the U.S. strategic position not only in Africa, but globally. Africa has become a
theatre in which a rising China has moved to stake out its claim to superpower status. The
traditional Beltway consensus about Africa has failed to respond to this strategic manoeuver, and
threatens to let the U.S. sleepwalk into disasters it could easily avoid if its eyes were opened.

The Contributors’ memoranda are a powerful wake-up call. They have surgically identified and
assailed the key defects in the present system, and proposed a host of specific reforms that can
bring U.S. policy into line with the needs and priorities of U.S. private investors in Africa. This
paper will review these specific proposals, as well as the various noteworthy divergences in the
Contributors’ strategic and tactical views. First, however, this paper will provide a brief tour
d’horizon of U.S. private investment in Africa. Without a solid understanding of the basic factors
at play in investment decisions, proposals for reform cannot be properly evaluated.

I. The Present State of U.S. Private Investment in Africa – A Brief Introduction

U.S. private investment in Africa, like any business investment, is undertaken when an investor
decides that the expected returns outweigh the known and unknown risks. Since Africa presents

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an enormous upside for returns, it must be deduced from the current paucity of U.S. private
investments in Africa – particularly outside the extractive industries – that the risks are perceived
by U.S. investors to be even larger than Africa’s profit potential. (The Contributors seem united
in their view that such fears are significantly overblown.)

Assuming that U.S. Government policy is to increase U.S. private investment in Africa, the task
of U.S. agencies must be to reduce those specific investment risks which the market cannot itself
overcome. In other words, the U.S. Government’s task must be to correct market failures. This
may seem like a commonplace observation, but it is actually fraught with complications in light
of existing U.S. Government policy. To begin with, the “market” for U.S. investment in Africa is
very poorly understood, most especially by the U.S. “aid” agencies which dominate U.S. public
and private involvement with the continent.

An Investment “Market” Is a Complex Set of Conditions

A “market” is simply a set of conditions that allow inputs to be introduced, related activity to
occur, and outputs to be removed. In a simple trading market, for example, money and goods are
introduced and then removed, with the only “related activity” being their exchange between the
parties. Even for such a simple process, however, a large number of conditions must be in place.
At a bare minimum, there must be a forum in which both parties can reliably verify that the
money and goods are actually on the table and removable. This in turn requires an identified and
secure space, a legal system setting and enforcing the rules for the exchange, ways to move the
money and goods to and from the exchange, and so forth.

When direct investment rather mere trading is undertaken, the number of relevant conditions
increases exponentially. To start with, the inputs are seldom the same as the outputs. One may
send materials to build a factory, and produce shoes as outputs. Even the money introduced and
removed must often run through a conversion process. As for the “related activity,” this is a
whirlwind of interactions, purchases, sales, contracts, licenses and labor. The sets of conditions
applicable to these individual actions may overlap in part, or they may be unique. For an investor
to determine whether a project is feasible, the investor must try to determine what conditions are
required for each action, whether they are present, and whether they can be navigated to finish
the desired project. This is what is simplistically referred to as the “return v. risk” calculation.

Africa’s “Market” for U.S. Private Investment Is Unexplored and Thus Deemed High-Risk

In the case of Africa, the “market” for U.S. direct investment has hardly been explored, so that
its contours and conditions remain largely opaque and thus frightening for most U.S. business
planners. For example, such a presumably simple matter as the purchase of a plot of land for a
factory in Ghana can lead to unforeseen headaches as the U.S. investor runs into the complexities
of a tribal land law that is both unknown and unimagined in U.S. corporate offices. Such pitfalls
are called “unknown” risks, which are added to “known” risks such as those of expropriation,
restrictions on profit-repatriation, and currency inconvertibility.

For most would-be U.S. investors and their funders, the risk-profile formed by these various,
often inchoate risks points to a chance of large to total loss. This in turn raises the cost of project

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capital sky-high, if it is even available in the first place. Consequently, U.S. investors cannot
achieve the financial “escape velocity” needed to reach Africa and its high-growth markets.

To correct this fundamental “market failure” for U.S. private investment in Africa – the inability
of business planners to develop risk-profiles that will attract affordable financing – “unknown”
risks must be reduced to “known” risks, and these “known” risks must be then minimized by
mitigation and offsets to allow a net-positive outlook for profits.

African Investment Prospects Mostly Fall into the Gap Between the Potential and the Possible

Africa is seen as being full of potential opportunities. This does not mean, however, that Africa
offers actual opportunities to every given investor. For many investors, Africa does not at this
time present conditions that make investment there attractive. In many cases, the discouraging
conditions are the investor’s own expectations and ambitions.

For example, many large U.S. companies put floors on their investment planning, so that small-
scale African projects are simply not considered worthwhile, even if they offer high growth
potential over the medium term. On the other end of the scale, a lone entrepreneur may be
personally willing to brave an African project, but is either unwilling or unable to do the difficult
and often expense prep work that a pioneer business requires. The lone entrepreneur may also
simply lack the resources to bear all of the shocks and setbacks that attend a project on the
economic frontier. Thus, one often finds in U.S. investment circles an inverse relationship
between an interest in African markets, and an actual ability to invest there.

Even where interest and resources co-exist in an investor, many simply lack suitable offerings.
For example, a mid-sized U.S. hospital chain may not find a profitable route into Africa except
through small clinics, which would require an entirely different business model, not to mention
major outlays to develop it. Even where an investor presents the trifecta of interest, ability and
product, the investor will still then face all of the known and unknown risks referenced above,
with vanishingly little business information or skilled support to guide the attempt.

In such circumstances, it cannot be a surprise that U.S. business investment in Africa is low. It
need not be this way, however. Africa is in fact replete with opportunities for any of the potential
investors described above. For this potential to be realized, the range of what is actually possible
must be expanded. As the number of possible projects increases, so will actual investments.

What must be done is to address the specific concerns of the U.S. investors found at each level of
the size spectrum. For example, the small investor can be relieved of having to reinvent the
wheel when the U.S. Government instead provides protection through bilateral investment
treaties (BITs), clear and reasonable tax burdens through double-tax treaties (DTTs), and day-to-
day help through support centers found both in the U.S. and at the local embassy. Meanwhile, the
mid-sized investor can be supplied with either public or private investment briefings, the services
offered by cadres of well-seasoned Africa experts, and the camaraderie and encouragement of
mutual-support clubs and associations. The large investor can for its part use major aid projects
as jumping-off points for its own private projects, or it can step in later in the game to take
advantage of the rising African economies fostered by multitudes of smaller U.S. investors.

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In short, to expand U.S. private investment in Africa, the interests, abilities and products of U.S.
investors must be aligned with the actual needs and conditions of African markets. Once this
point of equilibrium is reached, Africa’s investment “market” can be said to be fully open to U.S.
investment. It can then safely be assumed that U.S. investment will begin to pour into Africa in
search of the high margins to be found in an explosively growing African market that this very
same investment will help to bring about.

The Development of an African Investment Corps, and a Startup Industry of Advisors

The much-needed alignment between African needs and conditions on the one hand, and U.S.
investor interests, abilities and products on the other hand, should presumably be performed by
the market. After all, market theory posits that any demand will attract suppliers seeking profits.
In the case of those seeking profitable African ventures, a small cadre of advisers has indeed
arisen to offer risk-mitigation services, from due-diligence to legal advice to tax management.
This new industry is a product of the market’s invisible hand, moving quietly to meet needs.

The appearance of a skilled advisory cadre for African investments, which arguably began in
earnest around 2007-08, is an indicator that development is occurring or at least expected on the
African investment front. It does not prove, however, that there is a vibrant U.S. investor group
actually entering Africa. There unfortunately continue to be large dislocations in the market for
African advisory services. This is because the African investment corps in the U.S. is, unlike its
counterpart in China, uncertain and directionless. If China is Richard III, the U.S. is Hamlet.

While statistics and U.S. Government rhetoric present a hazy picture of bright horizons and grim
realities, the actual features of the African investment field have not been properly explored from
the perspective of an actual investor. This task of “market discovery” has been left to the African
advisory cadre, and to those individual businesses seeking to enter Africa. Indeed, it might be
said that this briefing packet is the first major survey of the field as seen by the advisors and
investors themselves. It offers a gritty, hardened and intensely practical view of the field.

As many advisors can testify, the “market discovery” conducted by individual investors can be
an initially exhilarating but ultimately dispiriting experience. The rush of excitement spawned by
the prospect of wide-open African markets soon gives way to the innumerable cares and worries
of attempting to learn and navigate – almost always entirely on one’s own – the conditions
present not only in the target market, but on the international investment plane. Advisors can
attest to watching the wheel being reinvented again and again, often with the spokes being left
lying about as the re-inventor walks off the field in frustration.

The advisory cadre’s own “market discovery” has been directed at exploring the contours of the
market for advice, and at learning the identity, needs and price-points of those who form the
“demand” side of the equation. This has been the task particularly of those advisory groups
which did not start off with a client base. This difficult and unforgiving learning process, which
would be arduous for large outfits, has proven very difficult indeed for the more modest startups.
(To their credit, most if not all advisory groups have tenaciously endured and survived.) The
harsh conditions of this pioneer business has, rather unexpectedly and certainly not by choice,

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had the salutary effect of producing advisors who have undergone the same type of struggles as
their clients, and who have thus honed the flinty outlook needed to succeed.

The shared travails of U.S. investors and their private advisors may have forged an investment
corps of formidable capacity, but it has also revealed a large gap between the reality experienced
by this avant garde and the notions and rhetoric of comfortably situated bureaucrats and so-
called Africa “experts.” While this divergence is frustrating for those in the private sector, as
they could certainly use skilled public-sector support, it is actually a perfectly natural and indeed
healthy development. A proposition that was once merely theoretical and hortatory – expanding
U.S. private investment in Africa – is now ever more clearly becoming a day-to-day reality, with
all its attendant messiness and rough-edged advances. It is to be expected that those on the
cutting edge of such change will be the ones who can best explain its new developments, and to
perceive the distance growing between themselves and those who cling to the old system.

Unfortunately, Africa’s new reality has not even begun to dawn on official circles, which remain
mired in old platitudes and increasingly irrelevant programs. One telling example of the depth of
government complacency was not long ago illustrated by a think-tank meeting called to discuss
how to introduce a basic awareness of bilateral investment treaties (BITs) to the bureaucracy and
to those on Capitol Hill. Given such depressing circumstances, it is easy to understand the sense
of many in the private sector that while the U.S. Government largely runs the show when it
comes to U.S.-African economic relations, U.S. officials are not looking out for U.S. business or
even aware of its needs, and that they are instead pursuing their own abstruse agendas.

An Effective Role for the U.S. Government in Fostering U.S. Private Investment in Africa

In the complex environment of U.S. private investment in Africa, the proper role of the U.S.
Government is not immediately clear. There is no overarching public question to be decided, the
resolution of which will channel private activity toward productive ends. What the field instead
presents is a dizzying array of public and private entities struggling to connect in a profitable
manner, with each entity and each relationship revealing a unique set of complexities. Factors
which are decisive for one party at one time turn out to be altogether irrelevant to another party,
or even to the same party at a different time.

In such a situation, the role of the U.S. Government cannot be decisive. It cannot organize, let
alone centrally plan, the vast and immensely diverse set of interactions that would make up a
mature economic relationship between a superpower and a continent. If the U.S. Government is
to act at all, it can do so only on the margins. It can ease the way for investors to pursue their
personal projects. It can encourage and gently nudge U.S. investors to get the ball rolling. Most
importantly, it can step in where the market cannot, and reduce persistent risks to make
affordably priced funding possible. The U.S. Government cannot, however, realistically try to
replace the U.S. investor corps. Indeed, it would be entirely counterproductive for the U.S.
Government to spend money on a Potemkin version of a tax-generating U.S. investor contingent.

Such a Potemkin-building effort is, unfortunately, exactly what the U.S. Government has been
doing for decades through its “aid” programs. While emergency responses to famines, epidemics
and other acute scourges are not only morally warranted but necessary, the U.S. Government has

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made the mistake of treating all African problems as if they were famines or epidemics. Thus, to
a degree not seen in any other region of the world, we see the U.S. Government sending “aid” to
improve all manner of alleged African problems. Earnest bands of Western consultants descend
on cattle-herders whose ancestors have worn the same paths for thousands of years. Clinics are
erected far from any known supply system. Waste-to-energy factories are dreamed up for cities
that do not have trash-collection services. The results of such endeavors have been negligible,
but the costs – both actual and in terms of private opportunities shoved aside by government
officials and their allies in the “aid” industry – have been large and growing.

The tragedy of the situation is that the U.S. Government does not understand, and indeed can
barely even recognize, the market into which it tramples. By seeking to impose a system that
exists only in policy papers and speeches, the U.S. Government mangles and deforms the system
that actually exists. The dire results are found in endlessly repeated statistics that show low and
stagnant U.S. investor interest in Africa. They are also found in the ascendancy of China. If the
U.S. had in the 1970s instituted for Africa measures friendly to U.S. private investment, China
would never have achieved more than a toehold on the continent as a low-budget alternative to
superior U.S. projects. Indeed, it might be wondered whether China would even be in the global
position it is, as it could have been merely a rising competitor to African industrial powerhouses.

In putting this past behind itself, and in reforming African investment policy, a wise and humble
U.S. Government would cease to entertain grandiose ambitions of continent-building. It would
instead restrict itself to identifying and correcting specific market failures that have dampened
U.S. private investor interest in Africa. The first step along this path is to learn what specific
market failures are actually occurring. The second step is to develop and implement strategies to
address these specific market failures. Having thus learned to put one foot in front of the other,
the newly dynamic U.S. agency will find that it must now continuously repeat this process –
study and action, study and action – in order to keep moving forward.

Once agencies are set to moving, their leaders will have the task of keeping up the institutional
determination to advance. Such firm resolve is not the natural state of a bureaucracy, which
prefers a well-paid humdrum. It is here that private-sector involvement and input will play a
critical role. By tailoring U.S. agency priorities and practices to ever-evolving private-sector
needs and goals, U.S. public agencies can remain both dynamic and useful.

II. A Précis of the Contributors’ Shared and Divergent Views on Major Topics

This briefing packet sets out ideas for a new U.S. Government policy régime that encourages and
supports U.S. investment in Africa. It is not a roadmap to some imagined policy endpoint. It is
intended simply to identify critical issues, and to propose solutions that can help the U.S. regain
its footing in Africa and usher in a new and far better era of U.S. economic, social and political
partnership with African countries and their citizens.

The Contributors share a great number of views, but they obviously do not agree on every point.
Each Contributor brings a unique focus and set of insights and experiences to the table. There are
philosophical differences between Contributors in their views of the nature and role of the State
in African investment matters. There are also more modest differences on tactical matters. What

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comes through in all of the sixteen Contributions, however, is a shared commitment not only to
the people of Africa, but also to a vibrant, lasting and productive U.S. presence on the continent.

The Contributors’ Strategic Views

Certain views and proposals concerning U.S. investment in Africa are shared by most or even all
of the Contributors. Perhaps not surprisingly, the Contributors are sanguine about Africa’s
potential for explosive economic growth. While it is recognized that serious obstacles remain to
be dislodged in many areas, these hindrances are deemed to be more than offset by the
tremendous potential for growth perceived in the rising, Web-connected middle classes that are
appearing across the continent. At the same time, the Contributors appear to concur that AGOA
has to date proved irrelevant as a tool for engaging Africa. While the sentiments behind AGOA
are considered worthy, it is judged by the Contributors that U.S. private investment, not a single
trade measure unmoored from Africa’s realities and focused almost entirely on natural resources
(especially oil), is the avenue likeliest to lead to African growth and improved U.S. prospects.

It is broadly recognized by the Contributors that U.S. private investors are the indispensable key
to strengthened U.S.-African economic relations. The Contributors uniformly call for U.S. public
policy and agencies to support U.S. private investors on the continent, albeit in conjunction with
the continued provision of “compassionate” aid. The Contributors do differ in the degree of their
acceptance of a State role in private investment. Where one view calls for the U.S. Government
to set the legal conditions for safe investment and then retire, another view calls for the White
House to select industries for preferential treatment as development champions. This divergence
of views is likely to lead to much debate, and there is of course no one invariably right answer.

The Contributors seem at one in finding U.S. corporate attitudes toward Africa to be typified by
fears of the continent that are in many respects irrational. Certain Contributors note that even
where large U.S. corporations have provably done well in Africa, these successes have not been
properly advertised and explained. This informational gap suggests a “market failure” that could
be privately or (in the view of some Contributors) publicly filled by the development of briefing
materials. Meanwhile, no Contributor would seem to dissent from the conventional view that
local partners are often indispensable to a project. The Contributors do differ from the standard
view, however, in urging long-term relationships that are carefully planned and maintained.

The Contributors express concern about African governments’ dependency on U.S. handouts,
and the lack of seriousness that such gifts bring about in African official planning. This state of
affairs is viewed as a burden on U.S. private investment in Africa, since aid tends to destroy
demand for non-free products in important sectors. It is also viewed as a strategic blunder. It is
noted that a rising China has drawn African governments to itself through the introduction of
investment projects that provide higher returns than U.S. aid projects. Although skepticism is
expressed by several Contributors as to the likelihood of a continued Chinese ascendancy,
particularly given increasingly negative African views of Chinese practices on the continent, it is
agreed that China is currently supplying the U.S. with severe competition, and that U.S.
influence is consequently waning in Africa despite Africans’ positive views of the U.S.

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While conventional wisdom might call for an escalation in aid to buy off African clients and woo
them away from China, the Contributors instead call for massive and even targeted increases in
U.S. private investment. In other words, the Contributors call for the U.S. to compete head-to-
head against China on the field of African investment. While China’s advantages in certain areas
are acknowledged, it is also noted that the U.S. has serious advantages of its own. In addition to
this call to action, a number of further suggested responses to China are put forward. These
proposals range from collaborating with Chinese firms to increase their dependence on U.S.
inputs, to seeking out partnerships with locals that would serve to confront and compete with
Chinese operations. Such ideas are likely to prove useful starting-points for further discussion.

The Contributors’ Tactical Views

Whereas strategy seeks to achieve overarching goals, tactics are used to win the smaller victories
needed for overall success. The Contributors helpfully provide insights and suggestions relating
to this lower yet still critically important plane of activity. Several of the topics mulled by the
Contributors on this level merit mention.

In jointly calling for increased U.S. investment, the Contributors diverge on the standards to be
applied by the U.S. Government to its African counterparts. On one end of the spectrum, a view
is expressed that the U.S. must cease to require African States to “earn” partnerships through
reforms or practices not expected of partners such as China. The more common view is,
however, that moral pressure on African governments must be kept up. While this difference in
approach may seem rich with possibilities for debate, there may in fact be ways to harmonize the
various views, at least in part. For example, it could perhaps ultimately be agreed that standards
will be kept in place, but that violations will have the effect of reducing benefits under an agreed
framework for economic engagement, rather than serve as a moving hurdle to the establishment
of a partnership. It may be noted that the Contributors were all of one mind in urging continued
support for reform efforts, the only debate being over what relationship such efforts should have
to the facilitation of U.S. private investment.

The Contributors uniformly recommend a closer working relationship between U.S. agencies and
U.S. private investors, so that U.S. public policies, programs and actions hew more closely to
U.S. private-sector needs and priorities. The Contributors differ, however, as to the specific
nature of this engagement. While on one end it is urged that the U.S. Government merely seek to
provide a level playing field and to minimize systemic risks, it is contended on the other end that
the White House establish policies and priorities that channel U.S. private investment toward
specified U.S. Government development objectives. Such a wide gap in proposed approaches
will no doubt prove fertile ground for debate.

Several Contributors urge the adoption of coaching programs to foster U.S.-African partnerships
and to impart know-how and other capacity boosts to African enterprises. These Contributors
agree that long engagements (with minimums of 1½ to 3 years) are necessary to achieve results
and to secure the trust of locals. Where the Contributors differ is in the manner in which such
coaching is to be conducted. Where one Contributor urges distance-mentoring, others urge
lengthy stays in-country. Meanwhile, while government support for such efforts is jointly called
for, one Contributor cautions that private-sector enterprises should be made to pay at least part of

C11

the cost to avoid moral hazard. Insofar as these different approaches cannot be squared by, for
example, matching different approaches to different project types, there will be room for debate.

The topic of trade and investment treaties is discussed by several Contributors. While one view
holds that the widespread conclusion of such treaties must be a top strategic priority for the U.S.,
other views are more ambivalent, finding that the delay and ideological priorities encountered in
the treaty-development process diminishes their usefulness. It is urged on the basis of such
skepticism that short-term policies and action plans be developed and implemented to secure
U.S. investment objectives, at least during the treaty-development process, if not in lieu of it.

The Contributors endorse the broad expansion of credit as a financial prerequisite for expanded
U.S. private investment in Africa. It is urged that the U.S. Government’s main financing arms,
Ex-Im and OPIC, be given long-term reauthorizations and license to operate autonomously as
free-market agents. At the same time, perhaps incongruously, it is suggested that these U.S.
Government bodies make greater efforts to coordinate their activities. Meanwhile, it is proposed
that the U.S. Government liberalize its political-risk insurance (PRI) requirements, and even
pioneer innovative forms of insurance for African projects. Given the central importance of
increased funding to the broadening of U.S. private investment in Africa, the subject of U.S.
Government financing, guarantee and insurance operations will certainly bear further discussion
as more specific tactical options are explored.

The role and operations of U.S. aid agencies, and particularly USAID, are the subject of various
proposals. Some Contributors urge the consolidation of agencies, and even having one agency’s
approach be adopted for the entire combined entity. Other proposals variously recommend the
identification of trade and investment as a top priority in aid programs, the adoption of internal
reforms (such as the Six Sigma approach), and the secondment or straight transfer of staff
between agencies to spread knowledge and implementation of best practices. On the operational
side, the practical need for sustainability in project-development is emphasized, and various
proposals are given for coupling aid work with private-sector entities and initiatives.

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Working Group on

SECTION A

INTRODUCTION AND THEMATIC SUMMARY
OF ACTION PLANS

Prepared By

Emmanuel Aghimien Tamara K. Gaw
David Baxter Peter C. Hansen
James R. Blaze David Humphries
James M. Blazewicz Justin Mahwikizi
Stuart H. Deming Emeka Nwankwo
Conal B. Duffy Laban Opande
André du Plessis Rick Orth
Jumoke Fajemirokun Jon Vandenheuvel

Introduction to the Working Group’s Action Plans
On September 11, 2012, the Working Group on U.S. Investment in Africa submitted its Briefing
Packet to the Romney Campaign’s Advisory Committee on Africa. This was followed by a
meeting held on September 14, 2012 in Washington between the Advisory Committee’s Co-
Chair, Ambassador Tibor Nagy, and most of the Working Group’s members. In the course of this
meeting, it was agreed that the Working Group would provide the Committee with a set of action
plans that distilled not only what had been discussed at the meeting, but also the proposals set out
in the Briefing Packet. This packet of action plans is the result of this follow-up effort.

This action-plan packet contains a wealth of innovative, practical ideas by sixteen members of
the Sub-Saharan African investment field’s avant garde. (The group submitting action plans
differs only slightly from the one that submitted the Briefing Packet, with Emmanuel Aghimien
joining and Francis J. Mills IV being unable to participate.) Each of the present Contributors was
asked by the Chair to address a specific topic, and to set out his or her ideas in a bullet-point
format dividing fifteen entries equally between guiding principles, executive policy reform
proposals, and legislative proposals. The Contributors had to work quickly, but came up with a
cornucopia of thoughtful and useful proposals for policy-makers and federal officials.

There is no substitute for reading through the individual action plans, preferably in light of each
Contributor’s entry in the Briefing Packet. Nonetheless, the packet’s sheer abundance of ideas
and broad spectrum of topics can be overwhelming. The Chair has therefore compiled for the
reader’s ease of reference a thematically organized list of 120 single-line proposal summaries.
The topics covered fall under four main rubrics: (i) Top-Level Strategy and Diplomacy; (ii) U.S.
Private Investment in Africa; (iii) Aid Reform; and (iv) Bureaucratic Reform. Under these
headings, a host of subjects are addressed, including AGOA, bilateral investment treaties, anti-
corruption measures, the development of a White House office to coordinate aid agencies,
measures to curtail vulture funds, and the recognition of an independent Somaliland.

Policy-makers across the Africa field will find in this packet a myriad of proposals relevant to
their work. It is hoped that these seeds of reform will take root and flower into vigorous policies
that shift the U.S.-African relationship into more fruitful paths. The goal of all the Contributors is
to foster a true partnership between the U.S. and Africa on every plane – economic, social and
strategic. The action plans contained herein are a superb guide to how this can be accomplished.

Peter C. Hansen
Washington, D.C.
November 5, 2012

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Thematic Summary of Action Plans
By Peter C. Hansen, November 5, 2012*

The following sets of thematically organized bullet points are intended to provide a fast-and-easy
guide to all of the various policy proposals put forward by the Working Group Members in their
respective action plans. For elaboration of these summarized proposals, including their extensive
backing analysis by the Members, reference should be made to the Members’ full action plans,
and to the Briefing Packet that serves as background to this Action Plan Packet.

The Chair’s call for action plans requested of each Member fifteen bullet points, divided equally
between guiding principles, executive policy proposals, and legislative proposals. This call went
out in light of the Working Group’s briefing of Ambassador Nagy, and had a tight deadline that
did not allow for extended consideration. The intent was to distill each Member’s policy
proposals into their most concentrated form for use on the Hill and in the federal bureaucracy.
The action plans submitted were therefore relatively terse and quickly written, and should not be
read or expected to be anything more than the brief policy calls that they are intended to be.

The general lack of overlap, and any conflicts that might be perceived, are not evidence of any
disagreement or group disinterest, but rather of the need to cover a wide field efficiently. Each
Member was asked to make proposals on a different subject. Consequently, overlaps or the lack
thereof are not a metric of popularity. In similar fashion, the thematic summary of the Members’
proposals provided below is designed simply to group topics together in the most coherent and
logical manner possible. No conclusions should be drawn from their layout or ordering,
particularly with respect to priority or popularity. No such effect is intended.

Part I – Top-Level Strategy and Diplomacy
U.S. GEOPOLITICAL INTERESTS IN AFRICA

Principles

• Trade and investment with Africa is of strategic importance.1

• Africa’s growth prospects and economic integration must be recognized.2

• Africa will be the Great Powers’ foremost zone of competition in the 21st century.3

• Check assertive BRIC advances within Africa,4 and particularly those of China.5

*
The only change made for the Compendium is that the page numbers have been updated to fit the new volume.
1
Duffy, C100; Mahwikizi, C164; Opande, C188 (noting enormous size of African market); Vandenheuvel, C200.
2
Mahwikizi, C164.
3
Hansen, C130.
4
Aghimien and Blazewicz, C58.
5
Baxter, C68; Humphries, C152; Vandenheuvel, C200.

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• Uphold free-market principles and best practices, including accountability.6

• Stick to democratic U.S. values, and eschew contrary foreign norms.7

General Proposals

• Connect national security principles and other long-term strategic goals to trade.8

• Use OPIC and Ex-Im aggressively to stimulate investment and compete with China.9

• Measure U.S. performance as a trade-promoter, not an aid promoter.10

• Build strong strategic partnerships with promising emerging national economies.11

• Develop beachheads in rising countries, facilitated by foreign policy, aid and trade:

o West Africa – Ghana (ECOWAS) rather than saturated Nigeria;

o Southern Africa – Mozambique (SADC) rather than saturated South Africa;

o East Africa – Tanzania (EAEC) rather than saturated Kenya.12

• Institute annual review of trade and investment policies in light of goals for growth.13

Specific Proposals – Somaliland

• Press U.N. Security Council to remove Somaliland from U.N. arms embargo sanctions.14

• Seek to wrest Somaliland from domain of the Somalia and Eritrea Monitoring Group.15

• Open U.S. Interest Section Office in Hargeisa, Somaliland, in advance of recognition.16

• Recognize Somaliland, and then open U.S. embassy in Hargeisa, Somaliland.17

6
Aghimien and Blazewicz, C58; Baxter, C68-C69.
7
Baxter, C69; Vandenheuvel, C200-C201 (urging that such values shape the drive to increase U.S. competitiveness,
and specifically naming the values of freedom, entrepreneurship, the rule of law, the inclusion of SMEs, African
buy-in and ownership, and social, environmental and economic sustainability).
8
Baxter, C69.
9
Humphries, C152.
10
Vandenheuvel, C201.
11
Baxter, C68-C69; Duffy, C99 (suggesting that trade and investment treaties be concluded); Humphries, C150.
12
Baxter, C68.
13
Duffy, C100.
14
Orth, C194.
15
Id.
16
Id.
17
Id.

C16

U.S. RELATIONSHIP WITH AFRICAN STATES

Principles

• There must be mutual trust and mutual benefit for U.S. and African trading partners.18

• The U.S. Government must show Africa respect by treating it like any other region.19

• Productive capital must be infused and diffused into the African private sector.20

• The U.S. and African public sectors must facilitate rather than replace the market.21

Proposed U.S. Expectations for African States

• African governments must actively work to attract trade, investment and financing.22

• African States should increase domestic investment financing, including through equity.23

General Proposals for U.S. Role in Relations with Africa

• Show appreciation for, and understanding of, the continent’s great diversity.24

• Tailor U.S. Government policies to the specific requirements of each country.25

• Align policies on Africa with those applied to larger developing markets like China.26

• Pursue region-wide access to markets, including through improved trade infrastructure.27

• Promote U.S. public and private engagement with regional trading blocs (e.g. SADC).28

• Translate standard U.S. concerns, legislation and intent for Africans, and vice versa.29

18
Aghimien and Blazewicz, C57; Opande, C188.
19
Hansen, C130.
20
Id.
21
Id.
22
Duffy, C100.
23
Mahwikizi, C163.
24
Opande, C188.
25
du Plessis, C108.
26
Hansen, C130.
27
Baxter, C68.
28
Opande, C188.
29
Aghimien and Blazewicz, C57; Fajemirokun, C115.

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• Promote African use of U.S. skills and management techniques.30

• Engage U.S.-trained African experts in law, security, science and technology.31

• Offer training and mentoring in U.S. project-execution methods.32

• Promote training and mentoring programs for African governments and enterprises.33

• Encourage African States to reduce systemic financial risk and create new instruments.34

Specific Legislative Proposals for U.S. Role in Relations with Africa – Vulture Funds

• Require disclosure of certain interested parties in U.S. vulture fund lawsuits.35

• Require disclosure of cost bases and interest for U.S. vulture fund claims.36

• Forbid compound interest for vulture fund claims, as is the case with zombie debt.37

• Cap vulture interest rates at reasonable, even if adjustable, level allowing fair recovery.38

Part II – U.S. Private Investment in Africa

Principles

• The U.S. private sector must be unleashed in Africa to develop local economies.39

• Treat U.S. corporations as true partners of the U.S. Government.40

• Ensure U.S. regulations do not harm or relatively disadvantage U.S. investors in Africa.41

30
Blaze, C81.
31
Opande, C188.
32
Blaze, C81.
33
Aghimien and Blazewicz, C58; Vandenheuvel, C201 (urging particular attention be paid to business, law and
accounting).
34
Mahwikizi, C164.
35
Gaw, C119.
36
Id.
37
Id.
38
Id.
39
Hansen, C130.
40
Baxter, C69.
41
Mahwikizi, C164 (urging such review upon a regulation’s implementation, and regularly thereafter).

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Executive Policy Proposals

• Have President lead private trade and investment mission to targeted African countries.42

• Involve U.S. businesses in policy-development, with access to key decision-makers.43

• Foster U.S. corporate partnerships and PPPs with Africans, guided by case studies.44

• As feasibility studies locally hard to implement, instead foster one-on-one mentoring.45

• Deepen cooperation to develop and expand capital flows to African financial markets.46

• Ensure U.S. banks can enter Africa independently, with a local partner, or via stakes.47

General Legislative Proposals

• Require Congress to review regulations affecting African investment every five years.48

• Incentives should encourage long-term strategic corporate partnerships.49

• Encourage U.S. banks to develop strategic partnerships with African banks.50

• Correct restrictive tax practices that hinder U.S. competitiveness in Africa.51

• Provide tax breaks for U.S. investors in development, health and science projects.52

• Institute dedicated guarantee facility for Africa project funding, backed up by PRI.53

• Develop Africa project-insurance products via “pioneer” program with $5B reserve.54

42
Vandenheuvel, C200.
43
Duffy, C98; Humphries, C152.
44
Aghimien and Blazewicz, C57-C58; Blaze, C81.
45
Blaze, C81.
46
Mahwikizi, C163.
47
Id.
48
Id., C164.
49
Baxter, C68.
50
Mahwikizi, C163.
51
Baxter, C69.
52
Opande, C188.
53
Duffy, C100.
54
Hansen, C130.

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Specific Proposals – Fighting Corruption

• Develop creative, effective mechanisms to help companies compete while complying.55

• Do not undermine global progress in fighting corruption by tinkering with the FCPA.56

• Reward countries that comply with international anti-corruption and commercial laws.57

• Strongly support implementation of existing anti-bribery conventions now in force.58

• Develop UN monitoring mechanism like that of OECD Anti-Bribery Convention.59

• Consider addition of protocol to OECD Convention requiring domestic legislation.60

• Seek new protocol to African Union Convention prohibiting bribery of foreign officials.61

Specific Proposals – Investment, Tax and Trade Treaties

• Conclude trade treaties with resource-rich countries and possible U.S. markets.62

• Conclude simplified multilateral investment treaty (MIT) for U.S. and African States.63

• Conclude simplified multilateral double-tax treaty (MDDT) for U.S. and African States.64

• Provide funding for conclusion of investment and tax treaties with all African States.65

• Set goal for USTR to have FTAs and BITs with large U.S. trading partners in Africa.66

• Devote agency resources to conclude BITs and DTTs with all African States in 2 years.67

55
Deming, C91.
56
Id.; Opande, C188 (urging the FCPA’s strict enforcement).
57
Opande, C188.
58
Deming, C91.
59
Id.
60
Id., C92.
61
Id.
62
Opande, C188.
63
Hansen, C130.
64
Id.
65
Id.
66
Duffy, C99.
67
Hansen, C130.

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Part III – Aid Reform

Principles

• Wean African countries off aid and promote their self-reliance.68

• Redirect aid so as to maximize private investment and minimize dependency.69

• Facilitating trade and investment should be made a top priority for U.S. aid.70

• Low-cost improvements to trade and investment framework is more efficient than aid.71

• Split aid into: humanitarian; long-term development; investment and trade; diplomacy.72

• Projects must be informed as to needs and expected impacts, with local engagement.73


• Brand all aid “From the American People” rather than by individual agencies.74

• Declare that increasing African employment is the priority for U.S. aid and investment.75

• Leverage humanitarian programs to reduce investment risks (e.g. metrics, better roads).76

• Create or promote public-private partnerships (PPPs) of interest to U.S. and Africans.77

• U.S. foreign aid should not go to foreign companies if U.S. companies are available.78

• Promote U.S., African and international organization partnerships for youth education.79

68
Opande, C188.
69
Hansen, C130 (urging the institution of an “Aid and Investment Model” or “AIM”).
70
Id. (urging the institution of a “Mature Market Model” or “M3”); Humphries, C152 (observing that all assistance
must be ROI-focused, with waste being unacceptable).
71
Duffy, C100.
72
Humphries, C152 (suggesting that each category be assigned to a different agency).
73
Mahwikizi, C164.
74
Humphries, C152.
75
Mahwikizi, C163.
76
Aghimien and Blazewicz, C58.
77
Opande, C188.
78
Blaze, C81; du Plessis, C108 (suggesting MCC follow the USAID model requiring a U.S. prime contractor).
79
Vandenheuvel, C201 (suggesting example of 4-H).

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General Legislative Proposals

• Allocate aid funds in proportion to proven record of business-promotion commitments.80

• Punish sustained bad behavior, including corruption, with censures and aid conditions.81

• Reduce assistance to States that redirect investment and trade funds to Africa or Asia.82

• U.S. aid objectives must include development of African bank-regulation systems.83

• Funds and discretion for agencies to conduct DARPA-style contests for solutions.84

Specific Legislative Proposals – AGOA

• Extend AGOA, and cover more commodities and services, to foster U.S.-Africa trade.85

• Amend AGOA to speed depreciation for harmless capital exports to U.S. subsidiaries.86

Specific Legislative Proposals – PEPFAR

• Expand host-country ownership of PEPFAR while emphasizing sustainability.87

• Shift PEPFAR to challenge-grant model with specific local requirements and rewards.88

• Shift PEPFAR from treatment to prevention to reduce future financial and social costs.89

• Expand PEPFAR beyond HIV/AIDS to include TB and malaria, given co-morbidity.90

• Mandate a PEPFAR evaluation, knowledge-sharing and cross-surveillance regime.91

• Develop mobile clinics, reference libraries and health-indicator surveys via PEPFAR.92

80
Baxter, C68.
81
Id., C68-C69.
82
Humphries, C152.
83
Mahwikizi, C163-C164.
84
Hansen, C130.
85
Opande, C188.
86
Duffy, C99.
87
Nwankwo, C175.
88
Id., C176.
89
Id., C175-C176.
90
Id. (urging implementation of new tests for HIV/AIDs, STDs and other co-infectors like TB, and further urging
use of targeted PEPFAR investment to help rebuild private health-care systems, while noting that private actors are
often excluded in favor of moribund and often corrupt public bodies).
91
Nwankwo, C176.
92
Id.

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Part IV – Bureaucratic Reform

U.S. AGENCIES GENERALLY

Principles

• The U.S. Government should focus on international, not inter-agency, competition.93

• Coordinated U.S. policies must aim for tangible, measurable results.94


• Develop policy-outcome metrics, the results of which are to be reported to Congress.95

• Strive for consensus on Africa, including by harmonizing official initiatives.96

• Coordinate efforts of U.S. agencies dealing with trade, investment and development.97

• Institute hub for coordinating U.S. agencies,98 perhaps at the White House.99

• Appoint inter-agency project finance coordinator to grow investment-finance options.100

• Appoint inter-agency coordinators to develop three regional investment centers.101

• Assign personnel to African countries based on their local and regional knowledge.102

• Bring in seasoned China-desk experts to change approach of Africa-focused offices.103

93
Humphries, C152.
94
Vandenheuvel, C200 (suggesting as examples official efforts to expand exports, create jobs, promote U.S.-African
collaboration on industrial development, provide project finance, and educate future African industry leaders).
95
Id., C201 (stating that bogus “body count” numbers must be rejected, and suggesting as new metrics: U.S.
exports to Africa, U.S.-African partnership exports to the rest of the world; U.S. market share in middle-class
African markets for goods and services; and private job creation in the U.S. and Africa).
96
Aghimien and Blazewicz, C58; Baxter, C69.
97
Fajemirokun, C115; Humphries, C152 (emphasizing need for clear roles and responsibilities, without
duplication); Vandenheuvel, C200-C201.
98
Fajemirokun, C115; Mahwikizi, C163 (calling for appointment of International Development National Director).
99
Humphries, C152 (noting that this proposed White House body should oversee all aid); Vandenheuvel, C198-199
(calling for creation of “President’s Interagency Plan for Sustainable Investment in Africa”).
100
Vandenheuvel, C201 (stating that the official should report to proposed White House inter-agency hub’s chief).
101
Id. (suggesting regional centers in East, West and Southern Africa, and further that the regional coordinators
report to a proposed White House inter-agency hub’s chief, and work with both U.S. and African businesses).
102
Opande, C188.
103
Hansen, C130.

C23

Legislative Proposals

• Redirect funding from multilateral bodies to taxpayer-accountable U.S. agencies.104

• Pass “President’s Inter-Agency Plan for Sustainable Investment in Africa Act.”105

• Keep apolitical, better-managed organizational structures that handle large populations.106

MULTIPLE AGENCIES OR BODIES
• Expand role of USTDA, and merge OPIC and Ex-Im into it to form a super-agency.107

• Multi-year or permanent authorizations of OPIC and Ex-Im.108

SPECIFIC AGENCIES AND OTHER BODIES

Millennium Challenge Corporation (MCC)

• Have MCC help develop guarantee funds for PPPs in high-priority sectors.109

Multilateral Development Banks (MDBs)

• Direct U.S. Executive Directors at MDBs to push for expanded private-sector role.110

• Support ADB’s effort to raise a $22B “infrastructure bond” for private infrastructure.111

Overseas Private Investment Corporation (OPIC)

• Improve OPIC’s lending capabilities to help both OPIC and investors.112

• U.S. financing aid terms should be competitive with those of 5 top competing nations.113

• Free OPIC to use profits for technical assistance to reduce reliance on outside agencies.114

104
Humphries, C152.
105
Vandenheuvel, C200.
106
Opande, C188.
107
du Plessis, C108.
108
Humphries, C152.
109
Duffy, C99.
110
Id.
111
Id.
112
Id., C100.
113
Blaze, C81.
114
Humphries, C152.

C24

• Direct OPIC to use credit subsidies to shrink burden on private project loan guarantors.115

U.S. Embassies and U.S. Commercial Service

• Have State, Commerce and the White House jointly foster best embassy practices.116

• Hold conferences for U.S. ambassadors and DCMs to infuse market-focused policies.117

• Stop closing U.S. embassies’ Commercial Service posts, as occurred in Ghana.118

• Have U.S. Commercial Service identify opportunities to supply non-U.S. projects.119

• Have U.S. Commercial Service cover more countries, annually, in its market reports.120

115
Duffy, C99.
116
du Plessis, C108.
117
Duffy, C100.
118
du Plessis, C108.
119
Id.
120
Fajemirokun, C115.

C25

Working Group on

SECTION B

INTRODUCTION AND THEMATIC SUMMARY
OF BRIEFING MEMORANDA

Prepared By

David Baxter Peter C. Hansen
James R. Blaze David Humphries
James M. Blazewicz Justin Mahwikizi
Stuart H. Deming Francis Joseph Mills IV
Conal B. Duffy Emeka Nwankwo
André du Plessis Laban Opande
Jumoke Fajemirokun Rick Orth
Tamara K. Gaw Jon Vandenheuvel

Introduction to the Working Group’s Briefing Memoranda
This briefing packet is intended as an introduction to the thought of the Sub-Saharan African
investment field’s avant garde. The sixteen memoranda presented here vary greatly in their
themes and in their authors’ backgrounds and professional focus. The viewpoints expressed are
informed by an extraordinarily diverse range of experiences. Many of the authors are African,
and hail variously from East, West and South Africa. Many authors are experienced Washington
or development hands with intensive experience either in African matters, or in related fields
such as corruption. In several cases, these categories overlap.

The Contributors to this packet, despite their great differences, not least on the political plane,
share one characteristic which places them in the vanguard of the African investment corps. This
is a hard-nosed determination to increase U.S. private investment in Africa, coupled with a close
attention to the innumerable conditions and practical details that variously serve to attract,
impede or welcome U.S. private investors. This knowledge and perspective has in many cases
been hard-won over the course of years and harsh experiences. It also sets them apart from the
vast and complacent bureaucracies that currently dominate U.S. economic relations with Africa.

Despite their friendly differences of view or approach in various strategic or tactical matters, the
Contributors reveal a striking commonality of view in holding that massively increased U.S.
private investment in Africa is not only possible, but a strategic and indeed moral necessity. Far
from fitting the stereotype of the exploitative plunderer, the Contributors express a firm intention
that U.S. private investment, and facilitating public-sector efforts, be undertaken in a spirit of
true and equal economic partnership, free of corruption and seeking always to build up Africans
and African institutions. In nuanced and deeply thoughtful passages, the Contributors navigate
the complex issues raised by the freewheeling nature of private commercial projects, and the
prospect of a U.S.-led economic explosion in Africa. If a classical spirit of free enterprise is
readily detected in the Contributors’ memoranda, it is one that is also quite conscious of the
meaning, challenges and limits of the laissez-faire approach.

What does surprise in this collection is the stark difference between the Contributors’ viewpoints
and the gauzy rhetoric of the U.S. public sector. Again and again, the Contributors cut through
the fog of official attitudes and platitudes, goring sacred cows like AGOA, the aid industry, and
that most harmful of official stereotypes, that of the pitiable and incompetent African. This
barbecue of conventional wisdom is not just a broadside against official complacency. It is also a
serious and grittily realistic call for action to reform U.S. policy on African investment from top
to bottom, and to set the U.S. on a course toward fruitful engagement and alliance with the many
countries and peoples of a great continent.

Peter C. Hansen
Washington, D.C.
September 11, 2012

C27

Thematic Summary
By Peter C. Hansen, September 11, 2012*

The following thematic summary seeks to represent in an objective and systematic manner the
many points raised by the sixteen Contributors in their respective pieces. Given the wide range of
the topics addressed by the Contributors, the summaries of their pieces are divided into five main
thematic sections: (i) an overview of conditions affecting U.S. private investment in Africa;
(ii) competition presented to the U.S. in Africa by China and other countries; (iii) the official
U.S. stance on U.S. private investment in Africa; and (iv) U.S. aid agencies and programs.

PART I – OVERVIEW OF CONDITIONS AFFECTING INVESTMENT

A. Africa’s Potential

Africa’s decade of strong growth and immense, positive change was recognized.1 It was noted
that Africa this time really seems to be taking off economically in a sustainable fashion.2 It was
pointed out that the U.S. need for African commodities (especially oil) was increasingly indirect
rather than direct, as U.S. trading partners were taking up a greater share of manufacturing.3 It
was observed that African exports will increasingly move toward manufactured goods, and that a
growing Africa is likely to import massive amounts of U.S. goods.4

Africa’s growth potential was attributed to various factors, including: (1) the growth in African
commodity exports;5 (2) increasing urbanization;6 (3) a growing middle-class;7 (4) major legal
and economic reform efforts by progressive African governments;8 and (5) Africa’s large youth
population, which is connected to the Internet and attracted to capitalism.9 The value of the
African Diaspora was noted,10 as was the hardy African entrepreneur developing businesses in
extremely harsh environments and without support.11
*
The only change made for the Compendium is that the page numbers have been updated to fit the new volume.
1
Duffy, C101; Blazewicz (passim); Opande, C191.
2
Duffy, C103-C104.
3
Id., C102.
4
Id.
5
Baxter, C70.
6
Id.
7
Id.; Mahwikizi, C168; Vandenheuvel, C202.
8
Blazewicz, C62-C64 (citing Nigeria and Ghana in particular, with respect to reforms in the energy sector).
9
Mahwikizi, C165-C167, C169 (noting that this capitalist system is ironically being pursued in Africa by China and
India rather than the U.S.).
10
Baxter, C78 (noting that the Diaspora’s reach and influence is often underestimated); du Plessis, C112; Nwankwo,
C180-C181.
11
Nwankwo, C182 (using as an example local African food-processors who build factories using personal
resources).

C28

It was asserted that Africa is not special or exceptional, and requires the same wide-eyed, hard-
nosed approach to development that has led to the successes of China, Brazil and India.12 It was
noted that “international development experts” tended to ignore this stubborn fact.13 It was
pointed out that the U.S. as a whole must approach Africa as investors rather than donors,14 and
that Africans want more investors, not more politicians, aid workers and exploitation.15 It was
observed, however, that Africa often loses out in competition for investment projects because
they cannot offer sufficient incentives (such as infrastructure, governance and cash offers) to
keep up with other regions.16

B. U.S. Corporate Approaches to Africa

1. Analysis of Situation and Issues

Note was taken of the need for an increased U.S. private-sector presence and positioning in
Africa.17 The successes of certain very large, branded U.S. companies in Africa were lauded.18
U.S. companies were considered representatives of the U.S., and a link was made between their
reputation in Africa and that of the U.S.19 It was observed that U.S. multinationals have a huge
reach in Africa, going places where the U.S. Government could not, and running projects that
USAID could not accomplish.20 Nevertheless, it was pointed out that U.S. corporate successes in
Africa had not been well-publicized, and that best practices associated with these efforts had not
been identified or disseminated.21

It was noted that U.S. business circles perceived that U.S. nation-building programs spawned
antipathy to U.S. businesses, and that there is a preference in procurement for local companies
over U.S. providers.22 More generally, an extraordinary degree of fear of Africa as a potential
investment site was observed among U.S. companies,23 accompanied by a near-total lack of
comprehension of the actual (lower) risks involved.24 It was pointed out that, given the relative

12
Id., C179.
13
Id.
14
Vandenheuvel, C202.
15
Blazewicz (passim); Vandenheuvel, C202.
16
Nwankwo, C178.
17
Vandenheuvel, C202.
18
Baxter, C71-C72; Humphries, C157; Mills, C172.
19
Humphries, C157-C159.
20
Id., C157-C158.
21
Baxter, C71.
22
Id., C72.
23
Id., C71.
24
Id.

C29

freedom of U.S. investors to work in today’s Africa, the dearth of U.S. private investment on the
continent reflected risk perceptions so high that they outweighed the prospect of high profits.25

Notice was taken of a lack of competitiveness and drive in U.S. companies as regards emerging
markets, and Africa in particular.26 A view was expressed that for the U.S. to maintain its edge in
the global economy, U.S. industry must see investment and growth in Africa as a strategic
imperative.27 It was elsewhere perceived, however, that the U.S. may be too late to the party.28
Anecdotes were related about visits to Africa where no U.S. companies were present, but where
companies from many other countries were successfully closing deals.29

It was pointed out that true and full U.S.-African corporate partnerships are quite possible.30 It
was observed, however, that given differences in culture and business practices between the U.S.
and Africa means that a long-term vision would require for success that goals, risks and the
values of the relationship be articulated.31 It was further observed that U.S. businesses should
undertake a full-spectrum review (e.g. due diligence, business development and management
protocols) before making any commitments in Africa.32

It was observed that while it was relatively easy to measure aid contributions made by the U.S.
Government and NGOs (the latter being around $8.6 billion per year), it is very difficult to
determine how much aid comes from U.S. private-sector companies.33 It was noted that U.S.
corporate aid included not only corporate social responsibility (CSR) funds, but also operational
budget allocations directed toward what amount to aid projects.34

2. Proposed Solutions

A need was identified for U.S. businesses to build long-term relationships in Africa, based on
successful projects.35 It was suggested that U.S. corporations be encouraged to take part in
nation-building by introducing business practices that broaden access to wealth and foster

25
Hansen, C131-C132 (noting that many perceived risks were unquantifiable since most involve a lack of public
protection, such as impartial and efficient courts, which presents a risk-profile akin to anarchy).
26
Baxter, C70.
27
Id., C71.
28
Id.
29
Id. (referencing Mozambique, which incidentally has a BIT with the U.S.).
30
Blazewicz (passim).
31
Id., C59, C62-C64 (using example of U.S. power projects in Nigeria).
32
Id., C60-C64 (using example of U.S. power projects in Nigeria).
33
Humphries, C157.
34
Id. (noting the example of a CHF International project to provide an urban development plan for a mine project in
DRC, in partnership with a U.S. company which funded the plan out of its operational budget).
35
Baxter, C76; Blazewicz (passim, using power projects in Nigeria as an example).

C30

expansion of the middle class.36 It was asserted that U.S. investments in Africa must be globally
competitive and profitable, not “social enterprises.”37 It was elsewhere suggested in a similar
vein that bilateral aid budgets should reflect the fact that private enterprise drives successful
economic and social development, not U.S. Government-direct aid programs.38

A specific proposal urged that U.S. companies be encouraged to open franchises in Africa,39 and
that USAID technical assistance be provided to help host-country governments upgrade their
laws so as to welcome franchises.40 It was suggested that franchises could be encouraged in non-
heavy industries (such as modern cleaning services) to allow operation in multiple countries
without heavy regulatory drag.41

It was observed that the U.S. Government has not made much of an effort to encourage U.S.
businesses to partner with African governments or businesses.42 It was asserted that increased
public-private partnerships (“P3” or “PPP”) would bring U.S. companies into Africa, creating
larger local export markets on both sides of the Atlantic, while also building African capacities.43
It was in the same vein suggested that U.S. partnerships (such as PPPs) would develop African
know-how and lead toward industrial and economic growth.44 It was pointed out that if the U.S.
Government assisted African food processors in improving their capacity through the facilitated
involvement of U.S. companies, this would allow U.S. aid agencies to source food regionally
when responding to African food crises.45

a. Proposals for Coaching Programs (Both Private and Publicly Supported)

It was proposed that in place of expensive, one-off feasibility studies, the U.S. Government
agencies should finance coaching, training and mentoring assistance by U.S. businessmen and
women for African policy-makers and planners.46 It was suggested that these coaches would help
African policy-makers and planners learn to ask the right questions for developing effective

36
Baxter, C74 (noting the fruitful participation of U.S. companies in South African civil society during apartheid,
which led to many of these companies’ former employees serving today as pro-U.S. national leaders); Nwankwo,
C180-C185 (using the example of U.S. development of local African food processors).
37
Vandenheuvel, C202.
38
du Plessis, C111.
39
Duffy, C104; Mahwikizi, C168-C169 (discussing this as part of a proposed Tactical Investment Hedge Program,
and using the example of a hypothetical U.S. cleaning company entering Africa).
40
Duffy, C104.
41
Mahwikizi, C168.
42
Opande, C190.
43
Blazewicz, C60, C62; Opande, C190.
44
Blazewicz, C60; Opande, C190.
45
Nwankwo, C182.
46
Blaze, C85-C86; Mills, C172 (suggesting a broad array of U.S. representatives, from businesspeople to former
Peace Corps volunteers, to scholars and trade-association representatives); Nwankwo, C184 (proposing that such
programs use the Six Sigma model).

C31

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