SPEAKERS CONTENTS INSERTS
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40—379 CC
1997
THE IMPACT OF U.S. DEVELOPMENT ASSISTANCE IN AFRICA
HEARING
BEFORE THE
SUBCOMMITTEE ON AFRICA
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
MARCH 13, 1997
Printed for the use of the Committee on International Relations
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COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
HENRY J. HYDE, Illinois
DOUG BEREUTER, Nebraska
CHRISTOPHER SMITH, New Jersey
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
PETER T. KING, New York
JAY KIM, California
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California
JON FOX, Pennsylvania
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JOHN McHUGH, New York
LINDSEY GRAHAM, South Carolina
ROY BLUNT, Missouri
JERRY MORAN, Kansas
KEVIN BRADY, Texas
LEE HAMILTON, Indiana
SAM GEJDENSON, Connecticut
TOM LANTOS, California
HOWARD BERMAN, California
GARY ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
PAT DANNER, Missouri
EARL HILLIARD, Alabama
WALTER CAPPS, California
BRAD SHERMAN, California
ROBERT WEXLER, Florida
STEVE ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
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BILL LUTHER, Minnesota
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
Subcommittee on Africa
EDWARD R. ROYCE, California, Chairman
AMO HOUGHTON, New York
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
TOM CAMPBELL, California
JOHN M. McHUGH, New York
ROBERT MENENDEZ, New Jersey
DONALD M. PAYNE, New Jersey
ALCEE L. HASTINGS, Florida
Vacancy
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
C O N T E N T S
WITNESSES
Hon. George Moose, Assistant Secretary of State for Africa, U.S. Department of State
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Hon. Carol Peasley, Acting Assistant Administrator for Africa, U.S. Agency for International Development
Mr. William Ford, President, African Development Foundation
Ms. Carol Lancaster, Assistant Professor, School of Foreign Service, Georgetown University
Mr. Michael Maren, Journalist/Author
Hon. Edmund DeJarnette, Jr., Executive Director, United States-Angola Chamber of Commerce
Mr. Nicholas Eberstadt, Ph.D., Visiting Scholar, American Enterprise Institute
APPENDIX
The Development Fund for Africa: ''Background Information: Development Fund for Africa U.S. Econ. & Military Assistance Charts''
Prepared statements:
Hon. George Moose
Hon. Carol Peasley
Mr. William Ford
Ms. Carol Lancaster
Mr. Michael Maren
Hon. Edmund DeJarnette, Jr.
Mr. Nicholas Eberstadt
THE IMPACT OF U.S. DEVELOPMENT ASSISTANCE IN AFRICA
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THURSDAY, MARCH 13, 1997
House of Representatives,
Subcommittee on Africa,
Committee on International Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:10 p.m. in room 2255, Rayburn House Office Building, Hon. Ed Royce [chairman of the subcommittee] presiding.
Mr. ROYCE. This hearing of the Subcommittee on Africa will come to order.
This is the first of at least a dozen hearings this subcommittee expects to conduct this year on various issues concerning America's relationship with Africa. This subcommittee takes very seriously its responsibility for oversight of U.S. policy and programs in Africa.
I believe we in Congress and the American people underestimate Africa's importance. The fact is that Africa matters to the United States. Our level of trade with Africa is greater than the level of trade was with the former Soviet Union or than our level of trade is with Eastern Europe. We have political security, humanitarian and environmental interests in Africa as well.
Fortunately, I believe there is a growing recognition that this is so, which is why American policy on Africa matters. The United States has been instrumental in bringing about peace in Angola, Ethiopia, Namibia. Yet there is a tendency to underestimate our impact. We have clout in Africa and we should use it. We should act forcefully to advance U.S. interests in Africa, which at the same time will improve the lives of millions of Africans. As the only superpower, this country is looked to for assistance on a variety of issues from humanitarian aid to technical training to election support.
American ideas matter to Africa, too. As democratization has proceeded in Africa, the American model has been useful for African democrats trying to formulate workable governance and electoral systems. A recent New York Times magazine article quoted a leading Kenyan human rights activist as saying, ''Africans stand in awe of American power.''
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America's power is not just military or economic, it is the power of example. There has been progress in recent years in Africa on which we can build, and last year 30 African nations experienced positive economic growth for the first time in more than a decade. Massive challenges remain, but this is a beginning.
Democracy is advancing through elections in Ghana, Benin, and Sierra Leone. Human rights advances have been made in Mali and Botswana. South Africa's Truth Commission and its struggle for national reconciliation stands as a stellar example for the world.
Africa is at a critical juncture. The old ways have failed. The new wave of democracy, human rights, and free markets have yet to take full effect. The United States has a major role to play in this transformation for our own sake as well as for Africa's future. An Africa that is unhealthy, that is undemocratic and noncompetitive will harm the entire world, including America.
This committee intends to make the U.S. role as constructive as possible. In today's hearing, we will examine the impact of America's development aid in Africa. It is no secret that USAID (AID) and our development aid programs have been troubled, and there is a wide bipartisan consensus on the need for fundamental reform.
Our development aid lacks focus. This is something that this Administration recognized early on. There also were questions about the merits of development aid itself. There have been cases in which our aid efforts have done nothing more than bolster an intolerable economic and political status quo.
On the other hand, some of our AID efforts, particularly humanitarian aid, have saved thousands, if not millions, of lives. Because development aid dominates our relations with many African countries, which is unfortunate, this subcommittee will be devoting a good deal of time to looking at what AID and other agencies involved in Africa are doing.
And before we proceed, I want to recognize the members of the committee that are with us today. We have an outstanding subcommittee, I might say, consisting of members who are truly committed to seeing America play a positive role in Africa; and I look forward to working with our members over the next 2 years.
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Our ranking minority member is Mr. Robert Menendez of New Jersey; and Mr. Tom Campbell is with us from California, as well. And I would ask my colleagues if they have an opening statement they would like to make at this time?
Mr. MENENDEZ. Thank you, Mr. Chairman. I am glad to have someone join us who has meant a great deal to Africa, Alcee Hastings of the great State of Florida, who is also a member on our side of the aisle.
First, since this is your first hearing as the chairman, Mr. Chairman, let me congratulate you on the selection of your party's side to have you chair the committee. I am sure that we have mutual goals--we may sometimes disagree as to how we get there, but ultimately I think we have the same sense of interest and commitment to the continent.
I want to welcome Ambassador Moose and Ms. Peasley, our first panel here today. As we begin to look at Africa on this subcommittee, and U.S. policy toward Africa, we must consider the progress we have made through our initiatives, but still remember that Africa remains the world's poorest continent. With 22 of the world's 30 poorest countries, Africa remains the world's great development challenge; and as with every region and particularly with Africa, there is no single initiative which will cure all ills.
U.S. assistance is geared toward five policy goals: supporting sustainable development, the alleviation of suffering and hunger, fostering democracy and respect for human rights, promoting peace by preventing and resolving conflict, and increasing American private sector development in Africa.
Around the continent, U.S. assistance is making progress in a variety of programs. The Development Fund for Africa is the key to an integrated, sustainable development program.
[The information supplied by the Development Fund for Africa appears in the appendix.]
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Mr. MENENDEZ. And some examples: In Senegal AID has used new technology to expand rice cultivation and rice yields by 20 percent. In Guinea-Bissau AID has assisted in the development of cashew production and exportation. In Uganda, AID has substantially reformed the education system, benefiting over 2 million children and 75,000 teachers. In Malawi AID helped to develop a geographic information system to monitor, evaluate and mitigate the environmental impact of new cropping patterns. And in nations around the continent the United States has played a critical role in facilitating peaceful transitions and successful economic stabilization.
Proposals which promote deep cuts in aid to Africa simply do not acknowledge the myriad of complex issues we face in our policy toward Africa. I personally strongly believe that trade and investment must be key components of our Africa policy; however, it is unrealistic to believe that trade and investment initiatives alone are likely or capable of replacing--and certainly in the short term--U.S. development and security assistance to the continent. A dollar-for-dollar ratio in my view is simply not appropriate. Every trade and investment dollar that goes to Africa is helpful, but it is in no way, certainly in the present term, a replacement for a dollar in aid.
There are simply too many areas which remain to be addressed. Whether we are talking about child survival, maternal health, democratization, the development of infrastructure, or the quelling of civil conflicts, there are needs in Africa which cannot begin to be addressed simply through trade and investment alone.
We have an opportunity to apply knowledge to Africa that we have learned in other places and to pursue a policy which seeks to improve the lives of Africans as part of our policy, not just as an afterthought. U.S. policy toward Africa needs to address African concerns. It must improve the everyday lives of Africans. It must make them a part of the process.
We talk a lot about empowerment in the United States. Its benefits can be similarly applied to Africa. When Africans are well fed and employed, when they are able to harness their nations' natural resources, when the rate of infection for AIDS is sufficiently slowed, and when Africa's children have access to education and the possibility of a bright future, the opportunity for stability and good governance will increase dramatically.
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Just last week a group of Ghanaian parliamentarians visited the Congress. Ghana is a country which has significant resources but has insufficient technology and infrastructure to harness those resources. Ironically, without technology and infrastructure, Ghana is unlikely to attract sufficient foreign investment. It is for this reason that AID has a program to increase small-farmer income by building rural roads. The roads have cut transportation costs in half, cut transport time, and expanded the availability of goods. Programs like this empower the African people.
And last, I think it is important for us to communicate with our constituencies here at home the importance and benefits of U.S. foreign assistance to Africa and around the world, for that fact. In 1995, the U.S. exported goods valued at $5.4 billion to sub-Saharan Africans, a trade level which supported about 100,000 jobs here at home. Africa has tremendous potential.
It seems to me that if we continue to focus our programs, refine them, that the return on our dollar will keep increasing, and that is good for Americans and it is good for Africans. Ultimately I would hope that is what our foreign policy is all about. I look forward to working with you, Mr. Chairman, toward those goals.
Mr. ROYCE. Thank you, Mr. Menendez.
Mr. Amo Houghton of New York is this panel committee's vice chairman.
Mr. HOUGHTON. No comment.
Mr. ROYCE. I recognize Mr. Hastings.
Mr. HASTINGS. Thank you, Mr. Chairman. I am glad to share this opportunity to explore the impact of assistance in Africa. And first, like my colleague from New Jersey, I would like to congratulate you, Chairman Royce, on your selection as the chair of this subcommittee. I look forward to working with you and having a good working relationship with you and the other members of this committee.
I am a fond admirer of the work that one of our colleagues, Tom Campbell, from California already has undertaken on behalf of matters on the continent, and Amo Houghton has no rival in this Congress in his long-standing support for developmental concerns on our continent of Africa as well as elsewhere in the world.
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Mr. Chairman, it has been my belief a very long time that the United States, as well as other countries, has a responsibility to help as best we can in Africa and to help them succeed toward stabilization and democratization and self-sufficiency both for humanitarian reasons and because, in my view, it is in our national economic interest.
An hour ago I was visiting with the ambassador from Uganda, and she pointed out to me what motivated, at least in her capsule analysis of history, the United States to involve itself in the redevelopment of Europe and in the redevelopment of Japan. And suffice it to say that she was very poignant in allowing that she would hope that, similarly, we will not find ourselves having vital security interests. And she cited just one for example, the development and the spread of Islamic fundamentalism and how that may very well impact on areas of considerable vital interest to the United States and how little attention, in her view--and she did not use those exact words--but she felt perhaps some of us were not giving it sufficient attention.
Mr. Chairman--I am around long enough now to get to know most of the panelists; and you have certainly chosen a distinguished panel, and let me compliment you in that regard. The Administrator, Ms. Peasley, and Secretary Moose and myself have been up and down this battle, ranging all the way from--I think I was among the first policymakers to identify as a holocaust--what was going on in Rwanda and countless other efforts in that regard.
Mr. Chairman, I would like, with your permission, to have my full remarks placed in the record and have it understood that we can't prevent every crisis in Africa, but we can avert many of them; and it is through effective foreign assistance, focused on sustainable development that we can help Africa move toward new opportunity and democracy and economic stability.
There are some exciting potentials ongoing from the policymaking front in the arena of trade, as well as some real progress that is identifiable in a significant number of countries in Africa who have good growth patterns and on curves that suggest that they will become important to us in our economic undertakings and our economic growth as well.
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I hope that this hearing and others will help us to uncover some creative means to that end. And finally, Mr. Chairman, this format in Congress, I am hopeful of discussing it with you, but I broach it publicly and I apologize to you for not having had time to talk with you.
You know, I like to hear from Ms. Peasley and George and all of the other people, but one day somehow we are going to have to start hearing from some of the people who are potential investors, some of the African people living in America, some of the African people living in Africa--you know, I can read what George sends me, but I don't know what everybody out there is thinking, and a lot of the time they are not thinking what we think they are thinking.
Thank you.
Mr. ROYCE. Thank you, Mr. Hastings. And in the future we will work with you. We have a second panel today, and we will try to impanel just such witnesses in the future.
I will ask my colleague, Mr. Campbell of California, if he would like to make an opening statement.
Mr. CAMPBELL. I will take 30 seconds to thank my dear colleague and friend from Florida for his kind remarks. It touches me deeply. It has been a pleasure to get to know you on this committee.
And, Mr. Chairman, I thank you for your leadership, taking this issue and making it your own.
One last point that has got to be said. Our good colleague and friend from the New Jersey side, Mr. Payne; he has been my teacher, and it is a pleasure to serve on this committee with him, as well as my other colleagues. Thank you.
Mr. ROYCE. I will ask if our witnesses will keep their testimony short and summarize it for us today.
It is a pleasure to introduce the members of our distinguished first panel. We have Assistant Secretary of State George Moose. He has been a frequent witness at congressional hearings, and the subcommittee expects to hear more from you in the future, Mr. Moose. His distinguished career in foreign service included two terms as U.S. ambassador in African nations Benin and Senegal. The Acting Assistant Administrator, Carol Peasley, is with AID and has held a number of high-level positions, including AID Mission Director in Malawi.
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STATEMENT OF THE HONORABLE GEORGE MOOSE, ASSISTANT SECRETARY OF STATE FOR AFRICA, U.S. DEPARTMENT OF STATE
Mr. ROYCE. Ambassador Moose.
Mr. MOOSE. Thank you very much, Mr. Chairman. Let me also extend to you my congratulations on your assumption of the chairmanship of this committee and also our greetings to the members of the committee.
Already we have had an opportunity to interact with some. You and I already know that the level of both interest and knowledge and concern about Africa is very high indeed, and you start with a very high level of comprehension and knowledge; and that, I think, should enable us even further in trying to understand better how American policy and American programs in support of those policies can be further refined to advance American interests.
I simply want to echo at the outset the comments made earlier that what is at stake here, frankly, is how the United States advances its own interests in Africa. I believe firmly that the effort to advance our interests is fully consistent and compatible with our efforts to support Africa's own development and advancements politically and economically and socially.
I have submitted, Mr. Chairman, a longer statement which I hope would be entered into the record. Let me here try briefly to summarize some of the elements of our policy and the ways in which I believe our economic and other programs are integrally linked to the advancement of those policies.
As has been stated by members of the subcommittee, one of the central elements of our policy over the last several years has been the support for democracy. We have learned from long experience that democracy contributes vitally to the achievement of all the other objectives that we are trying to pursue, that it gives us the kinds of viable international partners that we need to contribute to regional stability to promote regional and international and economic prosperity and also to meet the other global collapses that confront all of our nations, whether it is narcotics trafficking and crime, the spread of disease, or the protection of the international environment.
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We in the United States have, I think, a long and proud record of support for democracy in Africa. We have done so through our encouragement, our example, and through our support; we have also done so through our modest but significant financial and technical assistance. I would cite just three examples of that.
We have been instrumental in supporting the elections process in Africa, and I think we can take some satisfaction in the fact that over the last decade, in particular over the last 7 or 8 years, there have been 23 African countries that have experienced successful democratic elections. That is a significant improvement over the last decade or so, and it is an example of the kind of fundamental transformation that Africa is undergoing, a transformation comparable to what we have seen take place in Latin America and other parts of the world.
Beyond elections, however, our assistance has helped to strengthen democratic institutions in Africa from parliaments, from independent judiciaries, to the creation of independent electoral commissions, to strengthening of the press, and most important my judgment, the strengthening of civil society in Africa. That support for civil society is what, in my judgment, will guarantee and sustain Africa's democratic evolution over the next several decades, the strength of Africa's people.
Needless to say, our support for democracy is closely linked with our support for Africa's economic development. I think we have all learned the lesson that democracy cannot be sustained in an environment of poverty and deprivation. Here I would single out two areas where AID has helped our policy. Carol Peasley, my colleague, I am sure will talk in greater detail about this.
First and foremost, I would point to the efforts that we have made through the Development Fund for Africa in the first instance in promoting economic reform in Africa. Some of the members of the committee pointed to the significant accomplishments in places like Ghana and Uganda, where they have now experienced economic growth rates which rival those of the Asian tigers.
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The reason for that growth and that turnaround is precisely because of the kinds of interventions that we and others have made to help them restructure and reform their economies. That effort is essential as we look to the future, as we create opportunities for these emerging democracies to engage more fully in the global trading system.
The second area I would highlight--and again I hope Carol will talk more fully about this--is the investment that we have made in Africa's human resources and strengthening its human capacities--that too is essential to realizing the potential that is being created through the reforms of economic structures. The two go hand in hand. One cannot assure the pace of development unless Africa's human capital is invested through programs in education and in health and in family planning. AID has made a substantial contribution to the development of that human capacity.
The third area I would highlight is, I think, the distinguished record that the United States has had in the area of conflict resolution and conflict prevention. That effort of American diplomacy was instrumental, in my view, in bringing about the resolution of conflicts in places like Zimbabwe and Namibia, and currently in completing transitions from civil war to peace and stability in places like Mozambique and Angola.
But we all know that conflicts are a persistent challenge for the African continent and, indeed, for our diplomacy, right now in places like Zaire and Sudan and Liberia. These are conflicts which threaten to overwhelm significant progress that has been achieved in terms of economic reform and political development, and that is why it is important for us to remain engaged there as well.
Now, the first line of our effort is indeed our own diplomatic presence in Africa. We have the most knowledgeable, the most pervasive diplomatic presence of any country in the world, and that has enabled us to play such a key role in trying to promote solutions, resolutions to conflicts. But we also know we cannot do that without the instruments of diplomacy and, therefore, the modest funding that we request through such accounts as the Voluntary Peacekeeping Fund and through the Economic Support Fund to support countries in transition, to support peace monitoring, demobilization, and the reintegration of fighters into society. All of these are key to our effort to help promote transition from war to peace, from conflict to democracy.
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Those modest funds are also what we have been drawing upon to help Africans develop their own capacities in the areas of conflict prevention and conflict resolution. We have seen a remarkable transition there as well, a new generation of African leadership which is seriously concerned about the impacts of regional instability and seriously interested in engaging directly in efforts to solve these problems.
It is very much in our interest, I believe, that we support their efforts to develop their capacity in that regard, whether directly or through institutions like the Organization of African Unity or sub-regional organizations like SADC in South Africa.
One initiative I would point to particularly is our effort to support the development of an African crisis response capability. Here, too, if we can find ways to invest moderately in support of African capacities in the areas of peacekeeping, we can reduce significantly the call on the United States and others to involve themselves every time there is a major crisis. It will also contribute to our global capacity in the areas of collective security and international peacekeeping.
Finally, simply to mention the other important dimensions of our policy which involve responsible African nations and partnerships to solve transnational global problems, these are all problems which we recognize cannot be solved by nations acting alone; they have to be solved in partnership and in union with other nations. And here the efforts of AID in supporting and complementing the work of the FBI and DEA in building administration of justice programs and strengthening the capacity of African countries to deal with international crime and narcotics, I think, is key not only to the security of Americans, but also to protecting African nations, particularly the emerging democracies, from threats to their own stability and development.
I would like to stress in conclusion, Mr. Chairman, that we see these as integral parts of a single strategy; they all support and complement one another. We can't talk about promoting democracy unless we talk about promoting economic stability. We can't talk about either of these unless we are doing something to seriously address the issues of conflict on the continent. All of these, I think, are standards which come together; and that is why, I think, if you looked at the Administration's budget request for fiscal year 1998, it is a reflection of all of the instruments which we think are vital to addressing these issues and advancing our own interests on the continent.
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I echo what others on the subcommittee said; that ultimately our objective is an Africa that is fully integrated into the international system politically, economically and socially. That objective has been given great impetus by the initiatives taken here in the Congress. I speak particularly of the efforts of Congressmen McDermott and Crane, other members that have a working group looking at ways to enhance our trade and investment relationships with Africa and, through that, Africa's integration into the global community.
But I would say finally that that effort, which is vital to the success of our policies, is something that is dependent upon our continued engagement, diplomatically and programmatically, in Africa, that the policies that we have pursued through AID and other institutions of our own government are precisely what has created the conditions that will enable Africa to take advantage of these new economic opportunities and indeed accomplish its fuller integration into the global trading system.
So with those introductory remarks, Mr. Chairman, I would thank you again very much for organizing this hearing and also for the rigorous program of hearings that you have already outlined for us in the months to come.
Mr. ROYCE. Thank you, Ambassador Moose.
[The prepared statement of Mr. Moose appears in the appendix.]
Mr. ROYCE. I do want to recognize one of my colleagues who has joined us, Mr. Donald Payne of New Jersey, who has a long history of involvement in African issues. I am looking forward to working with him.
Ms. Carol Peasley, if I could ask you for your testimony.
STATEMENT OF CAROL PEASLEY, ACTING ASSISTANT ADMINISTRATOR FOR AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
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Ms. PEASLEY. Thank you very much, Mr. Chairman. This is an exciting time to be working on Africa, and we at AID look forward to working with you and the entire subcommittee, and I thank you very much for inviting me here today.
There have been many changes in the past decade, both in the world and in Africa, and these changes demand a new vision for Africa, an Africa in which elected leaders committed to equitable growth guide the development of their nations, in which Africans lead in analyzing and resolving domestic and transnational crises, in which Africa's children are well fed, healthy and attend school, in which Africa's adults are healthy, literate and active in civil society and working within a global economy, and in which mutual benefit and partnership define the African and American relationship.
I would like to take a few minutes, Mr. Chairman, to discuss the principles which frame this vision and how they take us to the 21st century.
This vision is based on four basic principles: that Africa's success depends on Africans themselves, that economic growth is imperative, that crisis prevention on this fragile continent is critical, and that strategic coordination is essential.
First, Africa's success depends on Africans themselves. The Development Fund for Africa in 1987 was premised on the idea that consultation with and participation of beneficiaries would enhance program results. After 10 years of implementing this approach, we are convinced that African leadership and African ownership of the analyses and the responses to development problems are essential. Where countries have made hard choices for the good of their people, AID-supported programs have succeeded.
For example, in Uganda, AID worked closely with Ugandans to build peace and to make it work. The cornerstone of our program has been increasing access to and investment in a thriving economy. The Ugandans have committed themselves to a more open economy, and we have helped them improve the agriculture and business climate. Farmers and entrepreneurs have responded. More than 100,000 new small and microbusinesses have been established and agricultural growth has exceeded 5 percent a year since 1991. Coffee exports, which are grown principally by small holders, are increasing rapidly, as are exports of high-value, nontraditional crops, which are grown primarily by women. Total agricultural exports have boomed, thereby enhancing regional food security.
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A second principle derived from the Development Fund for Africa is that social and economic gains or human capital development, as Ambassador Moose said, are not sustainable without broad-based economic growth. In Uganda, an example which I just mentioned, the results do not end with growth statistics. Uganda's economic growth has translated into impressive social indicators. Infant mortality and malnutrition rates have declined and school enrollment has increased.
Similarly, in Ghana, a growing economy and fiscal reform have brought major improvements in education. The number of students with textbooks has increased from 10 percent to 95 percent. We have also strived to ensure that economic growth is shared by many, for example, through a village banking activity in Malawi which has given thousands of women access to microfinance.
A third principle is that crisis prevention is critical. No nation is immune from the spill-over effects of crisis, but stronger nations and economies are better able to weather these challenges than succumb to them. We must therefore address pressing regional issues such as food insecurity, conflict resolution and post-crisis rehabilitation.
Fourth, strategic coordination is essential. Coordination intensifies the effectiveness of our resources. AID's on-the-ground presence gives us a detailed understanding and opportunities unmatched by any other donor. As a result, we often lead in dialog with host countries and other donors. This also helps us to leverage resources such as our early $1 million grant to control water hyacinths on Lake Victoria, which leveraged an additional $67 million of World Bank resources.
Strong coordination with UNICEF and other donors has helped the infant mortality rate, continent-wide, to fall below 100, with at least seven countries now below the international target of 75.
These four basic principles derive from our experience implementing the DFA. We are building on past successes and adapting them to current and future conditions.
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The future will include greater attention to food security. It seems so simple: Without access to adequate food, child survival is threatened. Without growth in the production of food and incomes to buy that food, child and adult health are compromised.
Given renewed African commitment, the time for reengagement in the important agricultural sector is ripe. The Africa Food Security Initiative presented in our fiscal 1998 budget request provides for a modest pilot year of $30 million to be used in five countries already committed to agricultural sector reform and pro-growth policies.
The future also demands that we strengthen links between development assistance and trade and investment. The global economy is growing, and African countries must become part of it. AID will help interested and committed African nations become full partners in the world's economy. Creating the right enabling environment is critical, and we will support our partners in essential policy and regulatory reform. As African countries become better integrated into the global economy, we both benefit.
For example, in Ethiopia, where we worked to help liberalize import policies, particularly in agriculture, last year these efforts rewarded both Ethiopian farmers and American business by opening the way for commercial fertilizer imports, one-third of which came from the United States. We plan to support the creation of more such enabling environments.
Finally, the future requires sustained support for strengthening civil society and preventing crises. A strong civil society and functioning democracy are essential for food security, for economic growth, for trade and investment, for improved lives. These are also the fundamental steps required to avert or at least mitigate the devastating effects of natural and man-made disasters.
Mr. Chairman, progress in Africa and performance of the AID programs in Africa are real and encouraging. We have learned from the past and we are applying that knowledge to help create a healthier Africa which is not dependent on donor assistance, which is fully integrated into the global economy, and with which the United States has an equal and mutually beneficial relationship.
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Therefore, in our budget request, we have asked for $700 million for the Development Fund for Africa, $25 million in economic support funds, $262 million and $19.9 million in PL 480 Title II and Title III resources for fiscal 1998.
And finally, Mr. Chairman, I would like to ask that my full written statement be included for the record.
Mr. ROYCE. Certainly, Ms. Peasley. Thank you very much for your testimony.
[The prepared statement of Ms. Peasley appears in the appendix.]
Mr. ROYCE. I would just like to open, if I could, with a question for Secretary Moose.
We have the reintroduction of the Crane-McDermott bill; the End of Africa Dependency Act is the name of the measure. This legislation has as its aim the advancement of some African nations from the status of AID recipients to trading partners; and I was going to ask you if you feel this legislation will succeed in this desirable goal.
Mr. MOOSE. I thank you, Mr. Chairman. Certainly, we fully share the view that trade and investment are keys to Africa's long-term accelerated economic growth and development. And again, much of what our policy and program activities have been concerned with over the last several years has been to try to create the conditions that would make that possible. I mean, I think one of the reasons we are seeing the kinds of turnaround in economic performance is precisely because of the efforts we have invested in economic reforms, market-oriented reform, structural adjustment and the building agreement capacity.
The objective that all of us share is the ultimate advancement of Africa, progress in Africa, to the point where it is no longer dependent on foreign aid; and that means we need to find ways to enhance Africa's economic integration with the United States and with the world.
We are anxious to work with Congressman McDermott and others on how we can indeed achieve that. We have done a fair amount of study, I would say, stimulated by the initiatives that have come out of Congress in that regard.
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If I were to register one reservation, and it is the one I registered earlier, there are some who seem to see this initiative as an alternative to or a substitute for the kinds of particular efforts that we have engaged in through AID and multilaterally through the World Bank and other institutions over the last several years.
I do not think that Africa is yet at the point where we can afford to discontinue the investments that we have made in reform, in human capacity building, and in infrastructure, et cetera. I see the two very much as complementary. And I hope that, in the course of working with Members of the Congress, we can devise a policy or a set of initiatives that would achieve the objective, that is to say, of placing Africa more firmly on the course of sustained economic growth.
Mr. ROYCE. Thank you, Mr. Ambassador. I would also like to ask you, it has been widely stated that some Asian nations have made significant progress on economic advancement without making any noticeable progress on democratization or on human rights. Is this a model the United States should find acceptable in Africa?
Mr. MOOSE. This is an issue of ongoing interest, academic and other, and I think it should be. There are different models of development around the world. Ultimately it is the African people who have made certain decisions and certain choices. They have been severely disappointed by the experience of the first two or so decades of independence and part of that disappointment relates to the nature of the political structures that govern them, political structures which were highly centralized which did not take into account their interests, their wishes, and which, as a result, devised policies that were not at all responsive to their needs nor were they capable of generating economic development.
There has been a correlation in Africa between the deepening of democracy and democratic performance and the strengthening of economic performance, and that is something that I think we also need to find ways to support. I think it would be terrible if, on either side of that equation, there were failures which led the people of Africa to conclude that somehow democracy was responsible for the failure or that the international community did not respond in ways that helped to ensure both democratic and economic success. I think the African experience and the will and wish of the African people on this subject have been made quite clear in the policies they have advocated and chosen over the last decade.
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Mr. ROYCE. Thank you. I am going to turn to the ranking member, Mr. Menendez, and at this time I am going to take the opportunity to cast my vote.
Mr. MENENDEZ. [Presiding.] Thank you, Mr. Chairman.
I want to thank both of you for your testimony. And let me turn quickly to Ms. Peasley.
You are not going to be sitting at the table when a series of other panelists will be having some criticisms, so let me raise some of them and have you answer them, hopefully.
I would like to read from one or two of the testimonies that will be given before the committee. There is one of the panelists who has this quote: ''We need to carry out AID projects with the aim of strengthening or creating private enterprise in the middle class. Projects aimed at the poorest of the poor make for good public relations, a la Mother Teresa, but the reality is that providing public services to the poor won't cure poverty and a strong entrepreneur class is the best bulwark against political oppression.''
There is another testimony which, in essence, says there is certainly room for foreign aid and that it is necessary, but suggests some needed changes and discusses some of the problems that in fact inhibit the overall development effectiveness of AID in Africa, and they cite too many different AID donors, funding too many different uncoordinated activities in African countries, too little direction and input from Africans into the projects and programs, too much initiative and direction on the part of AID donors, and suggesting that there be an approach that is more demand-driven than that which supposedly takes place.
How would you respond to some of that criticism?
Ms. PEASLEY. Thank you. Let me try to respond to the second first because I think that hopefully my testimony helped to answer some of those questions. Given some of the lessons that we have learned over the past 10 years with the DFA, we do understand that coordination is essential and that in the past there have sometimes been too many donor projects that have been discrete pieces. And we understand that host countries have to play more of a leadership role in defining the development agenda and defining priorities and that we the donors need to do a better job of designing our programs that are in support of host country efforts. I think we have learned that lesson, and I think we have made real strides in trying to improve how we deliver assistance.
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Again, the vision we have for the future is one that does respond to the issues that were raised in the testimony you quoted.
The first point on private enterprise and the importance of a middle class, again, I think we understand that economic growth is important and that economic growth means the full participation of all citizens. It does mean people throughout the economic system. The middle class is very, very important.
What we try to do is work at all levels. When we are working on the economic policy environment, when we are helping countries strengthen their financial market systems, when we help countries develop venture capital funds or stock markets, when we help countries liberalize their investment codes, we are helping not just the very poorest, we are helping all economic factors in that country.
But at the same time we recognize we do not want to limit our support to only that level of the economy. So, therefore, we want to support microenterprise development, we want to make sure that economic growth is broad-based and that all citizens are participating in it.
So I hope that helps to answer the question.
Mr. MENENDEZ. Are we ready, Ambassador, there are some who suggest that we can reduce a dollar of aid for every dollar of trade that is generated. Are we ready for that? I thought I heard you basically say we are not ready for that yet, but that we hope to be at some point in time.
And, Ms. Peasley, as part of that equation, do you see your programs as creating the foundation for trade, or do you see your programs just as putting your finger in the dike of some human problems and tragedies that are being faced every day in Africa?
Mr. MOOSE. To the first part of your question, Congressman Menendez, indeed, my view is that we have made a significant investment that has achieved substantial progress toward creating those conditions for sustainable development.
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I would be very concerned if we were to suspend that prematurely because I think the progress is only half there. Moreover, it is that progress which is essentially creating, for example, market conditions that we know are conducive to sustainable economic growth. There is still work to be done.
So what I would argue for is that, as we continue those efforts, we now need to look in a more focused way, at how we indeed take advantage of the opportunities that have now been created, how we now ensure that African entrepreneurs have the financial assistance and the technical advice they now need to have markets for their products. That is the next step in this process.
The ultimate goal is indeed as we have outlined it, and I think in many countries we are going to be seeing that goal achieved within a relatively short period of time. I think in places like Zimbabwe or even in South Africa or Namibia, we are already looking toward the day when we will be phasing out our AID programs, or a large part of them, because we believe the conditions will have been achieved for sustainable growth.
The second part of your question, I believe was addressed to Ms. Peasley.
Mr. ROYCE. Maybe I can make a suggestion, Ambassador Moose. We are going to reconvene in 10 minutes after this vote. Thank you.
[Recess.]
Mr. ROYCE. [Presiding.] We are going to reconvene at this time.
Mr. Menendez had asked a question and, Ms. Peasley, you were about to respond.
Ms. PEASLEY. Right.
Your question related to the relationship between development assistance and trade and investment, and I think we see a very important role for the development assistance that we are providing that helps lead to long-term trade and investment. This is both directly through some of the assistance we are providing on helping to improve the policy environment, assistance to help strengthen some of the key institutions in the country, whether that is on the democracy governance front or whether it is the rule of law, or whether it is central bank or financial markets. These are important institutional changes that help to support long-term trade and investment.
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In addition, I think that indirectly the sustainable development work which is done to develop human capacity, to help improve education, health and help reduce population growth rates, that these things are also important to the long-term environment for trade and investment. So we see it as an important element of long-term trade and investment and we see it as development for trade.
Mr. MENENDEZ. Thank you, Mr. Chairman.
Mr. ROYCE. Thank you.
Ambassador Moose, I understand that you must go, you have another commitment.
Mr. MOOSE. I do have another commitment, but if there are any last-minute questions, I would be happy to try to respond to them.
Mr. ROYCE. One request I wanted to make is if we could have questions from the members of the committee and submit them.
Mr. MOOSE. By all means, I would be happy to respond to those.
Mr. ROYCE. Thank you, Ambassador Moose.
Mr. MOOSE. Thank you very much, Mr. Chairman.
Mr. ROYCE. Well, at this time, then, we will call up our second panel. And again, Ms. Peasley and Ambassador Moose, thank you very much.
Mr. MOOSE. Thank you.
Mr. ROYCE. On the second panel we have Mr. William Ford, who has been president of the African Development Foundation since 1975. Prior to that, he had a long career as a foreign service officer, having joined AID in 1971. During his foreign service tenure, he held the post of director of the AID Mission in Nigeria.
We also have with us Ms. Carol Lancaster, assistant professor at Georgetown University School of Foreign Service. Ms. Lancaster recently returned to Georgetown after serving as deputy administrator for AID.
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We have Mr. Michael Maren. He is a writer and editor for a number of publications, including New York Magazine, Harpers, The New Republic, and an author of a major work on Africa. He has past experience as a contractor for AID and for Catholic Relief Services.
Mr. Nicholas Eberstadt is a visiting scholar at the American Enterprise Institute and a Visiting Fellow at Harvard University Center for Population and Developmental Studies. As a consultant to the World Bank, the State Department, and AID, he is acknowledged as an expert on international development issues.
And last but not least, we have Ambassador Edward DeJarnette, executive director of the United States-Angola Chamber of Commerce. He is also a private corporate consultant on African issues, and during his more than 30-year career as a foreign service officer, he has served as U.S. ambassador to three African nations.
Mr. ROYCE. So, Mr. Ford, I would ask you.
STATEMENT OF WILLIAM FORD, PRESIDENT, AFRICAN DEVELOPMENT FOUNDATION
Mr. FORD. Thank you very much, Mr. Chairman.
Good afternoon, Mr. Chairman and members of the subcommittee. I would like to offer my congratulations, as well, on your assumption of the chairmanship of the subcommittee. You are assuming these responsibilities at a very critical juncture.
I have submitted a written statement; I will give just a brief overview.
Mr. ROYCE. That is very much appreciated.
Mr. FORD. There have been dramatic improvements in the macroeconomic and political environments across Africa. However, serious challenges remain. Africa is the only region of the world where poverty is projected to increase over the next decade. There is a desperate need to generate off farm employment and income. With increasing land pressures, community-based natural resource management activities are critically needed. It is imperative that the basic institutions of civil society at the local level be strengthened so young democracies can flourish.
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The African Development Foundation plays a unique role within the U.S. Government's foreign assistance programs, and it is an integral part of our government's efforts and makes important contributions to advancing U.S. Government foreign aid objectives. ADF's strengths and effectiveness lie in its unique approach to alleviating poverty and fostering sustainable development in Africa.
All ADF activities are locally conceived and implemented. Small grants are awarded directly to grass roots organizations around government, not through government, enabling them to solve their own problems. Assistance is premised on self-help which fosters self-reliance.
ADF has pioneered participatory development in Africa. It promotes African leadership and ownership of the development process and assists in strengthening African institutions and local capacity.
To enhance impact, ADF focuses and concentrates its resources on four strategic objectives: developing micro and small enterprises, promoting sound natural resource management, strengthening civil society, and developing models for expanding grass-roots participation and building African capacity.
In our efforts, we target our support to the needs of women, youth, and other disenfranchised groups of the population. Our ADF funds are like seed money, they are very small, but valuable, with the potential to grow into something very large and very significant for the groups which we facilitate. The Foundation has a unique capacity to provide resources directly to micro and small enterprises to support their formation and expansion. These enterprises generate jobs, income, and build the foundation for broad, sustainable economic growth and provide links for expanding trade and investment.
For example, in Uganda, ADF supported a silkworm cooperative and enabled its members to earn in 1 month more than the average Ugandan farmer can make in a year. In Zimbabwe, ADF supported micro and small enterprises and agribusinesses which have created thousands of new jobs and are generating $6.6 million annually. That is as much income in 1 year as total ADF funding has been over the 11-year history in Zimbabwe.
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In Cape Verde, a sewing cooperative was started by eight people laid off when a sewing operation or enterprise was privatized. Today, after only 3 years, it is the country's largest clothing manufacturer, with annual sales of over half a million dollars, and employs 60 people.
While other U.S. Government programs focus on ensuring free and fair elections and building formal democratic institutions, ADF's participatory developmental approach fosters values and practices necessary for democracy to take hold at the grass roots, and it strengthens civil society through building capacity to engage in civic action.
For example, in the Cameroons, committees established to manage and maintain ADF-funded water systems have become successful advocates for their communities on broader development matters on the regional level.
Many of ADF's efforts are being replicated and extended by host governments and other donors. Thus, our relatively small budget belies the impact we can and do have as we support innovative grass-roots development activities.
One example of this is that ADF supported the development of a rural savings and credit mobilization scheme in Senegal which is being replicated throughout the country. Similarly, a microcredit program funded by ADF in Ghana has served for rural community banks there as well.
Mr. ROYCE. Thank you, Mr. Ford. We will have your full report for the record.
Mr. FORD. All right.
I just wanted to make one more statement. I just returned from a 15-day trip to Africa and I wanted to give you some of my impressions. After working in the international development field for 25 years, I came away with some very powerful impressions of the Foundation's assistance.
ADF's participatory development approach in focusing on strengthening Africa capacity at all levels really is unique. Grantees say that one of our most valuable contributions is training them in sound fiscal resource planning and management. Our programs promote self-reliance, not dependence; they support what Africans are trying to do for themselves. Funds are seen as a helping hand and not as a handout. Our activities are well managed and sustained after our assistance runs out.
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Although our grants are small, they are a vital catalyst that make a difference, and grantees have a profound appreciation for America's support. Thank you.
Mr. ROYCE. Thank you, Mr. Ford.
[The prepared statement of Mr. Ford appears in the appendix.]
Mr. ROYCE. Ms. Lancaster. And we are going to try to keep the comments here for 5 minutes and that will allow time for questions.
STATEMENT OF CAROL LANCASTER, ASSISTANT PROFESSOR, SCHOOL OF FOREIGN SERVICE, GEORGETOWN UNIVERSITY
Ms. LANCASTER. I promise to try, Mr. Chairman. I would just like to start by saying that I do have a written statement that I would like to submit for the record.
Thank you and Congressman Menendez for inviting me today. And let me just say that I think this is an extremely important topic, it is a timely topic, to take a look at what the United States is doing in Africa. Much has changed in the world. There are important changes going on there. So I compliment you on holding this hearing and the ones you plan.
I would like to make three points. First of all, I would like to make the point that foreign aid remains relevant in Africa both to U.S. foreign policy and to the needs of the region. The second point is that it can be effective and has been in the past. And, third, there are changes that one might consider that could help make it even more effective in the future. I would just like to elaborate on those very briefly.
In terms of the relevance of foreign aid to African needs, I think we all--Americans, Africans and others--are looking forward to seeing a healthy growth in the region, the end of economic and political marginalization and so on, the end of poverty, and I think we all recognize that private investment, both domestic and foreign, is going to be key to that growth.
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And there are promising economic signs. I think we have heard them already this afternoon. Growth rates are up. Exports are up. I think we still are waiting to see investment rise; I think we are still waiting to see domestic savings rise. And while these growth signs provide room for optimism, they also suggest a certain amount of caution. We still have a long way to go, I think, before we see the sustained and sustainable investment that is going to be needed to keep the Ugandas of this world growing at 10 percent, or the Ghanas growing at 5 percent.
What is needed to encourage that investment that I think we all want to see is the foundations for growth. When I say ''foundations for growth,'' I am really talking about two things--the fiscal infrastructure that is needed and the human infrastructure, the health and education, that is needed.
Sub-Saharan Africa has made enormous progress since its independence in both of these areas. At the time of independence, one in every three children were in elementary school, and today we have roughly three out of four, two out of three children in elementary school. That is real progress. But some of those gains are being eroded and have been eroded over the last decade or so.
The same goes for the physical infrastructure. Anyone who has traveled in Africa knows what it is like on the back and other parts of the body to bounce over the roads that are in a very sorry state of disrepair. We need to help the Africans rehabilitate and expand that infrastructure, both human and physical.
And I would like just to say that the McDermott-Crane bill--I hope that is in the right order--addresses the infrastructure issue, and I think that is important. I also think, though, that the issue needs to be addressed not just by the United States, and I will come back to that in just a second.
What else do we need in Africa to create the conditions where we can see real economic takeoff? We need continuing economic policy change. We have talked about the economic reforms that Africans have undertaken and they are important, but they are far from complete. I think the World Bank has written in 1994 that economic reforms in Africa are probably still the least fully implemented, fully adopted of any region in the world. There is a great deal more that needs to be done there.
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We need to see an agricultural transformation. It is not talked about very much, but I think the fact that we see low-input agriculture in Africa that does not provide the increase in productivity that the continent will need as its population surges is something to be very concerned about and something we must be looking at. And then I think we need to be concerned about the social and physical constraints on development, rapid and unsustainable population growth, environmental degradation, lack of access to resources for the very poor.
So I think foreign aid, not just United States, can address these problems, and they need to be addressed if we are going to see the increase in investment that will carry this continent forward.
Is AID effective? Has it been effective? Yes, it can be effective, and it has been effective when it has been provided to governments that are committed to development. And I don't want to talk about AID for political purposes. That is a whole other kettle of fish, but we can see from the total amount of AID provided bilaterally to sub-Saharan Africa since 1960, amounting to about $22 billion, about $5 or $6 billion of that has been provided to four countries--Zaire, Liberia, Somalia and the Sudan. And I think this is a fairly disturbing statistic. These were not governments that were committed to the development of their own countries, and I think that the results are clear to see of that kind of allocation. I am not commenting on the political effectiveness of the aid, simply the developmental effectiveness of it.
But there are many other governments that are trying, and we need to take them seriously.
It is also effective if it is designed and implemented appropriately and sustainably. If I had to point to a couple of areas where AID has been quite effective, one of them is child survival. Foreign aid has done a lot through inoculations and oral rehydration therapy to increase the child survival rate. There is an obvious correlation, more than a correlation of causality between these two. But child survival is not enough. Children can survive. Child survival programs can be implemented. They need to be sustained, and then the children need to have other advantages to contribute to their societies.
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A second thing where I think AID has been effective in the past has been in education, basic education and higher education. We focus in the United States now on basic education. I think that is very important, and I think we need to continue to do that.
Health is another area where AID has been very effective in eliminating or controlling river blindness in certain places; and in family planning in certain places I think we have seen some real successes.
In agriculture we have also seen some successes, particularly in development of new technologies. There have been some high-yielding varieties of corn financed by foreign aid, funding for research that have spread rapidly in Kenya and Zimbabwe and made a real difference there. And another untold story is the research done on addressing one of the major pests that was threatening cassava production in Africa. That has been resolved, and I think production is back up.
These are important demonstrations of what can be done and what should be done. There are other areas. I won't mention them.
Foreign aid can be ineffective when it is provided to the wrong governments with the wrong design and when it has faulty implementation and when there are too many donors getting in each other's way.
How to make it effective. Just three points and then I will stop.
Mr. ROYCE. Right. But before you do, Ms. Lancaster, I am going to suggest I pass the gavel to my colleague, Mr. Campbell. There is just enough time for Mr. Menendez and me to catch this vote. So we will let you continue. Thank you.
Ms. LANCASTER. I will just say it very quickly. Donor coordination at the country level----
Mr. CAMPBELL. [Presiding.] Take your time.
Ms. LANCASTER. I want the chairman to hear it. Donor coordination at the country level: Involve Africans in the planning and implementation more directly and exercise more selectivity in terms of the governments that receive the aid. These are important things; they are getting increasing attention. I think they need more attention, and I think it is time for us to start thinking about it actively.
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Thank you.
Mr. CAMPBELL. Thank you, Professor Lancaster.
[The prepared statement of Ms. Lancaster appears in the appendix.]
Mr. CAMPBELL. Our next witness is Michael Maren. And the chair asks that I express a particular note of gratitude that you came down to be with us today. He told me that he has already introduced you as the contributing editor of New York Magazine, specializing in Africa. Please proceed for 5 minutes.
STATEMENT OF MICHAEL MAREN, JOURNALIST/AUTHOR
Mr. MAREN. Thank very much. We have heard quite a bit today about the interdependence of the United States and Africa and the importance of African development to the United States; and I concur, and I just want to be very clear that as a critic of AID and someone who is often regarded as a very harsh critic of AID, it doesn't mean that I am against AID. I think what we have to do is separate the idea and the process of AID from criticism of the institutions that are carrying out AID, and too often I think those things are confused.
As a journalist, I am going to speak more in impressionistic ways than facts and figures. I have spent about 20 years in Africa, and I don't trust most of those figures anyway, and I am not exactly sure where most of them come from. All I know is that for the past 20 years I have gone into more and more African villages, I have seen conditions that are worse, that in the Kenyan village where I was a Peace Corps officer 20 years ago, if you just looked around the village very quickly, you would think that development has taken place. There are better roads. There is electricity. There is water. There are schools. There are more concrete buildings around.
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But one of the things that becomes very clear to me when I talk to my former students is there is less hope, there is less economic potential for most of the people in this village. Most of them are supporting larger and larger extended families on smaller and smaller pieces of land. The so-called development that has come into that particular village has been used for the benefit of very, very few people in that village, people with close connections to the government.
That is a case I see more and more in Africa where, if you were to talk to leaders in communities, you are going to hear about the impact of development, the positive impact of development, that the more time you spend at the village level, the more you are going to hear that the beneficiaries have been those very leaders, those very people who are communicating to us about development.
Mr. Hastings before expressed a desire to hear from the beneficiaries of AID--the so-called beneficiaries of AID, I should say. I have interviewed many of them and that is where these impressions come from.
I think one of the problems with AID starts right here in Congress. I have been following a debate about foreign aid for a very, very long time. And advocates of AID always remind Members of Congress that 80 percent of foreign aid or some such figure stays right here in the United States. And sometimes this boost comes from charitable organizations, as well, that are attempting to support AID. AID is good for America. But what is happening is we are focusing on the short-term benefits of AID and I think we need to look no farther than the debacle in Somalia to understand the costs of that sort of short-term thinking.
If we are truly interested in promoting economic development abroad, we must as a nation make a commitment to doing that. We must make a commitment strong enough to bear the wait of the short-term costs. Perhaps if we are not willing to make that commitment, we should get out of the business altogether.
We need AID programs free of spending restrictions, cargo preference and such, restrictions that tie up development monies and slush funds for American companies and other people that are getting their hands on bits and pieces of the aid. We must be willing to acknowledge that development issues in Africa are political, that human rights, political freedom, and economic freedom are inseparable, and they are prerequisites to launching any development effort. We must be willing to cut off countries that continually refuse to move in the direction of greater freedom.
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We need to carry out AID projects with the aim of strengthening and creating private enterprise in a middle class. And I guess Mr. Menendez read from this part of my statement before, but I will say it again. Projects aimed at the poorest of the poor make for good public relations a la Mother Teresa, but the reality of creating public service for the poor will not cure poverty, and a strong entrepreneurial path is the best bulwark against political oppression.
I just want to quickly relate a story. I was in Somalia very, very recently, where, as everybody knows, there is no government. One of the things that happened, to my amazement, since I had been there a year earlier, was that Somali entrepreneurs had built a telephone system; there were two competing telephone systems in Mogadishu, where you can call the United States for less than $2 a minute. And we can't do that calling back the other way, by the way.
How did they put together a telephone system? They raised the capital themselves and they hired a consultant themselves to get from that consultant precisely what they needed. The consultant was there for less than 2 months. And when I saw that, I thought, what if this had been a development project, what if this had been an outside financed development project? What you would have done is moved in a consultant or technical expert for a couple of years perhaps; you would have ended up paying for housing, you would have ended up paying for his family to come over there, you would have ended up giving him a car, you would have had this massive budget around the logistics of actually moving technical assistance into Somalia.
What I found in Somalia was that the people there knew what they needed and they were willing to pay for that help and pay for as much as was needed. I think we need to have development programs here that are responsive to the needs of people over there. They know what they need.
Mr. CAMPBELL. Thank you. I think we will end it there so we keep the 5 minutes, but there will be time to elaborate on questions.
[The prepared statement of Mr. Maren appears in the appendix.]
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Mr. CAMPBELL. Our next witness is Ambassador DeJarnette. Mr. DeJarnette comes to us as the former ambassador to Angola, Tanzania, Central African Republic, and now practices, I believe, with one of the finest firms in our legal practice, Hunton & Williams.
Ambassador.
STATEMENT OF THE HONORABLE EDMUND DeJARNETTE, EXECUTIVE DIRECTOR, UNITED STATES-ANGOLA CHAMBER OF COMMERCE
Mr. DEJARNETTE. Thank you very much, Congressman. I promise the red light won't come on in my 5 minutes. I know you have a busy schedule, and I hope you will ask me questions.
I would like to say first that I really don't have strong disagreement with what I have heard from these people because, after all, they are dealing with their own personal experiences and, in fact, they are speaking what they think is the truth; and I would agree that what you hear from me comes from my experience.
I have been a diplomat in Africa. I spent most of 33 years there. And now I am in the private sector, and I am also very active in the not-for-profit sector and worked for 5 years for the Peace Corps also. So I think I have a variety of experiences, but they are personal and they are limited, and I am not going to, I think, contradict what I have heard.
What I would like to say is I think everybody has agreed you can't impose development on a country or a person if they are not willing, if they are not prepared, if they don't have governance; and if they don't have the leeway for an individual to carry out everybody's natural desire to improve their own life and the lives of their families and communities, then you can do anything, but you wouldn't get much development.
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So I think that is a prerequisite to any serious development effort, whether it is from the private sector or the not-for-profit or from the government is you have to be sure that the countries are committed to it and that you can work with the people to get that development started.
Having said that, however, I would say that I have learned to be a contingency manager working in the U.S. Government, which means you can find an opportunity to do something in almost any circumstance. And that was certainly true in all of the countries where I worked. And the first one I worked in Africa, Niger, is now considered the worst place in the world to be born; and the last one I worked in, Angola, is now considered the second worst place to be born.
I might point out that both of them were better places to be born than they were in 1965 when I startled working there. One thing I would recommend--and this is really for the executive branch and not for Congress so much--is to stop moving the people around so much. I am talking about our own diplomats and our own AID officials. In fact, things take time, just as they do in Virginia, in Richmond, they also take time in Africa; and you cannot get much development done in 2 years or 3 years, and Mr. Maren will have to tell you that. And if you don't leave people on the ground long enough, then you are going to have a lot of good programs that go into the planning stage, but somebody else will execute them. I have seen that happen over and over again.
The key element we are talking about here in a contingency management situation is the quality of the person on the ground. If you want value for your money in the U.S. Government, you need good people on the ground and you need to leave them there long enough. And we don't do that. If you were a stockbroker in the U.S. Government, you would probably be taken to court for ''churning''.
Now, I would like to also say that I do think the private sector and the not-for-profit sector have real opportunities to do things that the public sector can't. I don't think the public sector should be replaced. The public sector, there are some things you have to do through government-to-government aid, and having been a diplomat, I recognize the political advantages, which nobody has really addressed, of being able to offer that kind of assistance. But the private sector is much quicker and, in fact, can get its resources on the ground much faster.
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An example of the entrepreneurs in Somalia is a good one, but I can think of several. Odebrecht, which is a member under the American manifestation of the U.S.-Angola Chamber of Commerce, was asked by the President to get an agricultural project started in Angola; and in less than a year they will have their first crop in. That is their own money, own equipment, that is their own people. They can do it. We cannot in the government.
We were asked by the President of Angola in 1994 to provide some macroeconomic advice, and we are still trying to get that. That is a bad example. And, in fact, that is typical--fairly typical of bureaucracies; they are lethargic and inept.
However, you cannot do large kinds of government-to-government projects through a group of individual corporations, even good NGO's. But I do think that what you have in many of the NGO's that I have worked with--and this is from both my now outside-of-the-government view and my view when I was in Angola and many of the other countries--is that you do, in fact, have the ability to get more local involvement and keep the expatriate personnel on the ground longer because they are not so much involved in promoting their own careers as they are in getting the job done, and in fact you get better value dollar for dollar.
Mr. CAMPBELL. Thank you very much.
[The prepared statement of Mr. DeJarnette appears in the appendix.]
Mr. CAMPBELL. Mr. Nicholas Eberstadt, I believe was also introduced, a scholar at the American Enterprise Institute and also Harvard Center for Population and Development.
Mr. Eberstadt.
STATEMENT OF NICHOLAS EBERSTADT, Ph.D., VISITING SCHOLAR, AMERICAN ENTERPRISE INSTITUTE
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Mr. EBERSTADT. Thank you Mr. Chairman, members. I have set my stopwatch here. I will try to keep on time.
I would like to pass out some handouts. I think these handouts have been passed to members already. I have some additional ones for the audience.
I would like to use my few minutes to walk through those handouts because I think it may help us grasp some of the meddlesome problems that we must confront in sub-Saharan aid.
Mr. Chairman, in talking about sub-Saharan development, our first obligation is to state the obvious, and the obvious is that there has been extraordinary and pervasive economic failure in the sub-Saharan region as a whole for a full generation. According to some economic statistics, per capita income in the sub-Sahara may be lower in the mid-1990's than it was in the mid-1970's.
Such pervasive failure presents us with a great puzzle. Some of the causes of this pervasive economic failure are still mysterious and in some basic respects not satisfactorily explained. The false precision of much economic data on sub-Sahara does not help us get any closer to solving this great mystery. But there are some statistics which are highly pertinent and quite reliable: these pertain to AID flows and international trade patterns.
I would like to go to Table 1 in my handout if I might. We have often heard that sub-Saharan Africa is in need or could use a Marshall Plan. What we see in Table 1 are the actual net ODA disbursements to the sub-Sahara since 1980. In constant exchange rates and in constant dollars, there was a net disbursement of about $280,000 of Official Development Assistance to the sub-Saharan area between 1981 and 1995.
Mr. Chairman, in today's dollars, the Marshall Plan would be priced out at about $60 billion. By this bench mark, sub-Saharan Africa has not gotten one Marshall Plan, but four Marshall Plans since 1980. On a per capita basis and in relation to local GDP or GNP, more aid has been spent in the sub-Sahara since 1980 than was spent in the ''European Recovery Program'' (the Marshall Plan).
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But as we know, we have not had an economic recovery, or development, in the sub-Sahara on the whole.
The Marshall Plan helped to spark economic integration in Europe; that is to say, it helped to spark a boom in exports and imports, which helped to restore prosperity and financial self-reliance to Europe. If you look at Table 2, you will see that something quite different has happened in sub-Saharan Africa in the 1980's and the 1990's. In 1980, overseas official development and assistance amounted to about 9 percent of total sub-Saharan exports. In the 1990's it amounted to over 20 percent of sub-Saharan exports. Aid to sub-Saharan Africa has not augmented trade and exports to this region; it has replaced it. AID has been substituted for trade in structural terms.
If you look at Table 3, you will see public sector financial flows as measured by the OECD to the sub-Saharan area and to all developing countries in the period between 1984 to 1995. Over this period of time, the developing regions, as a whole, managed to attract over $450 billion worth of private financial flows. Over that same period of time, according to the OECD, net financial flows to the sub-Sahara were negative. That is to say, more private capital moved out than came in. We see a hopeful blip in this sub-Saharan series in 1995 but all of it, 100 percent, is accounted for by the Republic of South Africa. The rest of the continent would still be in the zero or negative ledger, at a time when other developing areas were managing to attract a total of nearly $100 billion in private capital a year.
If we look at Figure 1, we can see what proportion of total financial flows that private flows comprised in the sub-Sahara in the developing regions as a whole. Especially since the beginning of the 1990's, there has been a rapid rise for developing regions as a whole.
Mr. CAMPBELL. You have got about 30 seconds.
Mr. EBERSTADT. In the developing regions as a whole, private flows are making more and more of an impact. Not in the sub-Sahara. And one reason for this, Mr. Chairman, as we see in Figure 2, is that the financial flows that have gone to sub-Saharan Africa have not significantly encouraged what is sometimes called ''economic freedom'', as measured by various ''economic freedom'' indices. Sub-Saharan Africa has remained at the bottom of those rankings and has changed only negligibly by the estimate of various assessors of such trends, whereas the rest of the developing world is judged to have seen much more substantial increases in economic freedom.
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[The prepared statement of Mr. Eberstadt appears in the appendix.]
Mr. CAMPBELL. Mr. Eberstadt, what I will do is this. Your time is up, but I will commence my questions and give you the first one and colleagues can go down the list. The chairman is back.
If you don't mind, I will commence anyway.
I would like to ask each witness, and then I am done. All of us, I think, would be in a position to perhaps advise in a new structuring of programs, but taking the programs that we presently have as a given, among them can you identify which in your judgment are most productive in their present use for encouraging economic development among our present economic programs? And I would like to go down the witnesses, and I will begin with you, Mr. Eberstadt.
Mr. EBERSTADT. I am less sanguine about many of the programs that AID is managing than perhaps some of the other panelists may be. Some of the technical assistance work that has been done I think can be commended. The problem is the macroeconomic framework in which these expenditures are being made the ''economic climate'', if you will. As long as there is a framework in which resource transfers will substitute for trade expansion, and as long as resource transfers finance an environment inhospitable to foreign private capital and foreign direct investment, the impact is going to be minimal.
May I say one more thing?
Mr. CAMPBELL. Of course.
Mr. EBERSTADT. It is all well and good to say that our AID programs are investing in human capital, but human capital, like physical capital, will not bear high returns in an adverse environment.
Mr. CAMPBELL. It is a pessimistic answer. I appreciate your candor though.
Mr. Maren.
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Mr. MAREN. I am fairly optimistic and I like what I have seen with some of the small-scale loan programs, and I would like to echo what Nick has said. When you do that in an oppressive economic environment, the overall impact is going to be negligible. And I think that unless we can improve the economic environments on a large scale, dealing with issues of human rights and economic freedom, all of the development aid that goes in there, whatever it is, is going to be wasted.
Mr. CAMPBELL. Thank you.
Professor Lancaster.
Ms. LANCASTER. I don't disagree with my colleagues, I think the economic environment is important. You talked about the different AID programs. And I would just like to say that we are looking, for example, at the World Bank as an AID program.
This may be a little out of your purview, but that is part of the scene.
Mr. CAMPBELL. No, that is fine.
Ms. LANCASTER. My own feeling is that the World Bank is most well positioned to advise governments on economic reforms, that AID is most well positioned to work on more grass-roots types of activities and things like health--I think microenterprise, if it is large enough and done well enough, can make a difference; and I think another aspect that is very important, and I am not sure we are putting enough attention to it, is research that will produce the technological changes that Africans can pick up and use.
Two final points.
Mr. CAMPBELL. I am sorry. Let me get Mr. Ford, and then we will come back if we have time. Thank you.
Mr. FORD. I would have to agree with Professor Lancaster in regards to economic environment. There must be an enabling environment that has to exist. The government would have to allow you to deal with the private sector and the grass-roots organizations within the country where monies go directly to them rather than to government.
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Those kinds of programs that would promote micro and small enterprise development and economic development at the grass-roots level would be the kinds of programs that I think we need.
Mr. CAMPBELL. Thank you.
Ambassador.
Mr. DEJARNETTE. Thank you, sir. In harmony with my original statement, I couldn't really pick out one program that would be better than the others that I favor, because I have seen them all work very well and I have seen them all fail miserably. But, in fact, I would say over the long term, it is very good to train people to invest in Africans. In fact, I would put in a plug for bringing a certain number of them to come to the United States for training. I think that is a very good long-term investment.
Mr. CAMPBELL. Professor, if you would like to conclude your remarks.
Ms. LANCASTER. Just a point on infrastructure. I think we need to come back and look at that because I think now is the moment for all of the donors to sort of think again about what is needed here.
If you have the right policy environment, you still need to be able to have the roads, the telecommunications support in order to sustain that growth. And, again, I think that we need to look at how we can get these 40 or so donors working together a little more productively with Africans to make it all come out right.
Mr. CAMPBELL. Thank you.
Thank you, Mr. Chairman.
Mr. ROYCE. [Presiding.] Thank you, Mr. Campbell.
Mr. Payne.
Mr. PAYNE. Thank you very much. Unfortunately, I missed most of the testimony, but I would just like to ask your opinion of the new legislation that is being proposed by Mr. Crane and Mr. McDermott. And I guess this is similar to the question that was asked of Mr. Moose.
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Initially, there was a large percentage of the DFA that may have been impacted by this legislation because it is difficult to find new money. And especially since the DFA has in fiscal year 1997's budget, which we are in now, it was $200 million less than at the height of the DFA 4 or 5 years ago, when it was about $880 million. It has been reduced in last year's appropriation to about $665 million. So you have got almost a decrease of close to 25 percent over that period of time.
With the trade and investment legislation, and needing funding, initially it was going to even more seriously impact because a portion would come from the same pot. And I think my question is to you, as a panel, do you feel that things are ripe at this time or, as Professor Lancaster indicated, you have got to have infrastructure and roads and bridges, telecommunications, things set up, if trade is going to flourish?
So I just wonder if each of you might give me your opinion of where that is today.
Start with the ambassador.
Mr. DEJARNETTE. I am not the best witness for this, Congressman Payne, but I support the bill. I think there are enough places in Africa where you have a propitious climate to do these kinds of things.
Mr. FORD. I would think that, given the proper infrastructure, given the capacity of the institutions within the country to deal effectively with the problems of the country, both from the employment side and from the economic, political, and strategic side of the government, as well as the human resources development of the people, in all of the places where we put a trade promotion effort in, we have always built the capacity of the institutions as well as the people prior to putting a trade promotion in.
I think it is not one or the other, but it is a parallel road that we would have to travel.
Ms. LANCASTER. Thank you. I just looked at the bill that is about to be introduced, or has been introduced this morning, and there are a couple of pieces to it. I think there are some very good pieces in it, that it proposes in addition to the money we were talking about, to create an African trade forum. I think that is a very good thing. I think that not only is a vehicle for exchanging information, but it can be an incentive for Africans to work harder at opening up their economies and positioning themselves to take advantage of the world market. So I think that is important if we, as Americans, are willing to put the time and the effort into it.
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The free trade area, I think, is also interesting, particularly if it could include textiles, but that, I realize, is problematical politically. There is a proposal for a $100 million equity fund to be set up. I think, without knowing any more about it than I do, I would want to look at that very carefully. I would want to know that where the money was going there is a good chance of major payoff.
We still have a lot of work to do in Africa, it seems to me, to make those markets strong enough. To ensure that and whether we like it or not, that money would have to come from somewhere. And it may not be taken directly from the Development Fund for Africa, but it would be taken from something I suspect that is now being spent on development activity in either Africa or elsewhere, and I think we would want to take a very close look at that.
The infrastructure fund, there is a $100 million infrastructure fund, and that, I think, we want to look at. I think there is a real need for it. I think if we want to do something in infrastructure, $100 million is not much when you talk about the needs out there; and if we are going to do something, let's do it with a bunch of other folks, a lot of other donors, where we can get a serious amount of money going and use it as an incentive for those governments, who are implementing the kind of economic policies we think are important, to continue to do so.
Thank you.
Mr. MAREN. I am going to pass on that question. I am not familiar enough with the details of the bill.
Mr. EBERSTADT. Two general observations. One, with civil order and appropriate economic policies, I think we could expect to get an economic bounce now from outward-oriented economic policies, even given the current infrastructure problems that have been mentioned.
Second, AID at this point may be a ''player'' in sub-Saharan Africa, but it is not the biggest player or the only player; it is a relatively small player. And as Professor Lancaster and others have said, the diplomatic job of coordinating with donors to make sure that perverse policies are not underwritten, would qualify, it seems to me, as a very high objective for AID policy in Africa.
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Mr. PAYNE. I have one quick question--thank you very much, all of you--just primarily, I guess, to Mr. Eberstadt.
I was listening to your comparison of your charts and looking at your tables, and your numbers are probably accurate. You indicated that four times more dollars have gone into sub-Saharan Africa than the Marshall Plan; and a number of very kind of negative conclusions, of course, come from your figures.
But to compare strictly dollars--as you have indicated, there are four times more dollars that have gone into sub-Saharan Africa; and there is not much improvement. The Marshall Plan in Western Europe has put $65 billion in, and it is great. Therefore, you are concluding almost that Africa can never work. That is what I would conclude. And the people who are not that familiar with the continent and all of the other variables that come into play would say, that is right, I spent four times more and look at what it did in western Europe and look at how great it is.
Let me just ask--it appears to me that you do damage in the way that you calculate and come to conclusions. Because it is almost like, you know, comparing apples to watermelons, I guess, or zeppelins or whatever. I mean, you know, it is almost unfair to say put four times more dollars in Africa; and it is a failure; and western Europe is very robust.
I don't know if I am being sensitive or heard it wrong or--my colleagues tell me I am wrong more than I am right, so it wouldn't bother me. How do you justify just putting a damper on the whole thing? It seems unfair, to be honest.
Mr. EBERSTADT. If I might say, sir. The European Recovery Program, the Marshall Plan, was a program for recovering to prewar levels of productivity. It was a restoration of economies. What we are hoping for in sub-Saharan Africa, as in other developing areas, is to obtain levels of production never previously obtained.
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What I tried to point out is that the Marshall Plan comparison is inappropriate. It is often invoked, but it is inappropriate in talking about mobilizing resources for the sub-Sahara.
Probably a more appropriate model would be looking at what happened in East Asia with the East Asian economic takeoff. Both South Korea and Taiwan in the 1950's were lovingly referred to as ''rat holes'' by AID functionaries. They were holes down which AID resources were poured and from which nothing would ever come back. We now know that those two countries turned out to be tremendous economic successes. But why?
One of the interesting and seldom-discussed factors in the takeoff in South Korea and in Taiwan was the threat of AID administrators to make an orderly termination of their AID programs. AID officials informed officials in both Taiwan and South Korea that these big-ticket AID programs were coming to an end; that Taipei and Seoul would have to figure out some way of financing their arrangements after that. It didn't have to work out happily, but it did, and the rest is history.
Mr. PAYNE. Thank you. I am not sure that answered my question, but I yield back. I think my time has expired.
Mr. ROYCE. Mr. Chabot.
Mr. CHABOT. Thank you. I thank the panelists. I was not here for all the testimony either, but I will certainly review the testimony that we have in front of us here. I would ask each of the panelists if you would perhaps respond to this.
Some people would argue that AID too often props up corrupt governments. That encourages dependency, oftentimes is counterproductive. The money tends to go to governments rather--and the governments have a tendency to grow larger and more important in those countries than they otherwise would in relation to, say, the private sector and sometimes hurt the private sector as a result.
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I am not saying at this point I necessarily agree with this completely, but I think there is truth in it to some degree. But I am just wondering what your views are on that. Is U.S. assistance often counterproductive and perhaps does prop up countries--corrupt governments?
If we can go down the line and maybe keep your answers relatively brief because I have a few more questions. Ambassador, if you would like to start.
Mr. DEJARNETTE. I think we have done that. You have to remember that hindsight is always better than foresight, and there is the argument made that for political expediency we need to maintain good relationships.
The situation in Zaire is perhaps one of the best examples of that. But I don't think it has been a systematic problem with AID. I think that, in fact, for political reasons AID sometimes has been directed--continues to be--largest amounts of aid do go, for political reasons, to places outside of Africa for reasons which sometimes are justified in domestic terms.
In fact, I have seen AID programs that were designed for domestic terms. Not just American AID programs. Other countries do the same thing, which will, in fact, harm the recipients. You can see it discouraged in local agricultural productions. Subsidized food is the best example of that.
I just don't think that it is a systematic thing. And you have to remember, hindsight is better than foresight. Because at the time you were fighting the cold war, it made a whole lot of sense to do some of the things that now don't seem like good decisions.
I just would have to say that I don't think that AID is the problem. I think there are things that you can do in the private sector, things in the not-for-profit sector that you cannot do in AID, but you still need government-to-government aid, and you can do it better. We are learning.
But my point--and you were not here, sir--is that there are some procedural things we can do that would make our official programs work better.
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Mr. FORD. I was associated with AID for 22 years, and I did not have one experience in the time, in the 22 years that I spent in AID, where we propped up a government. I have heard of instances and seen instances such as that in other countries, but I have never served in one like that.
I have seen a drop in the infant mortality rate. I have seen smallpox eradicated. I have seen so many good things happen in AID. I have seen the varieties of cassava and maize that increased the food security of different countries. I have seen many things that AID did that were very, very valuable, not only to the people in the countries but the countries themselves. I would be a bad witness in regards to speaking against what AID has done over the past 25 years.
Ms. LANCASTER. I don't take this as a question that is aimed at any particular agency or government. I think one has to think about two things that foreign aid provides. One is money, and the other is approbation.
When a government gives aid to another government, I think there is symbolic value to it often. It is not just for the United States. It is true for the World Bank as well. And when AID is provided to a government that is corrupt, inept and uncommitted to bettering the lives of its people, it does seem to me that there is a danger that one is strengthening that government and not encouraging it to change its policies. And I think we have seen cases of that largely associated with the pressures of the cold war, and we may have gotten something in return, although some day somebody ought to ask whether we paid too much for it or not.
But I think those pressures are much less today. I think we see the problems that they have caused for long-term development in certain countries, and one can only look at Zaire as the example there.
I think also what foreign aid is doing now, not just the United States but other donors--not all but many--is trying to get governments to adopt policies that would further their economic growth and would open them up to be more accountable to their people. And we can certainly see the beginnings of that in sub-Saharan Africa.
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One final point. U.S. foreign aid, bilateral aid, is not given only to governments but is also made available to nongovernmental organizations in the recipient countries. There are some cases where one might regret the impact of that, and I will let my colleague here talk about that perhaps in Somalia, but in some other places I think we can see some real successes.
And I think, in my own views, it is worth looking at the South Africa case before the election of Nelson Mandella as a case where foreign aid was not channeled at all through the governments but was effectively used to strengthen civil society; and I think it is a good example of how that can happen.
Thank you.
Mr. MAREN. In my opinion, governments are the primary impediment to economic growth in Africa. I think by increasing economic freedom and decreasing government control there we would do more economic benefit in Africa than any amount of proactive aid that we could possibly send to the continent.
Having said that, I don't think it is possible to carry out an AID program in an African country without in some way supporting that government. So you get into the ironic situation where you are backing the major force that is preventing economic growth in all of these situations; and whether you are providing public services on behalf of that government or providing large amounts of political aid to a government, you are backing that government.
No government is going to allow you to walk into a country with a development project that says, we are going to empower people in the villages so that they do not have to depend on you anymore, which is really the answer to a lot of economic development programs.
Mr. EBERSTADT. To echo what Michael Maren said, foreign aid programs almost always are state-to-state resource transfer programs, so the intentions of the recipient state become absolutely critical.
Ironically, I am not sure that corruption and theft are the worst things that can happen in a foreign aid program, because only the amount of money that is transferred can be stolen or pilfered. That is the maximum.
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What foreign aid programs can do at their worst extreme, not usually, but at their worst extreme, is to make it possible to finance an economic policy which is positively destructive to the well-being of the local population: which brings production and living standards down below the level that they would otherwise be at. And, unfortunately, that has happened from time to time.
Mr. CHABOT. I thank the witnesses for their very candid answers. Thank you.
Mr. ROYCE. Mr. Menendez.
Mr. MENENDEZ. Thank you, Mr. Chairman.
For those of you I did not hear, I have read your testimony and, in Mr. Eberstadt's case, tried to look at your charts. My sense of both of what I have heard and what I have read is that three of you say that, in some form or another, continuing AID is something that we need to pursue. We want to foster trade. We want to encourage it. We hope to get to a point in time in which that is ultimately the empowerment of the continent. But for now, at least, I understand--at least Ambassador, Mr. Ford, Professor, that to some degree, with some variations, that is in essence your positions. Is that a fair statement?
Mr. DEJARNETTE. Yes.
Mr. MENENDEZ. And understanding that we are putting two caveats in there--that we are not supporting a politically corrupt or tyrannical regime; and, second, that, as you suggest, we cannot foster and force upon a government that is not committed to development and therefore we won't be successful--but if we put those two caveats in there, that is what I understand your testimony to be.
Now turning to Mr. Maren and Mr. Eberstadt, I sense that you don't have those caveats; and correct me if I am wrong. Is it your positions, then, that no aid whatsoever, under any set of circumstances? And if that is the case, what do you offer as the policy that we should adopt as to the continent?
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Mr. MAREN. That is not my position.
Mr. MENENDEZ. Please correct me.
Mr. MAREN. I am not saying no AID under any circumstances whatsoever.
But one of the things that I have learned over the years in Africa is that we, outsiders, horribly underestimate the potential of Africans, one, to put capital together on their own and to hire the technical expertise they need and to go ahead and carry out development projects.
I think too often the aid that we are providing is supporting irrational economic policies, such as, say, growing coffee instead of food in areas. Because people understand that, well, if the crops fail, we can always get food and assistance from the outside. I think too much of our aid is backing these irrational economic policies in these countries and that aid has to be stopped.
I still think there is a role for AID, but I think largely we need to encourage private investment in Africa right now, and I think AID is actually creating a climate where private investment in Africa is very attractive.
Mr. MENENDEZ. But don't we need, whether it be Africa or other places, certain foundations for private investment to take place? Because private investment is not philanthropic. It seeks to make a profit; and, therefore, it must be shown that it can produce a bottom line that is certainly in the black?
Mr. MAREN. For example, let's say you are talking about putting infrastructure into an African village or something like that or into some part of a country. I do not believe that infrastructure is something that encourages economic development. I think it is the other way around.
Mr. MENENDEZ. Certainly a banking system that converted a currency, a whole host of other issues, for which AID can in fact engender the opportunity to have the type of market reform that a country on their own may not be able to do so would create that, would it not?
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Mr. MAREN. If AID was indeed encouraging those kinds of reforms instead of, I think, supporting policies.
You have to understand, having an election does not mean there is a democracy; and saying that we are reforming the economy does not necessarily mean there is reform. You can have reforms at one level; but if you go into a village and a farmer still has to sell all of his crops to a local cooperative or to the local buyer which happens to be the President's second cousin, which is often the case, you are not having any real economic freedom. AID policies often end up supporting that existing system; and I think we have to be very, very careful and to really, really take the time to study the impact of our aid.
I think a lot of AID funds would be better spent actually doing those sorts of studies and finding out exactly what the impact is. I think we too often stop very, very far short of really trying to understand the long-term impact of our AID programs.
Mr. MENENDEZ. Mr. Eberstadt.
Mr. EBERSTADT. The United States is a great power, and a great power must have and should have a foreign aid program. It is part of a great power's arsenal of economic and diplomatic tools. The United States should have a security and political aid program. It should have a humanitarian and emergency response relief program. And it probably can have a development assistance program. But that development assistance program, in my view, should be quite different from the one that we have today.
The one that we have today is quite different from the development assistance program that we had in the early 1960's and late 1950's. And if I may say, the quality of our AID program today is much lower than it was a generation and a half ago. The story of how we got from there to here is a long and tangled tale; it takes us through Vietnam and other places.
But it seems to me that it would be possible to have a focused--probably small, but a focused development assistance program, highly selective and very careful in evaluating its results, that could be useful in particular places in the world, including particular places in the sub-Sahara. But it would have to be a very different sort of program, from the one that we are financing and implementing today. Today's program is a grab bag of causes determined in large measure by various domestic constituencies which are pleased by it. Moreover, the program is mired in legislative barnacles.
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In a way, I would compare our AID program today to the Augean stable. And I would wonder who has the stomach to go in and clean it out. It could be cleaned out and it could be made effective; but it is far from effective, on the whole, as we see it today.
Mr. MENENDEZ. Thank you, Mr. Chairman. My time has expired.
Let me just say, with reference to where I have spent most of my work on this committee in Latin America, we have some shining examples of having laid foundations in countries in Central America and otherwise that have turned around dramatically as a result of our AID program. But I certainly appreciate your genuine comments.
Mr. ROYCE. Thank you.
And let me just ask Mr. Ford, as a former AID Mission Director in Nigeria, what is your view on how the United States can deliver needed development aid in such nonpresence countries as Nigeria? How do we go about that?
Mr. FORD. I would look first at the enabling environment. No. 1, could you do anything in a nonpresence country?
I know AID has attempted to do things on a regional level, and they have been quite successful in the southern Africa region. That story has not been told totally as yet because it is such a short time.
I would find it very difficult at this point in the kind of programs that we, in turn, run at the African Development Foundation; ones where the idea evolved from the community itself, where they, in turn, assisted in designing the activity; where they, in turn, purchased services from in-country, developmental experts; where they, in turn, were responsible for their bank accounts and the spending of the money and the accounting for the money; and where we, in turn, stayed out of it altogether, where we did not provide U.S. presence at all.
I think we could do something like that in places where there were enabling environments and I am saying where the government will not interfere with those grass-roots organizations such as cooperatives and so forth and so on. I think you could do it. I think you could do it very easily. But if the government would interfere, that throws the whole equation off.
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Mr. ROYCE. Thank you, Mr. Ford.
I will ask my last question of Mr. Eberstadt. In your writings, you have advocated technological assistance; and what specific forms of such assistance do you think are most worthwhile in Africa?
Mr. EBERSTADT. At this point, I would say that agricultural research would be one of the primary potentialities. There is, of course, a great deal of agricultural research that is already being sponsored, not just by AID and CGIAR. But more could be done in this area. Research in other areas, including health, may also be appropriate. But if I had to put my finger on just one area, I would say agricultural research, sir.
Mr. ROYCE. Well, the subcommittee wants to thank all of you for your attendance here today; and your full presentation will be in the record. I also want to thank the members for their attendance. We appreciate it.
The subcommittee is now adjourned.
[Whereupon, at 4:30 p.m., the subcommittee was adjourned.]