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REMOVING OBSTACLES FOR AFRICAN

ENTREPRENEURS

HEARING

BEFORE THE

SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN 

RIGHTS AND INTERNATIONAL OPERATIONS

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JUNE 8, 2006

Serial No. 109–192

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL

OPERATIONS

CHRISTOPHER H. SMITH, New Jersey, Chairman 

THOMAS G. TANCREDO, Colorado 

JEFF FLAKE, Arizona 

MARK GREEN, Wisconsin 

JOHN BOOZMAN, Arkansas 

JEFF FORTENBERRY, Nebraska 

EDWARD R. ROYCE, California, 

Vice Chairman 

DONALD M. PAYNE, New Jersey 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DIANE E. WATSON, California 

BETTY MCCOLLUM, Minnesota 

EARL BLUMENAUER, Oregon 

MARY M. NOONAN, Subcommittee Staff Director 

GREG SIMPKINS, Subcommittee Professional Staff Member 

NOELLE LUSANE, Democratic Professional Staff Member 

SHERI A. RICKERT, Subcommittee Professional Staff Member and Counsel 

LINDSEY M. PLUMLEY, Staff Associate 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Manuel A. Rosales, Assistant Administrator, Office of International 

Trade, U.S. Small Business Administration ...................................................... 7

Mr. Rodney J. MacAlister, President and Chief Executive Officer, African 

Development Foundation ..................................................................................... 13

Mr. Charles M. Williams, Senior Associate, Carmen Group, Inc. ....................... 31

Ms. Shade Bembatoum-Young, Executive Director, African Sustainable Small 

Enterprise Export Development Foundation ..................................................... 36

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Christopher H. Smith, a Representative in Congress from 

the State of New Jersey, and Chairman, Subcommittee on Africa, Global 

Human Rights and International Operations: Prepared statement ................ 3

Mr. Manuel A. Rosales: Prepared statement ........................................................ 9

Mr. Rodney J. MacAlister: Prepared statement .................................................... 15

Mr. Charles M. Williams: Prepared statement ..................................................... 34

Ms. Shade Bembatoum-Young: Prepared statement ............................................ 39

APPENDIX 

The Honorable Jeff Fortenberry, a Representative in Congress from the State 

of Nebraska: Prepared statement ....................................................................... 49

(1)

REMOVING OBSTACLES FOR AFRICAN 

ENTREPRENEURS 

THURSDAY, JUNE 8, 2006

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS

AND INTERNATIONAL OPERATIONS, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2 p.m. in room 

2172, Rayburn House Office Building, Hon. Christopher H. Smith 

(Chairman of the Subcommittee) presiding. 

Mr. SMITH. I am advised that our Ranking Member, Donald 

Payne, will be here in about 2 minutes, so I thought I would start 

and then yield to him some opening comments and then go to our 

distinguished witnesses. 

Six years ago, the African Growth and Opportunity Act was 

signed into law by President Clinton with the goal of stimulating 

growth in African economies through decreasing trade barriers and 

encouraging business-friendly regulatory environments. Since then, 

President Bush has expanded and extended AGOA. Over the past 

6 years, United States-Africa two-way trade has increased by about 

115 percent. Last year, 98 percent of U.S. imports from AGOA nations entered the United States duty free. 

Despite the good news, however, it must be acknowledged that 

AGOA’s goal of promoting multi-sector economic growth in Africa 

has been met only partially. Expansion of trade with Africa is 

largely due to oil imports from western African nations. Total nonoil trade under AGOA actually declined last year by 16 percent. 

This was despite increases in trade in non-oil sectors such as footwear, toys, chemicals, electronic products and cut flowers. 

In the original version of AGOA, this trade preference program 

was intended to benefit small and medium enterprises as well as 

large businesses and state-owned enterprises. Still, there remain 

constraints on African entrepreneurs that limit their ability to take 

advantage of AGOA or any other program to enhance trade. 

There is an axiom that two-thirds of any African economy is in 

the informal sector. Many of these businesses are microenterprises, 

but a large number are also considered small and medium companies with up to 100 or more workers. As in industrialized nations 

such as the United States, small and medium enterprises are the 

engine of job growth in an economy. If not for their ability to create 

jobs, many more Africans would be unemployed. 

Unfortunately, entrepreneurs operating in the large informal 

economy, the majority of them female-headed businesses, lack acVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
2

cess to government services. They too often are denied adequate financing from banks. Their needs for infrastructure and economic 

policy changes are not taken into account. Corruption makes their 

existence more tenuous, even, than weak economies. As a result, 

according to a World Bank study, small and medium enterprises 

have less of an impact on economic growth than they might otherwise have. 

The United States Government has attempted to enhance the capacity of African small and medium enterprises during the term of 

AGOA. Last year alone, $199 million in trade capacity building was 

spent in this area. Four hubs for global competitiveness have been 

established for this purpose in Botswana, Ghana, Kenya and Senegal. Nevertheless, African small and medium enterprises continue 

to lag in their ability to enjoy the benefits of AGOA. 

In recognition of this continuing problem, Congressman Tom 

Lantos, Ranking Member of the House International Relations 

Committee, and I have introduced legislation (H.R. 4319) to address the remaining capacity needs of African small and medium 

entrepreneurs. 

The Assistance for Small and Medium Entrepreneurs in Sub-Saharan Countries Act of 2005 makes a number of interventions that 

we believe will better enable African entrepreneurs to become more 

successful exporters in the global economy: H.R. 4319 provides for 

example technical assistance that will improve the ability of African banks to provide financing to small and medium enterprises; 

H.R. 4319 extends capacity building to African entrepreneurs, including youth and farmers; H.R. 4319 addresses intellectual property rights protection for African farming innovation, entertainment and against counterfeit drugs; H.R. 4319 gives technical assistance to African countries to enable them to meet U.S. food safety standards and strengthen agriculture research; and finally, H.R. 

4319 helps protect labor rights so increased production won’t mean 

workers are operating in unsafe conditions for too little pay. 

Surely, African nations have proven themselves able to make 

choices that can transform their economies once needed assistance 

is provided. Madagascar’s economic policies have transformed this 

nation into an engine of trade under AGOA. Botswana today has 

a higher sovereign credit rating than Japan. 

Many of us have witnessed the skills of African entrepreneurs 

who have come to America and demonstrated how successful they 

can be, provided they are given the right environment. Africans living in America have one of the highest family incomes in our country because of their diligence and talents in doing business. These 

skills could be creating wealth and employment in Africa as well 

if the economic policies of those nations better provided for indigenous entrepreneurs at home so they aren’t forced to seek opportunities and jobs abroad. 

Africans and Americans benefit from AGOA, the Millennium 

Challenge Corporation and other U.S. programs. However, a case 

can also be made that those who most need these opportunities 

have been least able to benefit from them. 

I hope our colleagues will work with us to gather all the information we can from today’s hearing and support our legislative efforts 

3

in order to completely fulfill AGOA’s promise as well as better benefit African entrepreneurs. 

I would like to yield to my good friend, Madam Ambassador, for 

any opening comments you might have. 

[The prepared statement of Mr. Smith follows:]

PREPARED STATEMENT OF THE HONORABLE CHRISTOPHER H. SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY AND CHAIRMAN, SUBCOMMITTEE ON AFRICA, GLOBAL HUMAN RIGHTS AND INTERNATIONAL OPERATIONS

Six years ago, the African Growth and Opportunity Act was signed into law by 

President Clinton with the goal of stimulating growth in African economies through 

decreasing trade barriers and encouraging business-friendly regulatory environments. Since then, President Bush has expanded and extended AGOA. Over the 

past six years, U.S.-Africa two-way trade has increased by 115 percent. Last year, 

98 percent of U.S. imports from AGOA nations entered the United States duty-free. 

Despite the good news, however, it must be acknowledged that AGOA’s goal of 

promoting multi-sector economic growth in Africa has been met only partially. Expansion of trade with Africa is largely due to oil imports from Western African countries. Total non-oil trade under AGOA actually declined last year by 16 percent. 

This was despite increases in trade in non-oil sectors such as footwear, toys, chemicals, electronic products and cut flowers. 

In the original vision for AGOA, this trade preference program was intended to 

benefit small and medium enterprises as well as large businesses and state-owned 

enterprises. Still, there remain constraints on African entrepreneurs that limit their 

ability to take advantage of AGOA or any other program to enhance trade. 

There is an axiom that two-thirds of any African economy is in the informal sector. Many of these businesses are micro-enterprises, but a large number also are 

considered small and medium companies with up to 100 or more workers. As in industrialized nations, such as the United States, small and medium enterprises are 

the engine of job growth in an economy. If not for their ability to create jobs, many 

more Africans would be unemployed. 

Unfortunately, entrepreneurs operating in the large informal economy, the majority of them female-headed businesses, lack access to government services. They too 

often are denied adequate financing from banks. Their needs for infrastructure and 

economic policy changes are not taken into account. Corruption makes their existence more tenuous even than weak economies. As a result, according to a World 

Bank study, small and medium enterprises have less of an impact on economic 

growth than they might otherwise have. 

The U.S. government has attempted to enhance the capacity of African small and 

medium enterprises during the term of AGOA. Last year alone, $199 million in 

trade capacity building was spent in this area. Four hubs for global competitiveness 

have been established for this purpose in Botswana, Ghana, Kenya and Senegal. 

Nevertheless, African small and medium enterprises continue to lag in their ability 

to enjoy the benefits of AGOA. 

In recognition of this continuing problem, Representative Tom Lantos, ranking 

member of the House International Relations Committee, and myself have introduced legislation, H.R. 4319, to address the remaining capacity needs of African 

small and medium entrepreneurs. 

The Assistance for Small and Medium Enterprises in Sub-Saharan African Countries Act of 2005 makes a number of interventions that we believe will better enable 

African entrepreneurs to become more successful exporters in the global economy:

• H.R. 4319 provides technical assistance that will improve the ability of African banks to provide financing to small and medium enterprises.

• H.R. 4319 extends capacity building to African entrepreneurs, including youth 

and farmers.

• H.R. 4319 addresses intellectual property rights protection for African farming innovation, entertainment, and against counterfeit drugs.

• H.R. 4319 gives technical assistance to African countries to enable them to 

meet U.S. food safety standards and strengthen agricultural research.

• Finally, H.R. 4319 helps protect labor rights so increased production won’t 

mean workers are operating in unsafe conditions for too little pay.

Surely, African nations have proven themselves able to make choices that can 

transform their economies once needed assistance is provided. Madagascar’s ecoVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
4

nomic policies have transformed this nation into an engine of trade under AGOA. 

Botswana today has a higher sovereign credit rating than Japan. 

Many of us have witnessed the skills of African entrepreneurs who have come to 

America and demonstrated how successful they can be in the right environment. Africans living in America have one of the highest family incomes in our country because of their diligence and talents in doing business. These skills could be creating 

wealth and employment in Africa if the economic policies of those nations better 

provided for indigenous entrepreneurs at home so they aren’t forced to seek opportunities abroad. 

Africans and Americans benefit from AGOA, the Millennium Challenge Corporation, and other U.S. programs. However, a case can also be made that those who 

most need these opportunities have been least able to benefit from them. I hope our 

colleagues will work with us to gather all the information we can from today’s hearing and support our legislative efforts in order to completely fulfill AGOA’s promise 

as well as better benefit African entrepreneurs.

Ms. WATSON. Thank you so much, Mr. Chairman, for holding the 

hearing. We here in the Subcommittee have all expressed our interest in economic development in Africa. We talk about it a lot in 

the abstract, as if the continent itself were capable of generating 

wealth. So perhaps today’s hearing will give us a chance to slightly 

amend our words so we can better articulate what we truly seek, 

and that is the economic development of each and every person on 

the continent of Africa. 

The land of Africa has always been richly resourced, but, despite 

this wealth, Africans themselves grapple with crippling poverty. 

Part of the problem is that for decades governments in both Africa 

and the West have had the wrong focus. We have spent our resources either on major development projects that often become 

white elephants or on social projects which, while necessary, focus 

on the symptoms of poverty rather than on providing a cure. 

The time is ripe for a new approach. It is time to reorient our 

policies to focus on Africa’s most valuable yet least valued resource, 

the human capital of Africans themselves. For this reason, I am 

proud to be co-sponsor of H.R. 5480, the African Entrepreneur Act 

of 2006. 

This bill would seek to provide American support for those Africans seeking to build their own capacity to build business and to 

build wealth in sub-Saharan Africa. 

But this is only one part of what must be a comprehensive strategy, and I would be remiss if I did not mention two issues that I 

believe are crucial to such a strategy. 

The first is helping to build capacity within African governments 

to protect intellectual property. We will only encourage African entrepreneurs to innovate and create their way out of poverty if we 

encourage their governments to protect the fruit of their intellectual labors. 

The second is to help Africans develop the tools to demand accountability and transparency from their governments. No African 

will take the risk inherent in entrepreneurship if they fear the rewards of their efforts will be confiscated by corrupt officials. Both 

corruption and piracy are theft, and both must be tamed if Africans 

are to achieve their full entrepreneurial potential. 

So, Mr. Chairman, I want to thank you for holding the hearing; 

and I look forward to working with you and Mr. Payne and the rest 

of our colleagues to develop a strategy that promises entrepreneurship, protects intellectual property, and defeats corruption in Africa. 

5

Thank you, and I yield back. 

Mr. SMITH. Ms. Watson, thank you very much. 

I yield to Ranking Member Donald Payne. 

Mr. PAYNE. Thank you. Thank you very much; and thank you, 

Mr. Chairman, for calling this important hearing on removing the 

obstacles to African entrepreneurship. 

One thing that I have seen through the years in Africa is that 

you have a lot of entrepreneurs. I mean, if you go down any main 

street in any city, if it is not Nairobi or Addis or if it is in Arusha 

or you name it, you find a lot of entrepreneurs. Salespeople all over 

the place, vendors, stalls, stands; and so entrepreneurial small 

business is a spirit that is very alive and well in Africa. 

But there are certainly obstacles, and we need to get beyond just 

the street vendors and the small entrepreneurs. I think that this 

hearing is extremely important and timely. In most African countries, most microbusinesses operate in the informal sector of the 

economy. The informal economy is a source of income for most African people. So it is something that we should focus meaningful attention on in our effort to increase development within the African 

sub-Saharan countries. 

The informal economy accounted for an average of about 42 percent of the gross national product in Africa in 2000, as compared 

to 26 percent in Asia and 41 percent in Latin America, 38 percent 

in Eastern Europe and 18 percent in OECD countries, 8.8 percent 

in the United States. So we can see that the informal economy in 

Africa is very high. 

I think on the issue of development in general it is important we 

not apply our own concepts of what development looks like and 

how it must happen. 

Everyone in the world wants to be a part of a vibrant economy 

where they can work and earn wages to provide for their families 

and for their needs. Since there is much reliance on and so much 

activity within the informal sector in these microenterprises, we 

should focus on strengthening capacity in this area while we also 

deal with strengthening small- and medium-sized businesses. 

Today, we will hear testimony from one of the architects of the 

African Growth and Opportunity Act, Mike Williams, when he was 

on the staff of Congressman McDermott. I was very impressed with 

this idea that he came up with and encouraged his boss to take 

credit for it. 

I was mentioning that the other day to Congressman McDermott 

at one of the hearings and I told him, no longer is he the father 

of AGOA, he is the grandfather, since he is getting grayer. 

It is good to see you, Mr. Williams. 

And also, Rod MacAlister, we are glad to see you here as the new 

President of the African Development Foundation, the ADF, which, 

as many of us know, was created in 1980 by Congress. ADF was 

created to deliver direct financial support to African entrepreneurs 

and community based organizations. I think they have done a great 

job over the recent years under the direction and guidance of Nate 

Fields, who has taken a new position as Director of Regional Programs based in Ghana. 

I look forward to working with the new President to ensure the 

wonderful programs that are in place will continue and so that 

6

microenterprises in Africa is even expanded. I have had the opportunity, of course, to talk on several occasions with Mr. Fields; and 

he is very encouraged by the new arrangement. 

AGOA extends preferential treatment to imports from eligible 

countries that are pursuing market reform measures. Data shows 

that U.S. imports under AGOA are mostly energy products, but imports to date of other products are growing, and we need to really 

expand outside of the extractive industries. 

AGOA has given African nations and African entrepreneurs hope 

that there is a tool in place to increase trade and investment between Africa and the United States. 

Since being signed in law May 18, 2000, AGOA has proven its 

importance and its power by providing real economic opportunities 

for Africa. There is, however, still much to be done on AGOA. It 

must be expanded to broaden beyond textiles to maximize economic 

activity among a variety of sectors and to ensure real and measurable impact on the economic well-being of sub-Saharan Africa. 

But AGOA has not reached its full potential. It must do more to 

help African small- and medium-sized businesses. Many entrepreneurs are in agriculture and most agriculture products are not 

a part of AGOA, for example, and that needs to be looked at and 

changed. 

The Civil Society Coalition, which held its forum on the Hill yesterday, agrees that AGOA must be integrated into the larger strategy that aims to unleash the entrepreneurial force of Africa in 

urban, rural and agriculture sectors, especially, among women. We 

must all work together to make sure that perhaps AGOA IV is 

even more encompassing. 

I would like to acknowledge that the former Chairman of the 

Committee, Mr. Royce, had a tremendous amount to do with AGOA 

and attended AGOA conferences in Africa; and it was his persistence and interest and support that helped move AGOA forward. 

So I was very impressed with the hearings yesterday, with so 

many AGOA participants at the forum that was sponsored by the 

NGOs yesterday. I think that it is alive and well, but we do have 

to expand, and we have to put all of our legislative authority into 

AGOA to ensure that it continues to improve. So, Mr. Chairman, 

I appreciate you calling this important hearing. 

Mr. SMITH. I thank you very much, Mr. Payne. 

Mr. Tancredo. 

Mr. SMITH. Let me now introduce our first panel beginning with 

Manuel Rosales, who was appointed as the Assistant Administrator 

for the U.S. Small Business Administration’s Office of International 

Trade in October 2001. In his position he serves as the SBA Administrator’s principal adviser on international trade. Before joining the SBA, he successfully operated his own financial services 

company, Inter-American Financial Services. 

We will then hear from Mr. Rodney MacAlister, who was appointed President of the African Development Foundation in February 2006. Mr. MacAlister has extensive private-sector experience 

in Africa, having led operations, business development and community development efforts for ConocoPhillips in central Africa for 12 

years, many of them in conflict-affected countries. 

Mr. Administrator, the floor is yours. 

7

STATEMENT OF MR. MANUEL A. ROSALES, ASSISTANT ADMINISTRATOR, OFFICE OF INTERNATIONAL TRADE, U.S. SMALL 

BUSINESS ADMINISTRATION 

Mr. ROSALES. Thank you, Mr. Chairman, Ranking Member and 

distinguished Members of the Committee. I thank you for inviting 

me to testify on the subject of Removing Obstacles for African Entrepreneurs. 

My name is Manuel Rosales, and I am the Associate Administrator for the Office of International Trade at the Small Business 

Administration. The SBA is tasked with assisting American businesses. The Office of International Trade provides technical and financial assistance to American companies who wish to expand into 

the international marketplace. 

The SBA has been working closely with the Department of State, 

Department of Commerce, U.S. Agency for International Development and the U.S. Trade Representatives Office in working with 

respective governments and private-sector organizations in Africa. 

SBA has a successful 53-year history of providing technical assistance, financial assistance, contracting assistance, and advocacy to 

the U.S. small business community. 

SBA has had an opportunity to share our experience with international visitors. Visitors to the SBA come from foreign governments, private-sector organizations from many countries. Visitors 

from many nations of Africa are no exception. In some cases, SBA, 

through its Office of International Trade, has established strategic 

alliances and collaboration agreements where we can share our experiences with these countries. 

Under the African Growth and Opportunity Act, AGOA, African 

Trade and Investment Policy Program, the SBA received funding 

to assist in the development of Business Information Centers, 

BICs, in Nigeria. This project was completed in 2003. 

These BICs were examples of public-private partnership pursued 

by the SBA, a model for one-stop community based business assistance centers where small- and medium-sized enterprises can acquire technical assistance, gain computer skills, access the Internet, explore financial options and link with other businesses. 

A second component of the program includes training for BIC 

managers and personnel in conducting entrepreneurial development training in their communities. These initiatives show how 

significant it is to have a good business environment to enable 

growth. The small business community needs to have the internal 

and external infrastructure to stimulate development and growth. 

This is one of the issues crucial to the success of AGOA. 

For SBA, AGOA has opened up possibilities and opportunities for 

U.S. small businesses to enter the sub-Saharan African market 

with confidence and assurance from the United States Government. 

As a result of this legislation, the key component of the Bush Administration’s trade policy toward Africa, SBA has either worked 

with or hosted high-ranking diplomats from numerous sub-Saharan 

countries such as Botswana, Senegal, Nigeria, Rwanda and Burundi. The President’s interest in creating trade with sub-Saharan 

Africa has also driven policy changes that have made communications with and obtaining information about sub-Saharan Africa 

more accessible to United States businesses. 

8

From the meetings with African governments, nongovernmental 

organizations and African entrepreneurs, we have learned what 

some of the obstacles to small business development and growth in 

Africa are; and they are: Limited access to capital. The funding 

available is at a high cost. African entrepreneurs typically have little or no collateral or are perceived to be high risk. 

Lack of capacity building. Foreign aid projects begin with best intentions, but the lifespan is often short. 

Failure to develop and sustain business clusters and small business incubators, both of which are valuable tools for economic development. 

Serious shortfalls in telecommunications and communications 

technology facilitate marketing and e-commerce activities. 

Significant shortcomings and weaknesses in long-term technical 

assistance. 

Ineffective governance at national, state and local levels. More 

qualified human capital is needed to facilitate and implement effective services. 

Limited intellectual property rights protection for African and 

small- and medium-sized enterprises inhibits their willingness to 

trade between neighboring provinces and states. This also significantly inhibits United States small firms from engaging African 

small businesses in trade. 

Effective collaboration between countries in the region, with support from both the private and public sectors will significantly enhance economic development and growth. 

One example of cross-border collaboration and economic ties is 

SBA’s initiative with the SME Congress of the Americas. The SME 

Congress of the Americas is a network of micro, small and medium 

enterprise service providers working together to promote the participation of SMEs in international trade. 

This leads me to my final point regarding promoting small business growth in Africa. This is not something that the governments 

of Africa can do on their own, even with assistance from foreign 

governments. The private sector needs to be a full partner in grassroots economic development. Just as we recognize that our small 

business development assistance can play a role in helping create 

more and better trading partners for United States businesses, the 

private sector operating in Africa needs to realize the stability and 

prosperity that small business development provides and creates 

opportunities for economic enrichment. 

I again thank you for the opportunity to share our thoughts and 

experience regarding Africa and entrepreneurial development. 

[The prepared statement of Mr. Rosales follows:]

9


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13

Mr. SMITH. Thank you so for your testimony. 

Mr. MacAlister. 

STATEMENT OF MR. RODNEY J. MACALISTER, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, AFRICAN DEVELOPMENT 

FOUNDATION 

Mr. MACALISTER. Mr. Chairman, Mr. Ranking Member, distinguished Members of the Committee, thank you very much for this 

opportunity to appear before you today and to share what the 

United States African Development Foundation is doing to remove 

obstacles for African entrepreneurs. 

The Foundation was created in 1980 to take a different approach 

to fighting poverty in Africa. The concept, then as now, is to enable 

individuals and groups to get out of poverty by putting their own 

ideas to work, not someone else’s. Our methods have evolved over 

time with experience, but one of the main pillars of our work 

throughout has been to remove barriers and promote the success 

of our customers, who are thousands of Africans who have no lack 

of innate entrepreneurial instinct, as you mentioned, Mr. Payne, 

but simply lack the means to get going and stay on the path to success. 

We believe people in poverty know better than anyone what they 

want to do to improve their lives, and usually they lack only the 

technical know-how and the necessary capital to make their 

dreams a reality. 

I would appreciate being able to submit a longer testimony for 

the record, please. 

Mr. SMITH. Without objection so ordered. 

Mr. MACALISTER. Thank you. 

Let me tell you four things about us and what we do: One, 

USADF has a unique model for growing businesses which gets impressive results; two, the Foundation is stretching appropriated 

funds with leveraged contributions; three, our work is in high demand across the continent; and, four, after 25 years as part of the 

overall American aid and development framework, USADF would 

like to and has the potential to do much more. 

So, first, we are actually unique, which I know is a pretty bold 

claim. But our core business is growing African-owned small businesses and demonstrating that African entrepreneurs and farmers 

can compete in the global marketplace. Since 1984, we have made 

more than 1,500 investments in enterprises owned and managed by 

poor Africans, businesses that they themselves have conceived and 

operate. 

The way we go about doing this is distinct from other agencies. 

First, we work directly with our clients. Other than employing 

African host government funds, there is no host government control 

over what we do and how we invest our joint funds; and we do not 

work through NGOs, consultants or other intermediaries. We believe our customers have the best view of their obstacles and how 

to remove them. 

Second, we help our clients think commercially. We show them 

how to diagnose their constraints, assess opportunities, conduct rigorous financial analyses on their options and develop business 

14

plans that are commercially viable and generate income for owners, 

employees and suppliers. 

Third, USADF provides a comprehensive package of direct investments in African small- and medium-scale enterprises and 

small farming operations. Essentially, we enter into a 3- to 5-year 

relationship and stick with them through thick and thin to help 

them succeed. 

Fourth, we work with enterprises that could not otherwise access 

commercial capital through banks. The investment is interest free, 

but the customers commit to contribute up to 100 percent of the investment amount to a local development trust. This feature reinforces commercial discipline and will create a pool of development 

funds for reinvestment in other businesses and community initiatives. 

Fifth, because our business development model is unique and effective, African governments are making cash contributions to 

match one for one appropriated funds. I know of no other agency 

whose core model is specifically based on leveraging American taxpayers’ funds in partnership with host governments. 

USADF works. It is producing results. Our investments in small 

African-owned businesses are generating economic growth. Small 

farmers are increasing their income by diversifying their production into high-value cash crops. These African businesses and farmers can compete in the international marketplace. We help them 

meet the quality and quantity demands of global markets and create relationships with international buyers. 

Last year, USADF’s investments across Africa helped create more than 110,000 jobs for poor Africans and generated $70 million 

in gross revenues for enterprises and almost $35 million in export 

sales. Local communities are taking control of their own development. Thus, USADF is advancing the objectives of AGOA and furthering United States objectives of building a foundation of peace 

and prosperity in Africa. 

My written testimony includes examples that will illustrate what 

our customers are accomplishing. 

Second, USADF is stretching appropriated dollars. Because of 

the Foundation’s distinct approach and high impact, a dozen African governments and two private corporations are actually matching the United States Government’s funding, dollar for dollar. 

USADF has a total of $22 million in actual commitments and expressions of interest. However, at the current level of funding, 

USADF will leave $11.5 million of this private co-funding on the 

table because we do not have adequate appropriated funds to 

match the private contributions. 

Third, we are in high demand. As an example of the walk-in 

business we experience, just this week, during the 2-day AGOA 

Ministerial Forum, we were asked by the Minister of Industry from 

the Congo, the Secretary of Commerce from Malawi, the Minister 

of Commerce from Burkina Faso, the Minister of Commerce from 

Benin and the Minister of Foreign Affairs from Burundi to match 

funds that they have ready to put into USADF work in their countries. It hurts, quite frankly, not to be able to say yes. 

For another example, President Ellen Johnson-Sirleaf of Liberia 

has requested USADF help in rebuilding her country and restoring 

15

hope through creating small businesses and community enterprises 

that can provide meaningful jobs to ex-combatants, women and 

youth. USADF is already developing an initial round of investments to be funded this year, but we will need additional funding 

next year to expand the program. 

Fourth, and finally, it is time for USADF to grow to its optimal 

potential. 

What will it take to enable us to increase our impact in Africa 

and deepen our contributions to United States objectives? Two 

things. 

The first is, this is an important year for us. We have put in 

process a number of improvements, including stationing our former 

President, Nate Fields, in Ghana to oversee in a more hands-on 

way the service we are providing to the poor. And I do thank you, 

Mr. Payne, for your kind remarks on my predecessor. He is a wonderful manager within USADF. 

But to have the capacity, we need to answer all the demand we have, including being able to match the $11.5 million in contributions of African governments that are currently left on the table, 

we do need adequate funding. Our board of directors has committed itself to this goal, and we will work with the administration 

and Congress to achieve it. We would be exceedingly grateful for 

the support of this Committee’s Members. 

Secondly, we also need some technical updates to our authorizing 

statute. During our 25 years of operations, the context for our work 

has changed significantly, but the legislation has never been revised. We believe several changes are now needed to better enable 

us to achieve our congressional mandate. 

I am extremely grateful to Congresswoman Lee, Congressman 

Payne and Congressman Boozman for their support in general and 

their leadership in particular on shepherding this small but necessary bill through the House. All of the proposed revisions are 

straightforward, so I hope the Committee will be able to consider 

it as a form of technical corrections bill. I would welcome the opportunity, Mr. Chairman, to meet with any Members or their staff on 

the proposed revisions. 

Mr. Chairman, thank you for the opportunity to appear before 

you today. More importantly, I thank you and your colleagues for 

your commitment to the poor of Africa. The work of the United 

States African Development Foundation is a powerful example of 

the goodwill of the American people and I believe is one of the most 

effective foreign assistance programs we have. I look forward to 

working with you in furthering the United States’s interests in Africa. 

Thank you. 

[The prepared statement of Mr. MacAlister follows:]

PREPARED STATEMENT OF MR. RODNEY J. MACALISTER, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, AFRICAN DEVELOPMENT FOUNDATION

Mr. Chairman and distinguished members of the Committee, it is my pleasure 

and privilege to appear before you today to share what the United States African 

Development Foundation (USADF) is doing to remove obstacles for African entrepreneurs. 

The Foundation was created in 1980 to take a different and then-untried approach to fighting poverty in Africa. The concept—then as now—is to enable individuals and groups to get out of poverty by putting their own ideas to work, not someVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6621 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
16

one else’s. Our methods have evolved over time, with experience, but one of the 

main pillars of our work throughout has been to remove barriers and promote the 

success of our customers: thousands of Africans who have no lack of innate entrepreneurial instinct but simply lack the means to get going and stay on the path to 

success. In describing our work, I will address four dimensions:

1) USADF has a unique model for growing businesses, which is showing impressive results.

2) The Foundation is stretching appropriated funds with leveraged contributions.

3) Our programs are in high demand across the continent.

4) After 25 years of operations, and given the distinct and effective contribution 

that the Foundation makes to the U.S. foreign assistance community, 

USADF has the potential to do much more.

USADF is unique. The United States African Development Foundation’s core business is growing African-owned small businesses and demonstrating that African entrepreneurs and farmers can compete in the global market place. Over the years, 

it has made more than 1500 investments to promote economic and social development for the poor in Africa. 

The way we go about doing this is distinct from other agencies:

• First, USADF works directly with its clients. Other than employing African 

host government funds, we bypass other governments and do not use international consultants or intermediaries.

• Second, the Foundation helps its clients think commercially. We show them 

how to diagnose their constraints, assess market opportunities, conduct rigorous financial analyses on investment options, and develop business plans to 

support commercially viable activities that generate income for owners, employees, and suppliers.

• Third, USADF provides a comprehensive package of direct investments in African small and medium-scale enterprises, agri-businesses, and smallholder 

farming operations. This integrated investment package combines technical 

assistance and training to strengthen technical, managerial and marketing 

capacities, with working capital and access to new technology. The Foundation assists its clients to: diversify their product lines; enhance the quantity 

and quality of production to meet market standards and demand; increase 

value through processing; and access regional and global markets.

• Fourth, while we were an early pioneer in microfinance, nowadays USADFsupported enterprises receive between $50,000 and US$250,000 in investment 

financing, as this is the least-served level of capital need. The investment is 

interest-free, but the customers commit to contribute up to 100% of the investment amount—based on business projections and actual profitability—to 

a local development trust. This unique feature of USADF’s enterprise development model ensures companies have the ‘‘patient’’ capital they need to grow, 

and at the same time reinforces commercial discipline so that small enterprises can access future capital requirements from banks and other commercial sources. It also fosters a culture of social responsibility and it creates a 

pool of development funds for reinvestment in other businesses and community initiatives.

• Fifth, because our business development model is unique and effective, African governments are making cash contributions to match, one-for-one, appropriated funds. I know of no other agency that is so successfully and extensively leveraging American taxpayer’s funds. This critical aspect of our program is detailed below.

USADF works—it is producing results. The Foundation’s investments in small African-owned businesses are generating economic growth. It is helping small farmers 

increase income by diversifying their production into high value cash crops. USADF 

is demonstrating that small African businesses and farmers can compete in the 

international market place; it is helping them meet the quality and quantity demands of the global marketplace and creating linkages with international buyers. 

The Government of Ghana has made USADF’s model of growing small businesses 

one of the major components of its national economic development strategy. Last 

year, USADF’s investments across Africa helped create more than 110,000 jobs for 

poor Africans and generated $70 million in gross revenues for enterprises and almost $35 million in export sales. (A chart showing the growth of gross revenue and 

17

export sales among USADF-supported enterprises is attached). The Foundation’s 

community enterprise investments are supporting grassroots solutions to local problems and empowering communities to take control of their own development. Thus, 

USADF is advancing the objectives of AGOA and furthering U.S. objectives of building a foundation for peace and prosperity in Africa. 

Four ADF-funded projects demonstrate the success and impact of our investments 

in growing small, African-owned businesses and launching some of them into the 

global marketplace.

• Bosbel Vegetable Oil Mills Ltd., located in Tamale, northern Ghana, specializes in the production of vegetable and groundnut oils for the Ghanaian and 

export markets. Aging equipment and limited resources were hampering 

Bosbel’s ability to meet increased demand both from the local and export markets. In FY 2004, Bosbel Vegetable Oils was approved for the equivalent of 

US$245,117 in funding support, enabling them to expand production. Since 

ADF’s involvement commenced, Bosbel Vegetable Oils has experienced revenue growth of US$306,977, of which over 50% is derived from exports.

• The Tanzania Mtibwa Sugar project has demonstrated an impressive capacity 

to scale up its production to meet the demands of the export market through 

its support for the production of small-scale sugarcane ‘‘outgrowers.’’ First 

funded during FY 2002, Mtibwa Sugar has increased its gross export revenues by 423 percent over the past three years, from US$1.188 million during 

FY 2002 to US$5.034 million in FY 2005.

• Ruembe Outgrowers Association, another small-scale sugarcane producer in 

Tanzania, has already exceeded most of the targets established when it was 

approved for US$228,740 in ADF funding in FY 2004. Yields per hectare are 

up 30% and cumulative export sales stand at US$4.7 million. The number of 

participating cane farmers has increased by 50 percent since project inception 

and the income of the 1440 growers has almost doubled as a consequence of 

ADF’s investment. Ruembe Outgrowers have become a trusted supplier of 

sugarcane to the Kilombero Sugar Company.

• Kelvin Shaun Investments Ltd., Uganda, a hydrated lime processing business, received a US$250,000 grant in FY 2005 to enable it to expand production and meet market demand, currently being met by imports. Funding support from ADF allowed Kelvin Shaun to construct new facilities, procure vehicles and equipment, and purchase inputs. Kelvin Shaun has subsequently secured a contract to supply an international construction company with 200 

metric tons of hydrated lime valued at US$259,500. The company’s net income has increased 17 fold since ADF support commenced.

USADF is highly effective. Over the past five years, the Foundation has consistently exceeded its performance targets. After conducting an extensive assessment of 

our operations last year, OMB gave USADF its highest performance rating, which 

only 11 percent of all government agencies and only 5 percent of all investmentmaking programs receive. We are very proud of this achievement and are committed 

to building on our record of strong performance management. As a business ourselves, our goal is to model the kind of management practices that we expect from 

those we serve. 

USADF is stretching appropriated dollars. Because of the Foundation’s distinct 

approach and high impact, a dozen African governments and two private corporations are actually matching the U.S. government’s funding, dollar-for-dollar. For example, the Government of Ghana is providing $5.0 million annually in co-funding 

for the Foundation’s program. Moreover, the agency stipulates that African enterprises that receive USADF support must contribute to a locally owned and directed 

venture capital fund. Thus, taxpayer funds invested in Africa can be used again and 

again to fund enterprises within the community and thus have a significant multiplier effect. Through these two mechanisms, USADF is effectively more than doubling the program impact of appropriations. No other agency operates on this basis. 

USADF has a total of $22.0 million in actual commitments and expressions of interest. However, at the current level of funding, USADF will leave $11.5 million of this 

private co-funding on the table, because we do not have adequate appropriated 

funds to match the private contributions. (A list of the strategic partnerships is attached to this statement). 

USADF is in high demand. The African Development Foundation is a vibrant program that both furthers U.S. foreign policy objectives in Africa and also supports 

Africa’s own priorities. Because it is seen as highly effective and supporting local 

needs, African governments, businesses and communities are clamoring for 

USADF’s investments; demand for its services greatly exceeds resources. For examVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
18

ple, President Ellen Johnson-Sirleaf has requested USADF to help in rebuilding Liberia and restoring hope through creating small businesses and community enterprises that can provide meaningful jobs to ex-combatants, women and youth. (A copy 

of her official request is attached to this statement). USADF is already developing 

an initial round of investments to be funded this year, but it will need additional 

funding next year to expand that program. The Governments of Burundi and the 

Democratic Republic of the Congo have also requested USADF to assist in their 

post-crisis transition and development, but USADF does not currently have the 

funds to undertake other new country programs. 

It is time for USADF to grow to its optimal potential. The Foundation’s programs 

are high impact and in high demand. It has been externally judged—by our clients, 

the Administration and Congress alike—to be effective. USADF makes a unique and 

valuable contribution within the US’s foreign assistance program. 

What will it take to enable the United States African Development Foundation 

to increase its impact in Africa and deepen its contributions to U.S. objectives? I 

believe there are two critical components needed:

1) This is an important year for us. We have put in process a number of improvements, including stationing our former President, Nate Fields, in 

Ghana to oversee in a more hands-on way the service we are providing to 

the poor. But to have the capacity we need to answer all the demand we 

have, including being able to match $11.5 million in contributions of African 

governments that are currently left on the table, we need adequate funding. 

Our Board of Directors has committed itself to this goal, and we will work 

with the Administration and Congress to achieve it. We would be exceedingly grateful for the support of this Committee’s members.

2) Some technical updates to our authorizing statute. During our 25 years of 

operations, the context for our work has changed significantly but the legislation has never been revised. We believe several changes are now needed 

to better enable us to achieve our Congressional mandate, including:

• Redesignating the agency the ‘‘United States African Development Foundation,’’ to clearly identify the Foundation as a U.S. government agency.

• Specifically including small enterprises and farmers associations as eligible recipients, recognizing that these are the engines for Africa’s economic 

and social development.

• Increasing the cap on grants from $250,000 to $400,000 to better meet 

the needs of African enterprises, smallholders and communities.

• Revising a number of personnel provisions.

I am extremely grateful to Congresswoman Lee, Congressman Payne and Congressman Boozman for their support in general and their leadership in particular 

on shepherding this small but necessary bill through the House. All of the proposed 

revisions are straightforward, so I hope the Committee will be able to dispense with 

it as a form of technical corrections bill quickly. I would welcome the opportunity, 

Mr. Chairman, to meet with any members or their staff on the proposed revisions. 

Mr. Chairman, thank you for the opportunity to appear before you today. And I 

thank you and your colleagues for your commitment to the poor of Africa. The work 

of the United States African Development Foundation is a powerful example of the 

goodwill of the American people, and I believe it is one of the most effective foreign 

assistance programs we have. I look forward to working with you in furthering the 

United States’ interests in Africa.

Mr. SMITH. Thank you very much, Mr. MacAlister. 

Thank you both for your testimonies, for your very timely recommendations to the Subcommittee to take action but also to encourage our colleagues, in like manner, to be aware of the good 

work that has been done, is being done, and certainly can be done. 

You mentioned Liberia. Obviously, Liberia and the other countries you have mentioned are in desperate need of transitioning so 

that a tourniquet is put on any possibility of ever going back; and 

certainly with the election of Ellen Johnson-Sirleaf there is great 

hope and expectation that Liberia can become another jewel. But 

it needs, as you pointed out, technical support and access to capital, certainly, and a structure that systemizes that and expands it 

19

so that the African subcontinent can realize its true potential, 

which is greatness. 

Let me just ask you a couple of questions. 

One, you know, just an aside, but having worked there for so 

long, Mr. MacAlister, especially—I am sure both of you have insights on this—and that is the nexus that disease morbidity, mortality is having—not just the HIV/AIDS crisis but also the malaria 

crisis—every 30 seconds, as we know, another child dies from malaria. 

This morning, the President was—actually, First Lady Laura 

Bush along with Ambassador Tobias and I joined him at the National Press Club when they announced that Malawi, Mozambique, 

Rwanda and Senegal have been added to the President’s initiative 

on malaria in an attempt to cut by half the number of malaria 

deaths in those countries. That now brings to seven the number of 

countries in that cluster that will grow and hopefully grow even 

faster going forward. One-point-two billion dollars over 5 years is 

what the President wants to use for this malaria initiative. 

I mention that because when you talk to people who want to invest, there is that concern about the indigenous desire of locals to 

get access to capital and create their own economic prosperity. But 

for foreigners, Americans and others, to invest, there has been that 

reluctance based on war and I do believe based on disease. And I 

would appreciate any insights you might have on that. 

We know that, until malaria was licked, the Panama Canal was 

going nowhere and other diseases remained there. 

It seems to me that the sooner we get a handle on that, for the 

best reasons to protect people’s lives but also to enhance their quality of life, the better. And what is the nexus that you see between 

the health issue and business? 

Mr. MACALISTER. I am not an expert in diseases. I understand 

conflict and warfare and that dimension of the threat to the sustainability of Africa’s businesses and its economic growth much better. But, clearly, there is a nexus, Mr. Chairman. 

We can easily assume a lot of things that are essential for success that we don’t have to worry about in our country, such as good 

health and solid infrastructure and other things, none of which can 

be assumed or taken for granted in Africa. So while USADF has 

no particular mission in health or indeed in security, we do have 

to pay attention to these things; we are mindful of them. That is 

where I think good synergy across the different government agencies is a useful thing, particularly where our relatives at USAID 

and MCC have programs that address these specific needs. 

Mr. SMITH. Mr. Rosales, did you want to respond? 

Mr. ROSALES. Usually, small businesses, when they trade internationally, their main concerns are transparency, arbitration, dispute resolution, non-tariff barriers and the introductions to investment, knowing that marketplace or knowing their investment 

would be safe. You know, capital is a coward. But as far as disease 

and warfare, I think Mr. MacAlister is the expert on that subject 

matter. 

Mr. MACALISTER. I was just handed a note as well that I think 

is an interesting additional point, and that is that we are actually 

20

seeing the need to double the training for enterprise managers 

within USADF projects just to allow for morbidity. 

Mr. SMITH. Wow. I appreciate that insight. 

Could you speak to the issue, and it goes along with technical capabilities, so that the skills to grow a business are sustainable, 

knowing how to meet a payroll, how to ensure that your business 

survives, that you have a product that is viable in your locale. 

Many of us—and I served on the Veterans Affairs Committee for 

24 years until last year; and I was always struck that, post-World 

War II, it was the GI Bill with its emphasis on housing but also 

on access to college that created the entire middle class in this 

country. Until World War II, the two echelons were like we see in 

so many other countries, the very rich and the very poor. And I am 

wondering if you might speak to maybe the African countries don’t 

have the wherewithal for something equivalent to the GI Bill, but 

one of the outcomes of the GI Bill was the creation of the community college system, the 2-year community college system which has 

enabled so many people of limited means to get college and then 

to break out, go right through that glass ceiling that might have 

otherwise been imposed on them. 

What is your sense about that kind of higher education infrastructure, especially over time? It seems to me that you are late 

putting seeds—111,000, or whatever that number was, jobs is nothing to snicker at. That is very significant, and I congratulate you 

on that. But, obviously, you want to grow it. You want more resources. 

You even said, and I thought this was interesting, that foreign 

aid projects may begin with the best intentions but their life span 

is often short. So there is almost like a fatigue that sets in or a 

lack of planning for sustainability. But the education part, it seems 

to me, is crucial. 

Mr. MACALISTER. Well, you are absolutely right, Mr. Chairman. 

In fact, it is even more fundamental than the community college 

level. 

Here is a quick look at some of the recent developments in the 

USADF portfolio. As I mentioned, we are going into Liberia. That 

is our newest country. We are going there as fast as we can at the 

request of the White House. We were actually in President Johnson-Sirleaf’s office 13 days after her visit here. So we think we can 

move as fast or faster than any other part of the U.S. Government 

to help her show meaningful results within the first 150 days. 

But we are also going into Angola, we began last year in Rwanda, we are going into Burundi, we are in northern Nigeria but moving toward the delta shortly, and we are in northern Uganda; and 

just the names of these places tells you something about the issues 

that we face. 

In countries that have known warfare for a protracted period of 

time, such as Liberia, for 14 years, any Liberian that you meet between the ages of 10 and 30 essentially has had no education and 

no childhood, lost their childhood violently and was taught how to 

cause others to lose their childhood in the same way. 

Because of that, because of the lack of ability just to read and 

write, add and subtract, they not only have those problems but a 

lack of faith in their fellow human being, the ability to believe in 

21

tomorrow, the ability to sacrifice for a gain the next day, many of 

the things that again are so fundamental. So even before we can 

get to a level of community colleges and that sort of thing there is 

a great deal of remedial need at the basic educational level. 

Mr. ROSALES. I would like to add that the project that we did in 

Nigeria really addressed that issue. The reason why it is still available to the communities are there was buy-in from the local government. These BICs were really intended to be a place where they 

can have resources, including counseling and access to the library, 

to be able to get into business, and as was stated, the very lack 

of education. 

In our experience at the SBA, capacity building or technical assistance is just as important or more important than capital. Because our role is to create an environment with these businesses 

of sustainability to reduce the failure rate. This capacity building 

in Africa is in all fronts in the governments to provide the same 

kinds of services and products that we do for our small businesses 

so they can thrive, private-sector organizations like chambers of 

commerce or industrial groups that can provide the services to 

their memberships so they can grow, and to the SMEs themselves. 

We understand that our SMEs here are large compared to the 

SMEs in Africa where there are more microbusinesses, which has 

a totally different challenge. The capacity building, technical assistance, education is the key. 

Mr. SMITH. Lastly, one final question. Yesterday, the AFL–CIO 

filed a section 301 complaint with the USTR toward the People’s 

Republic of China because of their horrific record on labor rights 

and their mistreatment of workers’ rights—no collective bargaining, no ability to have OSHA-like protections. 

When Greg Simpkins and I were in Uganda, we visited a factory 

that is making clothing for export, much of it coming to the United 

States, and asked them a number of questions about worker rights 

while they were there. It seems to me that some U.S. businesses 

are very quick to invest where the pay and health benefits—or lack 

of it—is so small that people—you know, there is more money to 

be made. And my question is—and I read the AFL–CIO’s complaint 

yesterday, and it is an indictment of China for its abuse of workers. 

I am wondering what safeguards—because this was a topic of conversation when AGOA was considered originally—but what safeguards do you think are needed so that a culture that respects the 

rights of workers, as these businesses are small, medium and even 

large, are getting off the ground, can be inculcated? 

Mr. ROSALES. In my statement, sir, I mentioned big governance; 

and I think that is within the crux of some of the issues in developing nations. 

I am not an expert on the subject matter, but, you know, knowing that if you have good labor standards and good relations between the management and the companies and their employees 

that you will have a more productive society. 

Mr. SMITH. Okay. 

Mr. MACALISTER. As a U.S.-Government-owned corporation, 

USADF tries to operate as a small business and therefore a model 

for the rest of our customers. We have a union within our own orVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
22

ganization, and we try to manage our labor relations in such a way 

that they can be a model for our customers. 

In Africa, there are so many differences in the quality of work 

life. One of the things that I have made a priority to focus on is 

simply the safety, health and well-being of the people that come to 

work every day. From the oil business background that I had, 

where safety is virtually a religion, I am trying to bring a culture 

where everybody understands that they have to come home at the 

end of the day in the same fine shape that they arrived at in the 

morning. And in ways like that as well as in environmental policy 

and other things we are trying to bring more of this culture and 

imbue it deep within the businesses that we invest in. 

Mr. SMITH. That is really outstanding. 

Just one footnote, one point that I noticed in the human rights 

report this year for China, the lack of concern for worker rights. 

There were at least 125,000 men and women who died in industrial 

accidents in the PRC last year, which is a horrific loss of life. I saw 

nothing in the reports dealing with Africa, so I don’t know if that 

is being chronicled. 

But thank you for the wonderful work you are both doing. We 

appreciate it. 

Mr. Payne. 

Mr. PAYNE. Thank you very much; and let me also indicate that 

I think, as I indicated in my opening remarks, it is very important 

that we attempt to really get more activity moving in this whole 

small business and entrepreneurial area in Africa. 

I wonder, Mr. Rosales, if you can talk about any specific project 

that SBA has implemented with any country in Africa with African 

entrepreneurs to improve capacity and combat the obstacles you 

mentioned, such as developing and sustaining small business networks and incubators. Are there any specific programs that you 

have been involved in in any of the countries there? 

Mr. ROSALES. Yes. Thank you Mr. Payne. 

The Small Business Administration’s main focus is domestic. It 

is to assist and create the opportunity for small businesses. Our 

role in the international arena is to take those businesses abroad, 

so our interaction with Africa is limited, and it is limited to two 

projects that we have done. One was in Egypt, which is not subSaharan but in Africa; and those were again to assist the Egyptian 

Government to develop these technical assistance centers. The 

other was in Nigeria, where we established these two BIC centers 

that provided basic information and technical assistance to budding 

entrepreneurs. 

The other area that we are involved in is when we have visitors 

come to us who are seeking some of our best practices so they can, 

hopefully, take those best practices and utilize them in their economies. 

We have an agreement with Nigeria, an MOU, Memorandum of 

Understanding, where we can share our technology and share our 

best practices for them to look at certain sectors’ particular access 

to capital, our guaranteed programs for banks, and our government 

contracting program. 

So our ability to do what Mr. MacAlister does is restrained. Our 

real role is to really focus on the small businesses in America and 

23

have them get ready to export and compete internationally and 

hopefully gain ground, particularly in China. 

Mr. PAYNE. All right. Then it might be good, a nice project if your 

agency had the capacity to grow to try to even be a little more aggressive in some African countries to export your skills that you do 

here domestically. 

Mr. ROSALES. Yes, sir. In my interaction this week with the 

AGOA countries, most of them, if not all, are seeking that kind of 

technical assistance. We work very closely with the other agencies, 

the U.S. Government particularly through the Trade Promotion Coordinating Committee, where they may have the ability to do 

things on the ground in Africa and we add value to their projects. 

But it is technical assistance at all levels that they seek, and we 

can offer that through the exchange of best practices. But, you 

know, we don’t have the mandate to do so abroad. 

Mr. PAYNE. Okay, as you mentioned—thank you—that you are 

primarily domestic. But I wonder, you know, we are always attempting to, through SBA and section—I mean, what you call 

USAID program set aside and some of the programs that we used 

to have, I wonder if you have been there long enough to see whether any minority businesses, women-owned businesses, African 

American-owned businesses or other kind of small businesses have 

been worked with, since you say you are mainly domestic, to see 

about getting these minority businesses connected to African businesses. 

Mr. ROSALES. Yes, sir. Our role is to go out in all communities 

to promote the opportunities that are abroad. And the best conduit 

to trade between Africa and United States is the African American 

community. My experience as a head of a chamber of commerce in 

California, an Hispanic chamber, is that we dealt very closely during the NAFTA debates in creating those linkages with the Mexican companies so we can create opportunities for trade. I think 

those linkages are very important. That is why in my testimony I 

indicated the private sector. 

Private sector is very much the key, because we need to remember that most of these businesses in Africa that will be able to export, the numbers are not that great. In the United States alone, 

we only have 220,000 exporters out of 25 million small businesses. 

So we need to focus on those areas where the opportunities are, 

and the bridge—the natural bridges would be the diaspora communities from those countries here who have the relationships back 

home; and through our programs like 8A and all our assistance 

programs, we encourage, obviously, all sectors to export abroad. 

Our assistance to minority communities has been on the increase 

the last 4 years, but we are breaking records not only in our 7(a) 

program but in our contracting programs and in our technical assistance areas, also. 

Mr. PAYNE. Thank you. Is there any connection—I know Overseas Private Investment Corporation, OPIC, is usually—I guess 

have your bigger maybe road programs and so forth. Do you get involved at all with OPIC, which, of course, is trying to encourage 

U.S. products to be sold abroad? I mean, is the overall product—

of course, we want to see it both ways. We need you to look at 

China, perhaps, so we can sell something to China rather than buy 

24

everything they make, but that is another day for another story. 

Is there any connection with your SBA and OPIC? 

Mr. ROSALES. Yes. As a matter of fact, before I go any further 

on that question, sir, we have a women’s business center in Virginia that is funded through the SBA that works with Africans in 

Ethiopia in business development. So we have a lot of our private 

sector partners who are dealing with those kinds of situations. 

As far as our engagement with other agencies, we have an MOU 

of understanding both with OPIC and with Ex-Im Bank in assisting them with developing their small business centers within their 

agencies. 

As a matter of fact, the Ex-Im Bank, I think, 6 months ago created a small business center. We have a co-guarantee working capital program with Ex-Im Bank so we can go out and reach more 

small businesses that want to export abroad. And with OPIC, we 

are working with them so they can bring smaller deals to the table. 

And in the last 6 months, I think OPIC has done about 100 small 

deals that we are looking into how large each deal was. 

So we do work very closely with them because we have a network, which they do not. Both of those agencies are headquartered 

in Washington, DC, with very few offices throughout the United 

States, whereas the SBA has the resource partners through universities, through the banking system and through our district offices, 

so we work very closely with those agencies. 

Mr. PAYNE. Well, that is great; I am glad to see OPIC getting 

into smaller projects. 

You know, early on they were only kind of dealing with the 

Halliburtons and that sort of thing. I don’t think they need any 

more help. I mean, maybe we could break that down into small 

business; we could probably create another 2,000 businesses if we 

did that. 

But the total, Mr. MacAlister, you mention that no other agency 

operates on the basis as you. You talk about USADF has a total 

of 22.0, 22 million, in actual commitments and expression of interest; however, at the current level of funding, you must leave 11.5 

million of this private co-funding on the table. Could you just elaborate on that a little bit more? 

Mr. MACALISTER. Certainly, Mr. Payne. We have got a $23 million budget this year, and that has been the administration’s request for next year. The total leveraged contributions that we are 

able to match is $10.5 million, so that is where we get the $11.5 

million difference. 

Mr. PAYNE. So you could—if you had to expand that capital, you 

could certainly do—there is certainly much more demand than you 

have the ability to finance? 

Mr. MACALISTER. That is right. Our optimal funding level at the 

level of demand that has been expressed—although that is increasing constantly—is $35 million. Being that that is not what the 

President has requested, I obviously have to respect the President’s 

request, but I don’t mind making it known that I find it a bit of 

a management challenge for us to optimize the delivery of our services when we don’t have the capital capacity to do so. 

Mr. PAYNE. Okay. Something we can look at. 

Thank you very much. 

25

Mr. SMITH. Ambassador Watson. 

Ms. WATSON. Yes. Thank you very much to the panel. 

And, Mr. Rosales, you mentioned that in California you are looking at helping businesses there. Well, are you aware of our trade 

centers that we have on the continent of Africa? I think we have 

two, one in Johannesburg and the other one probably down in 

Zimbabwe. I know that we were able, myself and others, to open 

up one in Brazil and so on. 

If you are aware of those, can you bring us up to date? Because 

what I would do when I was taking groups to South Africa would 

be to take my group through our center for an orientation because 

people fantasize about Africa. One woman contacted my office, she 

makes African dolls. She thought she could go sell them. That is 

like taking sand to the beach. So what we did was give our group 

an orientation and hoping that when they got back to their respective homes, other people who had interest in entrepreneur pursuits 

would be able to be guided and directed to, A, what would sell 

there in Africa, what businesses they could start up, and what the 

time is like. 

Could you comment on if we still have those trade missions, and 

if somebody wanted to start a business; and they came to you before they left going to Africa, what kind of information would they 

receive? 

Mr. ROSALES. Thank you. 

First of all, I have been out of California for 5 years. This was 

my experience when I was head of the Chamber of Commerce over 

10 years ago. And unfortunately, California has shut down most of 

their international centers. I am aware that under Mr. Davis that 

those centers were closed. And California does not have a trade 

and commerce agency. It is under a different agency now. 

But those centers were very helpful in the sense that they augmented what happens in our commercial services in our Embassies, 

where they specifically geared toward the State’s products and 

services they had to offer. So those centers were very productive 

and very helpful. As a matter of fact, I helped cut the ribbon to the 

center in Mexico City that was established back in the early 1990s. 

So those centers do work. 

Now, if somebody walks into one of our expert assistance centers—because the SBA is collocated in 16 locations with the Department of Commerce, and Ex-Im Bank in 5 locations—and they 

are looking for basic services in export, depending on exactly what 

their needs are depends on which agency would help them. And it 

is a one-stop shop for that assistance. If they happen to walk into 

an SBA office, we have what we call an International Trade Officer 

at each SBA office that would lead them to our trade expert officers. 

Most of our role is in the finance side. The outreach and the promotions that we participate in is mostly conducted by the Department of Commerce. Ex-Im Bank and SBA, our major role is financing those deals. We finance the smaller ones and Ex-Im Bank the 

larger ones. Through our co-guarantee program we have been able 

to maximize our resources capital that we can put out to the small 

business community. 

26

Our role is to look for the companies that are ready to export, 

the companies that have already proven that they have sustainability in the marketplace, and they are ready to expand and have 

the capacity to do so, and those are the companies we work with. 

International trade is not a very easy market. In domestic it is not 

easy, and now you take that to a greater level. 

So our training and capacity-building happens in several areas. 

One is training the banks, telling the banks what we have to offer. 

Most banks do not have international individuals in their branches 

so they can help our prospective clients, so we help the banks. At 

the same time, we train the individuals from A to Z how to export. 

As a matter of fact, one of our tutorials on line is how to break into 

the trade game.That can be used universally. 

And thirdly, we help them do their financing schemes, how to set 

up their infrastructure, what kind of product they use for their particular product line that they are trying to sell. We have basic programs that deal with real estate and equipment, and we have programs for short-term capital, and then we have revolving lines that 

go up to $2 million. 

We work very closely with Commerce, who sets the stage by having field offices abroad, who work very closely with these State offices, to be able to help the small businesses while in country. They 

do the analysis, they do the groundwork, they know the people. In 

trade, the big word is the know who, not so much the know-how. 

So they know the who in those countries that can help them connect and make those matches so they can execute trades. 

So it is a very complex and very good service that we provide to 

small businesses. Unfortunately, not a lot of them know that we 

are there, and our job is to go out and to promote and be sure that 

they understand the opportunities that the U.S. Government affords them in expanding their marketplace. 

Ms. WATSON. Thank you very much. 

And to Mr. MacAlister, in the remaining time, Mr. Chairman, 

can you describe what you see are the major needs of the native 

Africans as they go about entrepreneurship? Now, you go into a village, and the women are the shopkeepers, and the men have other 

duties. Now that high technology is spreading over many of the 

countries on the west coast, what would you see are their needs, 

most of the young Africans, in terms of becoming entrepreneurs? 

That is number one. 

And I mentioned in my opening that I was concerned about the 

piracy of intellectual property. Let me give you an example. You 

know the tunes, the little rhythms and so that they have seem 

some way to end up in a lot of our music over here on these shores. 

And I have heard people say, you know, you were humming something, and that is what we chant in the village, or maybe that is 

the basis over here of a lot of our religious music. 

So there is a connection, and I was concerned about the intellectual property that might originate in Africa and come over here—

of course, I have a major concern about our intellectual, creative 

and innovative pieces ending up in other places, too, maybe in Africa, being copied. But for the most part what would you see are the 

major needs in training? 

Mr. MACALISTER. Certainly, Ambassador Watson. 

27

You know, at some fundamental level, what we all need to succeed is somebody to believe in us. And so the first and probably 

foremost thing that we offer consistently to the poor of Africa that 

we work with is belief in them and their ability to succeed. We 

come alongside them, we help them understand their needs; we 

take their ideas, we help them evaluate their context, how enabling 

is the environment around them, where is the market, what would 

the price be, how to put this into a plan, and how to pass muster 

just as they would if they went to a bank. And we sort of step into 

the shoes of a would-be bank and require the same standards of 

them as they would if they walked into the doors to a bank, but 

then we stick with them. 

Most of the time the problems are not complex, and most of the 

time—in our portfolio we don’t often see problems of intellectual 

property. I will give you an example. In northern Ghana, for instance, we are helping some 200 small farmers become mango 

outgrowers to a major fruit company there. These fruits, the mangoes, are going to go into the export markets. It takes a lot of work 

to grow a mango grove. It is at least 3 years before you get any 

fruit, 5 years before anything much is happening, before a major 

crop. And during that time, it is not simple like pulling nuts out 

of the ground. And so we help the farmers sustain themselves 

through that tough period during which some initially fell away because of the hard work, because of the discouragement, because of 

the delayed results, all of the things that they were not used to. 

Well, now it is like a fashion statement to be a mango producer 

in northern Ghana because they have seen the quadrupling and 

quintupling of incomes that come as a result of that. Now there is 

a processing facility outside of Accra called Blue Skies; and what 

this facility does is intake mango, banana, papaya, coconut, all the 

tropical fruits from 150 outgrowers within an hour or 2’s trucking 

distance from the plant. They would like to double their capacity 

so that they can export these fruits to further markets in Europe 

and abroad, but their constraint is the number of growers that they 

have to depend on. And they have quality problems and reliability 

problems and everything. 

So when we pitched up, we said, look, this is what we do, we 

grow growers; we have the financial capital for them and the technical ability to help them become reliable and meet the quality 

standards you require. It is not exceedingly complex, it just requires the patience, the endurance, perseverance and the commitment to do it. 

Ms. WATSON. If I have another half a minute left, I know early 

on—I am talking about in the 1960s—1970s—in talking to one of 

the governors in Nigeria, he said that he had capped his gold 

mines and his diamond mines because they did not have the skills 

and the technology to administer and operate those mines themselves, and so he was working on sending young people to the 

States, to Western Europe to learn those skills. Now, that was back 

in the 1970s. Do you see more highly skilled workers that could go 

in and process their own resources and operate their own mines? 

I have no idea; I haven’t followed up. 

Mr. MACALISTER. In the extractive industry specifically? 

Ms. WATSON. Yes. 

28

Mr. MACALISTER. That is not an industry that we have any direct investment with. We are working with Global Alumina in 

Guinea, who are making the largest single foreign investment in 

the continent for many years, and helping them manage a lot of 

their community relations challenges that they are going to have, 

but we have not, to my knowledge, financed individual extractive 

operations. 

Ms. WATSON. Well, it looks like the continent of Africa will be 

our continent for resources, natural resources, in the future, and I 

think what might be interesting, Mr. Chairman, is that we kind of 

see or do a—I would guess a report on how the Western countries 

of Africa are preparing to be able to process these natural resources 

for worldwide trade. We might want to look into that because they 

are so rich, and we are concerned about the poverty levels, so that 

people are trained and they could extract their own resources and 

process them and send them internationally. I think that would 

help a great deal, rather than receiving handouts from the various 

other countries of the West. 

And I want to thank our panel very much. This is very enlightening. 

Mr. SMITH. I would just add to that, we have actually held hearings on this. The concern that many of us have is that countries 

like China, which has a great need for natural resources—timber, 

oil, and metals—are getting those metals and those precious resources for a song. And that is a very disturbing trend for armaments and weapons in places like Sudan, for example, and 

Zimbabwe. So I think your point is very well taken, and I thank 

you for it. 

Yes, Mr. MacAlister. 

Mr. MACALISTER. With your permission, Mr. Chairman, I would 

like to go back to that question you asked about China earlier and 

the labor practices there. In a way, it is a pity that you don’t have 

Dick Day and Larry Bevan behind me sitting here, who, combined, 

have more than 50 years experience in this field versus my 4 

months. 

But the note that I have received says the following: That we ensure, as a criteria for support, that USADF invests in businesses 

that pay at least double the average daily wage. Our objective is 

to fuel economic growth through small businesses that generate 

good-paying jobs for the poor. 

Mr. SMITH. Thank you for that, and thank you for that amplification. 

If you could also get back with us, if you would, maybe with 

some amplification on the nexus between disease—you mentioned 

morbidity, and it would be very helpful for the Committee if we 

knew about that. And it would help us, I think, garner additional 

resources for that important humanitarian issue if we can also 

prove or show the connection of economic growth and vitality. 

Mr. MACALISTER. We would be happy to do that. 

[The information referred to follows:]

29


27989a.eps
30


27989b.eps
31

Mr. SMITH. Thank you very much, and thank you both for your 

testimony and your excellent work. 

I would like to now welcome to our witness table our next two 

witnesses, Mr. Charles Williams, who is Senior Associate at the 

Carmen Group in Washington, where he assists United States companies to develop market opportunities in sub-Saharan Africa. 

While he was a congressional staff member—and Mr. Payne 

made reference to this earlier—he was truly instrumental in developing the original African Growth and Opportunity Act legislation. 

Subsequently, Mr. Williams was founder and president of the U.S.-

Nigeria Development Institute in Abuja, Nigeria. 

We will then hear from Ms. Shade Bembatoum-Young, who is 

Executive Director of the African Sustainable Small Enterprise Export Development Foundation, whose main objective is to assist 

small and medium enterprises in Nigeria and other African nations 

to develop products into internationally competitive exportable 

items. 

During the past 16 years, she has been a strong advocate of nonoil and non-traditional export intraregional training in West Africa, 

and the capacity development of small and microenterprises. 

Mr. Williams, if you could begin. 

STATEMENT OF MR. CHARLES M. WILLIAMS, SENIOR 

ASSOCIATE, CARMEN GROUP, INC. 

Mr. WILLIAMS. Thank you, Mr. Chairman, for graciously providing this opportunity for me to speak to the Committee. 

In my role at the Carmen Group, as you mentioned, my primary 

job is to help United States companies identify opportunities to do 

business in sub-Saharan Africa, and it has been an interesting 

process. We work with a number of large companies both in the 

United States and India and other places who are beginning to be 

very eager about finding opportunities and assuming the risk and 

developing business opportunities and creating jobs in sub-Saharan 

Africa. 

Today I would like to talk a bit about what I consider to be one 

of the most important issues confronting Africa’s future, namely, 

what the global community can do to help empower Africa’s private 

sector to create wealth and become that much-talked-about engine 

of growth, capable of improving the quality of life and the wellbeing of Africans throughout the continent. 

First of all, before I begin to talk about the subject of this hearing, I would like to especially thank Congressman Payne, who, during my 12 years of labor on Capitol Hill, a very interesting and 

wonderful time in my life, was a mentor and a person I looked up 

to, and I am very, very pleased to see that you are still the champion of the cause. So we thank you. 

I would like to commend you, Mr. Chairman, and the Committee, 

and the House of Representatives in general, for your leadership on 

African issues. Obviously much needs to be done, and we could all 

do a lot more; but this Committee has always been a leader, helping to forge bipartisan consensus, and building bridges in support 

of a peaceful resolution of many of Africa’s most pressing conflicts 

and problems. I want to personally thank you and the Members of 

this Committee for all that you have done and try to do to help the 

32

people and the countries of Africa to enjoy the benefits of democracy. 

I think over the tenure from Congressman Royce to Congressman 

Smith—and Congressman Payne has been the Ranking Member 

and leader in all of that. I came from the Ways and Means Committee. I was chief of staff, as Congressman Payne mentioned, to 

Congressman McDermott, but we always had a close working relationship with this Committee. And the work that was done on 

AGOA could have never been done without the stewardship of the 

Africa Subcommittee and the Members then and now. And I think 

the history there has served you well for the very ambitious agenda 

that you have set for the future of this Committee, so I want to 

commend you on that. 

I believe firmly, and my personal experience in Africa supports 

this belief, that the most important thing that America can do for 

Africa is to transfer to African entrepreneurs the knowledge and 

the experience about how to create wealth. Working directly with 

African businesspeople to develop the skills to create wealth and 

stimulate employment will do more, in my opinion, to combat the 

HIV epidemic, to minimize civil conflicts in all of our assistance 

programs. 

As you know better than I, development assistance is a necessary 

but not a sufficient remedy for the problems that confront Africa. 

Africa respects America because of the wealth and the quality of 

life that we have created for ourselves. That is what they like and 

appreciate the most about us. Empowering people to take care of 

themselves weakens the stranglehold that inefficient governments 

and corrupt politicians have on their people. 

A stable, dynamic private sector will support a growing and educated middle class that will demand change and have the power to 

make those demands a reality. This is the spirit that led to the development of the Africa Growth and Opportunity Act, AGOA. Unfortunately, I think for many of us who worked on the initiative, 

we stopped before we completed the job, and that is why I am so 

exited about the hearing today for the potential, I think, to pick up 

the mantle of what was the vision in that era and to continue with 

it. 

In the mid-1990s, when AGOA was just an idea, a bipartisan 

group of Members decided that they wanted to do something about 

the lack of engagement regarding trade and investment relations 

with the countries of sub-Saharan Africa. There is a small story 

that I like to tell. The Ways and Means Committee had a hearing 

on the Uruguay Round Agreement Act—well, acts, there were a 

number of them, so I guess it was plural. There was a question 

raised at that hearing to Mickey Cantor, who was the USDR rep 

at that point, about what this act would do for the countries of Africa. And he was puzzled, and he said something which ultimately 

led to the work on AGOA, which was, if you are talking about Africa, you need to talk to USAID; that Africa was not a part of the 

global trading system, so therefore you should talk to USAID. And 

that was sort of the beginning of the process around AGOA. 

So in order to build support for this, we worked with this bipartisan group of Members to build support for this new direction that 

created—we ultimately created the African Trade and Investment 

33

Caucus, which I believe, Mr. Payne, you were a founding member. 

Working very closely with Members of this Committee and Members of the Ways and Means Committee, that caucus fashioned legislation which ultimately became AGOA, after a lengthy series of 

discussions with interest groups and organizations across the political spectrum, from the Heritage Foundation to CATO, to the Africa Union, to a host of trade groups, to Bread for the World. 

I am aware that Ray Almeida is in the audience today, who has 

also been a long-time champion and was part of that discussion 

back in 1994, 1995. 

We talked to people in Africa and the United States. It was decided that what we needed to do was to develop a way for African 

entrepreneurs to have a competitive edge in the United States marketplace so that they would have a chance to learn how to compete 

and would be in a better position to attract foreign direct investment. We thought that duty-free access to the United States market would be a strong incentive for foreign companies to reassess 

their position on investing in Africa. We also hoped that modern 

management and technology would begin to be transferred to Africa to create a competitive manufacturing sector that could employ 

local people and export value-added products to the United States. 

After 4 years of intense debate on AGOA, it was clear to many 

Members that AGOA was not the answer, but like development assistance, it was a necessary part of the answer. Many AGOA supporters hoped that we would have an opportunity to promote companion legislation that would address the supply side of the issue. 

The thinking went that AGOA would open up the market, creating 

the potential demand for products from Africa and giving the African producers the leverage to be able to compete in the global marketplace, but AGOA was not designed to speak to the needs of the 

African entrepreneur. AGOA is a short-term answer to the demand 

side of the problem. 

Unfortunately, textiles and apparel dominated the thinking on 

subsequent AGOA bills and amendments, and an important opportunity, I think, was lost. So it is no surprise, I think, that after 5 

years, while we have seen some successes in textile and the apparel sector, U.S. oil companies are the dominated AGOA exporters, and they are one of the chief beneficiaries of the AGOA legislation. 

The law of unintended consequences, unfortunately, seems to always be at work. But if we can get back, I think, to the original 

vision of the Congress when AGOA was enacted, it would be clear 

that we must complete the task that you began with this legislation by doing everything we can to unleash the dynamic generation 

of African entrepreneurs who just need a little help to make a huge 

difference in the lives of their people. 

In this regard, my hope is that this Committee and Congress will 

enact this year H.R. 4319 introduced by Chairman Smith and Congressman Lantos, and H.R. 5480 introduced by Congressman 

McDermott and a number of other Members, very similar bills in 

intent that I believe would have a dramatic impact on the ability 

of African entrepreneurs to compete in the marketplace. Both bills 

have the potential to do for African entrepreneurs what the SBA’s 

34

array of programs have done for the American small business person. 

We have the most small business community in the world, responsible for creating the majority of our jobs in part because we 

have a system of technical support and financial assistance that 

says that it is in our interest for us to help you succeed, and if you 

fail, we will help you get up and try again. SBA has built a business support system that is the envy of the world, and I think what 

we should do for Africa and for ourselves is to give Africa the opportunity to adapt our experiences, our programs and our knowledge about helping companies grow and compete to their realities. 

If we can do that in conjunction with development assistance and 

the market access provided by AGOA, I believe that we can see 

dramatic job growth, dramatic increase in income per capita and 

the quality of life for millions of Africans. 

But we have to do these things in tandem to have the greatest 

success. An aid approach will not work by itself, AGOA will not 

work by itself, and just focusing on the private sector will not work 

by itself; but these three separate but interrelated approaches can 

have a significant impact on the lives of people. 

I lived in Nigeria for 5 years, and one of the things that I learned 

was that Africans are natural entrepreneurs, and that they don’t 

need a lot from us, but what they want is simple and straightforward; they want a chance to get the knowledge, to compete, and 

to earn their own way. We have the knowledge at the Department 

of Agriculture, the Department of Commerce, at SBA, and in particular I think the African Development Foundation, which is on 

the ground every day providing these services. These three, I believe, are the most important agencies to the African private sector. 

We need to empower these agencies to do more and to be more engaged. As it stands now, they are on the sidelines without the 

funding or mandate to do what they can do best for Africa. 

Thank you again for the opportunity to testify today. I am available for questions. 

[The prepared statement of Mr. Williams follows:]

PREPARED STATEMENT OF MR. CHARLES M. WILLIAMS, SENIOR ASSOCIATE, CARMEN

GROUP, INC. 

Thank you Mr. Chairman for your gracious invitation to testify today on what I 

consider to be the one of the most important issues confronting Africa’s future. 

Namely, what can the global community do to help empower Africa’s private sector 

to create wealth and become that much talked about engine of growth, capable of 

improving the quality of life and wellbeing of Africans throughout the continent. 

First of all, before I begin to talk about the subject of this hearing, I would like 

to commend you, this committee and the House of Representative in general for 

your leadership on African issues, obviously much needs to be done and we could 

all do more, but this committee has always been a leader helping to forge bipartisan 

consensus and building bridges in support of a peaceful resolution of many of Africa’s conflicts. I want to personally thank you and the members of this committee 

for all that you have done and tried to do to help the people and countries of Africa 

to enjoy the benefits of democracy. 

I believe firmly and my personal experience in Africa supports this belief, that the 

most important thing that America can do for Africa is to transfer to African entrepreneurs the knowledge and the experience about how to create wealth. Working 

directly with African businesspeople to develop the skills to create wealth and stimulate employment will do more, in my opinion, to combat HIV/AIDS and minimize 

civil conflict than all of our assistance programs. As you know better that I, developVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
35

ment assistance is a necessary but not a sufficient remedy for the problems that 

confront Africa. 

Africa respects America because of the wealth and quality of life that we have created—that is what they like and appreciate the most about us. Empowering people 

to take care of themselves weakens the stranglehold that inefficient governments 

and corrupt politicians have on their people. A stable dynamic private sector will 

support a growing and educated middle class that will demand change and have the 

power to make those demands a reality. This is the spirit that led to the development of the African Growth and Opportunity ACT (AGOA). Unfortunately we 

stopped before we completed the job. 

In the mid 90’s when AGOA was just an idea, a bipartisan group of members decided that they wanted to do something about our lack of engagement regarding 

trade and business relations with the countries of sub Saharan Africa. To build support for this new direction they created the African Trade and Investment Caucus. 

Working closely with members of this committee and members of the Ways and 

Means Committee the caucus fashioned legislation which ultimately became AGOA. 

After a lengthy series of discussions with interest groups and organizations from 

across the political perspective, in Africa and the United States, it was decided that 

what we needed to do was to develop a way for African entrepreneurs to have a 

competitive edge in the U.S. marketplace so that they would have a chance to learn 

how to compete and would be in a better position to attract foreign direct investment. We thought that duty free access to the U.S. market would be a strong incentive for foreign companies to reassess their position on investing in Africa. We also 

hoped that modern management and technology would begin to be transferred to 

Africa to create competitive manufacturing plants that could employ local people 

and export value added products to the United States. After four years of debate 

on AGOA it was clear to many members that AGOA was not the answer but like 

development assistance it is a necessary part of the answer. Many AGOA supporters 

hoped that we would have an opportunity to promote companion legislation that 

would address the supply side of this issue. The thinking went that AGOA would 

open up the market creating the potential demand for products from Africa and giving the African producers the leverage to be able to compete in the global marketplace but AGOA was not designed to speak to the needs of the African entrepreneur. 

AGOA is a short term answer to the demand side of the problem. Unfortunately textiles and apparel dominated the thinking on subsequent AGOA bills and an important opportunity was lost. So it is no surprise that 5 years latter, while we have 

seen some successes in the textile and apparel sectors, U.S. oil companies are the 

dominant AGOA exporters and one of the chief beneficiaries of the AGOA legislation. The law of unintended consequences seems to always be at work. 

But if we can get back to the original vision of Congress when AGOA was enacted 

it would be clear that we must complete the task that you began with the passage 

of that legislation by doing everything we can to unleash this dynamic generation 

of African entrepreneurs who just need a little help to make a huge difference in 

the lives of their people. In this regard, my hope is that this committee and the Congress will enact this year H.R. 4319 introduced by Chairman Smith and Congressman Lantos and H.R. 5480 introduced by Congressman McDermott both bills (very 

similar in intent) would I believe have a dramatic impact on the ability of African 

entrepreneurs to compete in the global marketplace. Both bills have the potential 

to do for African entrepreneurs what the Small Business Administrations array of 

programs have done for the American small businessperson. We have the most dynamic small business community in the world, responsible for creating the majority 

of our jobs, in part because we have a system of technical support and financial assistance that says that it is in our interest to help you succeed and if you fail we 

will help you get up and try again. SBA has built a business support system that 

is the envy of the world and I think what we should do for Africa and for ourselves 

is to give Africa the opportunity to adapt our experiences, our programs and knowledge, about helping companies grow and compete, to their realities. If we can do 

that in conjunction with development assistance and the market access provided by 

AGOA I believe that we could see dramatic change in job growth , income per capita 

and the quality of life of millions of Africans but we have to do these things in tandem to have the greatest impact. An aid approach will not work by itself, AGOA 

won’t work by itself and just focusing on the private sector will not work by itself 

but these three separate but interrelated approaches can have a significant impact 

on the lives of millions of people. I lived in Nigeria for 5 years and one of the things 

that I learned was that Africans are natural entrepreneurs and that they don’t need 

a lot from us but what they want is simple and straightforward. They want a chance 

to get the knowledge to compete and earn their way. We have the knowledge at the 

Department of Agriculture, the Department of Commerce and the SBA. The three 

36

most important agencies to the African private sector, we need to empower these 

agencies to do more and to be more engaged as it stands now they are on the sideline without the funding or mandate to do what they do best in Africa. Thank you 

for the opportunity to testify today and I am available to answer your questions.

Mr. SMITH. Thank you so very much for your leadership and for 

your testimony and your ongoing work. 

I would like to now ask Ms. Bembatoum if you could provide 

your testimony. 

STATEMENT OF MS. SHADE BEMBATOUM-YOUNG, EXECUTIVE 

DIRECTOR, AFRICAN SUSTAINABLE SMALL ENTERPRISE EXPORT DEVELOPMENT FOUNDATION 

Ms. BEMBATOUM-YOUNG. Thank you, Mr. Chairman, Mr. Ranking Member, and distinguished Members of the Committee. 

I wish to first begin by expressing my deep gratitude to the Government and people of the United States for making it possible for 

me to come from Nigeria to attend the AGOA Civil Society Forum 

and giving me the opportunity and honor to testify today. 

As you are well aware, in 2004, petroleum and extractive industries accounted for 87 percent of exports from Africa under AGOA; 

and in 2005, this figure rose to 92 percent. We also know that Africa still accounts for only about 2 percent of world trade, and that 

the volume of recorded trade between African countries is much 

lower than trade between neighboring countries in other parts of 

the world. Something is obviously very wrong. 

There are serious obstacles which are impeding the development 

and growth of non-oil and non-traditional exports from African 

countries, and in my opinion, they can be grouped into three main 

categories. I have done this because I was told that I would have 

to be very brief, but I do have a lot of information that I would 

want to share with you, maybe later. Group one comprises 

infrastructural problems, such as inadequate and unreliable power 

and water supply; these cause serious production problems. However, I want to emphasize that poor quality or lack of access roads 

to villages in rural areas, inadequate transport facilities and the 

high cost of transportation prevent agricultural raw materials that 

are needed by small, medium and large-scale industries, as well as 

handicrafts and artisanal products from cottage industries, from 

reaching both the domestic and the export markets on time, and 

make these products uncompetitive both in the local market and in 

the export market. 

Furthermore, I would like to submit that in this era of 

globalization, there is no such thing as a local market. Every market is a global market. If you cannot compete at home on your own 

market, you certainly cannot compete abroad. 

Now, these conditions make it impossible to create jobs and reduce poverty in rural areas through sustainable export; and this is 

what AGOA is all about. 

The second problem or group of problems has to do with financing. Financing is a huge problem, it is a big headache for micro and 

small and medium enterprises in Africa, because banks generally 

see SMEs as very serious business risks. Most African countries 

are coming up with different schemes, different financing packages, 

which are supposed to be designed to meet the needs of African enVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
37

trepreneurs. However, most African entrepreneurs are not too 

happy with a lot of those schemes. Many of them are drawn up 

without input from the entrepreneurs, and I think that is a serious 

mistake. 

In Nigeria we have a scheme called the Small and Medium Enterprises Equity Investment Scheme, which started a few years 

back, but it has not been successful, because although the banks 

who started it have put aside 10 percent of their profit after tax 

for equity participation in small or medium enterprises, there has 

been reluctance on the part of the enterprises themselves to apply. 

This is because a lot of them do not quite understand equity investment, and they really don’t want banks coming in to own any type, 

any size of their company for any amount of years, even 1 year. 

The banks also say that they are not receiving the kind of proposals that are bankable, and that SMEs cannot draw up proper 

business plans. Unfortunately, this situation has gone on for over 

3 years. 

My own opinion is that we should encourage banks to use some 

of that money to ensure that SMEs can be trained to do the kind 

of paperwork that they want them to do so that they do get their 

loans, their proposals, agreed to. 

Now, recently, also, in the agricultural field, we have a new financing package has just been introduced by the Federal Government, and this will allow farmers access to loans repayable at 8 

percent, but it is really too early to say what kind of success this 

will have. But the farmers are very happy that they are seeing a 

single-digit interest rate. 

Part of the solution would seem to be to package SMEs, especially those with export potential, in such a way that they become 

an attractive business proposition to banks. On the other hand, 

banks need to be properly educated so they can fully comprehend 

the role they could play in assisting SMEs to grow their businesses 

so they don’t continue to throw the baby away with the bathwater. 

After all, any bank which provides financial support in the form of 

loans to SME exporters will benefit directly when successful exporters deposit their repatriated export proceeds in foreign exchange in their bank. 

I would like to add here that women have an additional problem 

in getting any sort of funding from banks because of the fact that 

in many of our societies women are not allowed to own property, 

so obviously that is one form of collateral they could never provide. 

In my opinion, I think banks should be encouraged to work with 

business development support services in the public, private and 

not-for-profit sectors in order to obtain expert risk assessment regarding proposals submitted by exporters. They should also work 

closely with BDS (business development services) with expertise in 

product development, export marketing, export financing and export procedures. Pre-shipment and post-shipment export finance 

must be readily available to SME exporters, and export development funds should be established in each African country so that 

SMEs can obtain grants to cover part of the funds they would require to engage in market research, prepare and translate promotional material, conduct contact promotion and publicity campaigns in respect to export markets, participate in trade fairs, and 

38

cover part of the travel and accommodation expenses for eligible 

companies and their consultants. 

Last, but by no means least, ASSEED believes that improved information flows, technical assistance and capacity building at enterprise level for Chambers of Commerce, women business associations, farmers’ cooperatives, handicrafts and cottage industry cooperatives, and for export development service providers are the 

key to success. Even if all the other constraints are removed, and 

the issues of packaging of products and human capital development 

are not addressed through trade-related technical assistance, there 

is little hope that the volume of export from SMEs in Africa will 

increase and create the kind of sustainable wealth required to 

make poverty history on the African continent. 

One of the problems we find in the field is that there are many 

very good schemes and programs being run by different agencies, 

but it is sad that the people who need those schemes and services 

are not even aware of them. I think it is time for agencies to have 

better outreach programs and take their services to the people 

where they need the services, because as it is now, for instance, 

with the West African trade hub, which is in Ghana, we in Nigeria, 

in order to have any kind of benefit have to either get on a plane 

or take a long bus ride, and, quite frankly, this costs money, which 

most people really cannot spare. And even the resource center that 

we have in Nigeria needs to be better equipped and more fully 

staffed. 

I am a friend of the center; I went there before I came. They 

have a very good person in charge, but definitely he could do a lot 

more with more support. 

Now, ASSEED itself was set up because we, having worked in 

the field for almost 16 years, have been identifying all these problems as being the reason why export is not getting off the ground, 

non-oil export. There is interest, and many of our Export Promotion 

Councils are promotion councils that promote exports, but they 

cannot always develop the export sector because they themselves 

are in need of training and capacity building. 

So we believe that it is not just the job of government, but of the 

private sector and NGOs, because now there is a growing crop of 

social entrepreneurs, a lot of people who have worked as professionals in a particular field and now wish to set something up 

which is not for profit, which doesn’t mean that they will not make 

profit, it just means that they will put all the profit back into the 

institution and not share it. So this kind of institution also needs 

to fit in somewhere in the scheme of things. 

You mentioned USAID, somebody did just now, that if you want 

to talk about trade, you have to talk to them in Africa. I went 

through this—as I said, I have been in this a long time, and the 

problem there has been that if USAID programs are governance or 

they are health-related, which they were, no matter how much the 

person in charge is convinced that you, as an NGO, can deliver a 

viable service, there can be no real interaction between you. 

So I must say that I am very excited about the Assistance for 

Small and Medium Enterprises in Sub-Saharan African Countries 

Act of 2005, the African Entrepreneurship Act of 2006, and the creation of the Trade Capacity Enhancement Fund in the 2007 ForVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6601 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
39

eign Operations Appropriations Bill. I have read through these 

bills, and I believe that they will go a long way to helping us in 

Africa to become viable business partners to United States companies who are interested in importing our products. 

One last word on women, because—not because I am a woman—

I actually started out with multinationals, large companies, trying 

to get them to do AGOA’s trade—to register under the ECOWAS 

Trade Liberalization Scheme. But as I went to more and more 

trade fairs in the West African sub-region, I found a lot of the participants were women. They were very enthusiastic about getting 

into export markets, but most of them were doing what one could 

call ‘‘suitcase export.’’ And I am sorry to say that almost 15 years 

later, most of them are still doing just ‘‘suitcase export,’’ although 

a lot of their products do come under AGOA, some of the cloth, 

woven cloth and the dyed cloth, and the artisanal products, food 

products, dried fruit and so on. 

Where I am going with this is that we really need to keep it in 

mind that women cannot always attend the kind of events and 

training that men can, and so we also need to have special training 

sessions for them. I am not saying they shouldn’t be part of the 

mainstream, but for those who for cultural reasons or family reasons cannot travel long distances and leave their homes, we have 

to have that kind of intervention for them. 

Also, international agencies should train a special cadre of certified women, SME business development service providers, that 

are equipped to handle specific needs of women entrepreneurs in 

a globalized economy. The training of women trainers is of paramount importance. 

Lastly, I would like to appeal to international agencies to adopt 

a regional approach to training and technical assistance so that 

benefit can be derived from best practices existing within each subregion and beyond, in other places in Africa. I have found that 

sometimes we are reinventing the wheel in one country because we 

are not aware of what is happening in a neighboring country that 

is working. Even if we don’t take on whatever it is wholesale, it 

does save time if you have a basic structure, a basic program that 

you can work around and develop. 

I think I have run out of time now, so I would like to thank you 

once again for this great honor. And I must say that I have an 

AGOA history as well. In 1999, I came to the States for other reasons and I found out about the East Coast Regional Summit of the 

National Summit on Africa that was held in Baltimore, where I 

met quite a lot of people—Mr. Payne wouldn’t remember, but I did 

meet him then—and I was quite overwhelmed with the kind of support that all Americans, not just African Americans, were giving to 

the AGOA bill. 

So I came back. I paid my way back in 2000 to be at the National 

Summit on Africa, and it was one of the experiences in my life 

which I will never forget. Thank you. 

[The prepared statement of Ms. Bembatoum-Young follows:]

PREPARED STATEMENT OF MS. SHADE BEMBATOUM-YOUNG, EXECUTIVE DIRECTOR, 

AFRICAN SUSTAINABLE SMALL ENTERPRISE EXPORT DEVELOPMENT FOUNDATION

Honourable Members of Congress, 

40

I wish to begin by expressing my sincere gratitude to the government and people 

of the United States for making it possible for me to attend the AGOA Civil Society 

Forum in the Washington, DC and granting me the privilege of being a witness at 

this hearing. 

As you are well aware in 2004 petroleum and extractive industries accounted for 

87% of exports from Africa to the U.S. under AGOA. In 2005 that figure rose to 

92%. We also know that Africa still only accounts for about 2% of world trade and 

that the volume recorded trade between African countries is much lower than trade 

between neighboring countries in other regions of the world. 

There are obviously serious obstacles which are impeding the development and 

growth of the non-oil and non-traditional exports in African countries, and in my 

opinion they can be grouped into three main categories. 

1 Infrastructural problems such as inadequate and unreliable power and water 

supply cause serious production problems. However I wish to emphasize that poor 

quality or lack of excess roads to villages in rural areas, inadequate transport facilities and the high cost of transportation prevent agricultural raw materials that are 

needed by small, medium and large scale industries, as well as handicrafts and 

artisanal products from cottage industries from reaching both the domestic and export markets on time, and make these products uncompetitive. Such conditions 

make it impossible to create jobs and reduce poverty in rural areas through sustainable export. 

2 Financing is a huge problem for micro, small and medium enterprises in Africa

because banks generally see SMEs as a serious business risk. Most African countries are coming up with different financing packages which are supposed to be designed to meet the needs of African entrepreneurs, ( an example of one such scheme 

in Nigeria is the SMEEIS (Small and Medium Enterprises Equity Investment 

Scheme) under which banks set aside ten percent of their profit after tax for equity 

participation in small and medium enterprises. Unfortunately, a great proportion of 

these funds have not been accessed by SMEs because the banks complain that 

SMEs have not been able to submit bankable projects in the form of proper business 

plans and the SMEs are would rather not have banks invest in their businesses, 

insisting that what they really need are low interest loans.) The Nigerian Government has recently introduced a financing package for farmers with loans repayable 

at 8% but it is too early to evaluate the success in implementing the scheme. 

Part of the solution would seem to be to ‘‘package’’ SMEs, especially those with 

export potential, in such a way that they become more attractive business propositions to bank. On the other hand, the banking sector needs to be properly educated to fully comprehend the role they should play in assisting SMEs to grow their 

businesses so that they do not throw the baby out with the bathwater—after all, 

any bank which provides financial support in the form of loans to SMEs exporters 

will benefit directly when successful exporters deposit their repatriated export proceeds in foreign exchange in their bank. Banks should therefore work with business 

development support services in the public, private and not-for-profit sector, in order 

to obtain expert risk assessment regarding proposals submitted by exporters. They 

should also work closely with BDS services with expertise in product development, 

export marketing, export financing and export procedures. Pre-shipment and postshipment export finance must be made readily available to SMEs exporters and Export Development Funds should be established in each African country so that 

SMEs can obtain grants to cover part of the funds they would require to engage in 

market research, prepare and translate promotional material, conduct contact promotion and publicity campaigns in prospective export markets, participate in Trade 

Fairs and cover part of the travel and accommodation expenses for eligible companies and their consultants. 

3 Last but by no means least, ASSEED believes that improved information flows, 

technical assistance and capacity building at enterprise level, for Chambers of Commerce, Women business associations, Farmers cooperatives, handicraft and cottage 

industries cooperatives and for export development service providers are the key to 

success. Even if all the other constraints are removed and the issues of packaging 

of products, and human capital development are not addressed through trade related technical assistance, there is little hope that the volume of export from SMEs 

in Africa will increase and create the kind of sustainable wealth required to make 

poverty history on the African continent. 

In order to ensure that the products they export comply with international quality 

and environmental and standards, grants or waivers should be given by African governments to the Export House or the micro/small enterprise concerned, to cover at 

least 75% of the high cost of testing and certification. Inability to pay for such services (which are often provided by government agencies) is preventing the products 

of such enterprises from gaining access to global markets. 

41

African governments should call upon International agencies to assist with capacity building for Public/Private Sector and NGO MSME Business Development Service Providers, Chambers of Commerce, Women’s Business Associations, Youth Entrepreneurship Development Initiatives, Women Farmers Organisations, Crafts Associations and Cooperatives, Producer Associations, Cooperatives etc so that they 

can render better quality and more relevant services which will empower their 

members to participate in or facilitate global trade, especially pro-poor trade and 

fair trade. 

International agencies should train a special cadre of certified women MSME 

business development service providers, equipped to handle the specific needs of 

women entrepreneurs in a globalised economy. Women who wish to become producer exporters, merchant exporters, product development, adaptation and export 

marketing professionals, or learn how to export their services, should be given adequate training at highly subsidized rates. This is because of the urgent need for 

women in the private sector in Africa to be encouraged to acquire such expertise 

so that they can pass it on to other women. In some parts of Africa, only women 

will be able to provide such training to their peers for cultural or religious reasons, 

and some women feel more at ease with women trainers. Training of women trainers is therefore of paramount importance. 

International agencies should adopt a regional approach to training and technical 

assistance so that benefit can be derived from best practices existing within each 

sub-region and beyond (in view of the influence of French, British and American approaches on Anglophone and Francophone African countries). Women, who have acquired the necessary expertise and experience should be encouraged to export their 

services to other African and developing countries. Some of the certified women 

international business development professionals should be trained in business advocacy and as international trade negotiators. 

Women Business Centres and export production and counseling centres for women 

and young entrepreneurs in Africa should be established in rural and urban areas 

and be adopted as a NEPAD Programme in each sub-region.

Mr. SMITH. Ms. Bembatoum, thank you very much for your testimony, and just let me ask a few opening questions. First, yesterday 

I and others met with the President of the Congo, who, as you 

probably know, wears the dual hat of being the African Union 

President as well, and had a very lively discussion about the whole 

issue of transparency, including two people in his own country who 

have recently been arrested. We have written letters to him expressing concern that they may indeed be political prisoners; we 

are concerned about it. 

We had Nuhu Ribadu here from Nigeria, who gave riveting testimony about the whole issue of transparency and the challenges he 

is facing, he and his colleagues in the Economic and Financial 

Crimes Commission in Nigeria. 

So my question is, first, on the issue of the trend in transparency, it seems to me that the more predictable and the more 

open and transparent all of these proceedings are, the better it is, 

the climate it is for foreign investment. 

Also, if I could ask you on the issue of microcredit whether or 

not—obviously microcredit lending has been going on for many 

years. This Congress and the President appropriates about $200 

million per year. Much of it goes to Africa; the overwhelming majority of those microcredit loans goes to women. Is there any evidence that those women, besides growing small business of three 

and four and five, have moved up the ladder and have, again, broken through the glass ceiling that they may be facing with regards 

to access to credit and finance, or even the owning of property, as 

you pointed out in your testimony a moment ago? Has there been 

a trickle-up effect, if you will, as a result of microcredit? 

Ms. BEMBATOUM-YOUNG. Thank you, Mr. Chairman. I would like 

to say yes, but I am not sure that I really can. 

42

In Nigeria, I was actually looking forward to the microcredit program, which has just been launched. It came out in December or 

so last year. And as you know, last year was the International Year 

of Microcredit. And some of us in the NGO sector, from the year 

before, were saying, ‘‘Look, what is coming up is the Year of Microcredit, what is happening, what is UNDP doing?’’ And quite frankly, I was very disappointed because, as you say, microcredit has 

been around for a long time, and I have seen it in operation in 

other West African countries. I can only say that unfortunately in 

my country, maybe because we are a big country, we tend to look 

at the big things and sometimes neglect the smaller things, to our 

own detriment, because as you know, the informal sector is actually what has been keeping the Nigerian economy, the real non-oil 

economy afloat, and women form the majority of that sector. 

But we do have local indigenous schemes, like maybe you have 

heard of ‘‘Esusu.’’ How it works is that women—well, mainly 

women, but men do it as well—will contribute a certain amount, 

the same amount every month, and put all the money together, 

and one person takes it out each month. You take it out in turn. 

So this means that if there are 10 of you, and you are contributing, 

let’s say, $100, you have $1,000, and the next month it is somebody’s else’s turn. Now, because there was nothing else, this indigenous way of saving and getting a loan—obviously from people you 

know, the risk is very, very minimal because everybody who does 

this knows the other person; it is not done with people far away. 

But these have been the things that have enabled market women 

and other people—I even know people who have salaried jobs who 

do that so that you can have a certain amount in hand and do 

what you need to do then, because in many cases you are saving 

100 every month, so you don’t really feel it. 

But as I said, we will have to wait a while for any effect because 

the community banks were not a great success. There has been, as 

you know, restructuring in the banking sector, as you know, in Nigeria. Now it is being said that banks who did not make the 

amount that needed to be deposited to remain normal commercial 

banks are going to be somehow converted into some sort of community bank scheme. But everything is just starting out, and it is not 

clear what effect these measures will have. 

Mr. WILLIAMS. A couple of points, Mr. Chairman. 

A lot of these issues, the important issues of transparency and 

even microcredit lending, I think these things are all on the ascendancy in sub-Saharan Africa. I think if you look at 2 years ago 

and now, things are—there are more opportunities for United 

States companies to see that if their investment proceeds in a country, that they will be functioning in a more transparent environment, not necessarily one like the one we have here today, but certainly one more transparent than it was previously in these countries, and I think that is a very good thing. 

I think you are seeing in many of these countries that newspapers are more vigilant, they are reporting in a less aggressive 

fashion. And most importantly, the facts are becoming more like 

facts as opposed to speculation. So there is some real reporting and 

investigative reporting going on. 

43

I think there are new agencies. The Economic and Financial 

Crimes Commission in Nigeria has had its problems, accusations in 

a number of different fronts, but they have done some phenomenal 

things, the arrest of the police chief in the country, the arrest of 

other high-profile individuals for corruption, and also dealing with 

some of the banks. 

Shade mentioned when Nigeria just went through the recapitalization, they went from 89 banks to 27 or 28 banks in the country. 

A number of board of directors and managing directors were arrested because when central bank went in and looked at the books, 

the money didn’t back up what was on the books, and obviously 

people had fleeced the corporation and they were arrested. 

So in terms of transparency, little things, but very significant 

steps are taking place. And also, you are finding more and more 

individual citizens utilizing the system for redress on corporate 

problems. 

In terms of microcredit lending and women, it is a huge problem; 

without appropriate infrastructure and without a lot of change culturally will be a continuing problem, much like it was here in the 

United States. But I would like to tell you at least about one interesting success, again in Nigeria. Access Bank just this week signed 

an agreement with the IFC for a $15 million loan program for 

women in Nigeria. And that is a great success, and it is a bank 

that has a record; it has a number of women in management positions. It is one of the new powerhouse banks in Nigeria, and it will 

be operating this program with $15 million from IFC and their 

money—probably a larger fund than that—to focus on women. 

President Obasanjo has probably the most difficult job in the 

world, but he has consistently talked about women entrepreneurs. 

And the set-aside program that he put forward years ago, 5, 6 

years ago, was supposed to do a lot of things for women. It didn’t 

do it, but a big part of that is because they can’t do it for all private 

enterprise. It is not just a women’s issue. Loans are not available 

for anybody, male or female, to speak of, and so women obviously 

are suffering more than men in that regard. But progress is being 

made, and I think I have seen some substantial progress over the 

last 5 years. 

Mr. SMITH. Mr. Payne. 

Mr. PAYNE. Thank you very much. 

And let me thank both of you for your testimony. And this area 

of financing is extremely important. 

Let me just ask the three areas that you spoke about, Mrs. 

Bembatoum-Young, infrastructure, financing, and the need for improved information flows, technical assistance and capacity building. Is there any plan in Nigeria to attempt to deal with the infrastructure problem? We heard even yesterday at the AGOA forum 

that some of the persons are saying it is difficult for them to get 

their products to the market, to transshipment places, because of 

the infrastructure. And is there, to your knowledge, planning going 

on in Nigeria around the major cities—I mean, it is a large country—to try to deal with this infrastructure problem? 

Ms. BEMBATOUM-YOUNG. Yes, there are several initiatives. I 

think you are talking more about transport roads———

Mr. PAYNE. Right, absolutely. 

44

Ms. BEMBATOUM-YOUNG. Actually, one of the major problems has 

been the lack of a railway system in Nigeria which used to exist. 

In my parents’ school days, people used to go from the north to the 

south; people from the east would come to the west all on trains. 

And we have had repeated attempts to get the railway system back 

on track. 

Why I am laying emphasis on this is I think it is obvious that 

with such a huge country and with so many raw materials and 

products that need to move from one part to another over long distances, it makes a lot of sense to have an efficient rail system. 

As for the roads, you know, sometimes you wonder if it is not two 

steps forward and three back because of the terrain, because of the 

climate. Sometimes because of shoddy workmanship, and contracts 

being given to all sorts of people, you find roads are being done, 

and in no time they are bad again. But I would say that one way 

I think the government is trying to get around this is through foreign direct investment. And I do see—I don’t know much about it, 

but I see on television visits from foreign companies who are interested in BOT arrangements and things like that. But I don’t 

know—I don’t have any figures, and I haven’t been around Nigeria 

extensively for the past 7 or 8 years. 

Mr. PAYNE. Thank you very much. I am a firm believer in the 

agricultural possibilities for Nigeria. I think unfortunately there 

has been a distraction away from agriculture. I think that their 

ability to have as many as three crops in some areas, in Liberia, 

three cycles, whereas, you know, here in the United States, we can 

only get one out. And so I wonder—I don’t know, Mr. Williams, if 

you have any thoughts about the agriculture sector in Africa in 

general, and whether you feel that perhaps—even the subsidies is 

a handicap that the West has for its farm industry, but the potential of agriculture in general in Africa. 

Mr. WILLIAMS. Thank you. 

Agriculture is still the dominant sector in most African countries, 

if not all African countries. And certainly when it comes to a country like Nigeria, when you have 150 million people, it has become, 

I think, since the mid-1980s, and 1985 with the economic support 

or adjustment program that they adopted under the World Bank, 

an import-dominated economy. I know in the rice sector Nigeria 

imports over $1 billion worth of rice; I know they import over $300 

million worth of fish, $500 million in beef, and on and on and on, 

toothpicks—there is one funny story about $150 million, more than 

that. 

Ms. BEMBATOUM-YOUNG. Not anymore. 

Mr. WILLIAMS. Tomato paste, et cetera. 

So there are always these issues. But the farm community is 

very eager to be able to take up on these imports and to be able 

to produce the products themselves. The issue is management and 

modern farm technology, and developing a system for the transfer 

of that. That is why I think I mentioned in my comments that the 

Department of Agriculture—which, by the way, gets hundreds of 

requests from African and Nigerian farmers for assistance, but is 

not able to respond to them because they don’t have the resources—but if that kind of structure could be set up so that our 

farmers who, for instance, now are more inclined to sell their techVerDate Mar 21 2002 09:57 Sep 15, 2006 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6601 F:\WORK\AGI\060806\27989.000 HINTREL1 PsN: SHIRL
45

nology and their management as opposed to the raw product could 

engage with African farmers, there would be an explosion, I think, 

of domestic production. But there needs to be a bringing together 

of this modern farm technology and modern farm management in 

order for small subsistence farmers to be able to produce on economies of scale in order to compete against imported products. 

Nigeria’s rice primarily comes from Thailand and India, and it is 

usually 6 or maybe more months old, and consumers complain 

about it; but it comes in cheap, and it undercuts the local producers 

of rice. And I know during the time that I was there, every election 

the local rice farmers would complain, and the politicians would respond with a temporary embargo, but soon after that rice would 

start flowing back into the country. 

So there needs to be assistance to these local farmers, and we 

need to have programs. Right now under AGOA we don’t have 

those types of things. We have a few agricultural promotional officers in Nigeria, but their job is primarily to help United States 

companies sell into these countries. For instance, in West Africa 

now, I think the dollar figure is up to $18 billion in commodities 

that go into West Africa. Very little of it comes from the United 

States. We tend to price ourselves out of the market. 

But the opportunities for U.S. farmers are in partnership with 

the local level in transferring technology and management skills, 

and I think it could be extremely lucrative for our farmers if we 

could do that. 

Mr. ROYCE [presiding]. If I could follow up on Don’s question. 

And, Mike, I know you have spoken on this in the past, but as Don 

has pointed out, when we had our AGOA Civil Society Forum yesterday—Don Payne and Members participated—Don points out 

over 70 percent of Africans operate in the agriculture sector, and 

yet at the end of the day, our efforts to stimulate United StatesAfrican trade often seem to focus on textiles and on apparel, as you 

point out in your testimony. So why do you think there seems to 

be such a relative disinterest in terms of the agricultural sector? 

And what do we do now? How do we overcome those existing impediments that you talk about in terms of United States-African 

agricultural trade? One of the things we have held hearings in the 

past on was doing away with the subsidy for cotton and other subsidies in the United States in order to make African agriculture 

more competitive. We are also pushing an initiative, Jim Colby has 

an initiative to sort of build trade capacity-building, and in that, 

I think we can kind of steer it toward some of these issues. 

But, Mike, if you would tell us the prescription you would give 

us right now in terms of overcoming those impediments. 

Mr. WILLIAMS. Well, what I would do right now is probably not 

the most political thing but would be to cut out the middleman that 

USAID uses for their consultants and go directly to the farmers, 

to the American farmers, to the business people who know how to 

do business as opposed to the consultant or the technical person 

who knows how to talk about what it should look like. I know that 

American farmers are very interested in doing business in Africa. 

During my time in Nigeria, people paid their own way to come and 

figure out how to do business. Mississippi farmers, Louisiana farmers, farmers in Arkansas are very interested in their rice sector, in 

46

the tomatoes and processing. But we don’t have the structure in 

place to allow business-to-business interaction. We can allow government-to-government discussions about these issues, policy discussions, trade policy, but not business to business. And I think if 

we could figure out a way to put this money in the hands of the 

rice, soybean and cotton co-op people in Mississippi and Louisiana 

and these other places and get them touching base with the farmers in Ebonyi State and Bayelsa and River State, we would see a 

tremendous explosion in trade. But the way we are going about it 

now, it never translates. 

Mr. ROYCE. Let me also ask Ms. Bembatoum-Young for her observations on this. 

Ms. BEMBATOUM-YOUNG. Thank you. You can see I was bursting 

to say something. In the past 5 years or so, there has been a positive shift back toward agriculture. 

This last administration has really pushed cassava for instance. 

There is a Presidential initiative on cassava. Everybody is growing 

cassava now, and it happens to be something that grows all over 

Nigeria. 

And we have actually gone out and found export markets for cassava. One of the biggest is China, and the race is on to see that 

we can actually grow enough to meet the needs of China. That is 

just to give you an indication. 

As far as rice is concerned, I buy Nigerian rice now, and I 

wouldn’t have 5, 10 years ago. 

Well, first of all, there is more growing of rice. It has been promoted by several state governments. But also the milling and the 

packaging and everything and the price is okay. 

Of course, some people will always buy—am I allowed to name 

brands—but you know there are certain brands that people will 

just buy. American rice is what they want, or Thai rice is what 

they want. 

Mr. PAYNE. You can get Uncle Ben down there? 

Ms. BEMBATOUM-YOUNG. Sorry? That was the one I was going to 

mention. Yes. But I am sorry, I don’t eat Uncle Ben’s anymore. 

Mr. ROYCE. You get Nigerian rice now. 

Ms. BEMBATOUM-YOUNG. Yes, honestly, I would be quite happy 

to let you have some. There is another crop that might surprise 

you; cocoa is coming back. And I was interested to hear the World 

Cocoa Foundation talk about their tree crop program. 

So, you know there is definitely a push for agriculture now. 

Mr. ROYCE. We have to give up this room by 4:15, so I want to 

go to Congresswoman and former Ambassador Diane Watson from 

Los Angeles and let her ask her questions. 

Ms. WATSON. I had mentioned before, I am interested in Nigeria’s ability to perform and to handle the technology that seems to 

be spreading throughout the country. 

Can you comment on their advancement in handling technology? 

Ms. BEMBATOUM-YOUNG. What kind of technology do you mean? 

Ms. WATSON. Well, I know they were involved in cell phones. I 

know a delegation came over to my district about putting the satellite up. They were joining 3 or 4 other nations. 

47

Ms. BEMBATOUM-YOUNG. Well, yes, actually Nigeria’s telecommunications sector has just exploded. I mean, I cannot remember what it felt like not to have a cell phone. 

It has only been a few years. And that is one of the few areas 

where we have a very strong consumer lobby, because actually 

these phones are still quite expensive. But because they are so necessary and because people saw what it could do to them, their businesses—you don’t have to sit in a traffic jam for 3, 4 hours. You 

can call somebody. You can send a text message. Even the farmers 

we have in our NGO association, we have a network run by some 

young people, and they are using their cell phones to inform the 

farmers of prices, of weather, you know, forecasts and things like 

that. So it has really made a lot of difference to life. But it is still 

expensive. 

Ms. WATSON. I would say that Nigeria, if you look at the six 

western countries along that coast, would probably be the most advanced. And I know they had a large number of young people going 

to school in the West. 

I visited one of the countries—it is no longer Anambra State—

many years ago. And they were doing automobile parts assembly. 

And I am just curious as to what do you see in terms of future 

investments. And I know oil companies with their share in particular; I know about the Ogoni Delta region and the problems they 

have had in that area. But in terms of the technological areas, 

what do you see for the very near future with Nigeria? 

Ms. BEMBATOUM-YOUNG. Well, already, as you mentioned with 

the automobile spare parts, they have clusters. They have been 

making these parts for at least 15 years, because I remember going 

to trade fairs in Dakar 15 years ago, and people were asking about 

them. So that is one of the areas where people do buy Nigerian 

products. Also, leather shoes, leather shoemaking is also very predominant in that area. Again, they have clusters set up by UNIDO 

and the state governments and the new SMEDAN, which is the 

Small and Medium Enterprise Development Authority of Nigeria. 

So, yes, there are areas, pockets of technological and manufacturing abilities that are growing and being encouraged. 

Ms. WATSON. One of the issues, and this is my last point, that 

seems to have plagued that country is the, shall I say, governmental changes, the coups and the corruption. I can’t think of Nigeria without thinking of what I see as obstacles to the progress of 

this as a leading country in Africa. Can you comment in those 

areas? 

Ms. BEMBATOUM-YOUNG. Well, briefly, my comment would be 

that we do have a very strong NGO network now, and we were 

very quick to come up with a 12-point plan on fighting corruption 

years ago. 

We have done work in at least one local government area where 

we are teaching the people. It is called a watch, citizens watch, 

teaching people that they are to hold their leaders accountable. 

They are to monitor budgetary spending. They are to make sure 

they know what is going on and be part of the planning of whatever development is going on, even economic development. 

So I think there is a lot of hope in that area. 

Mr. PAYNE. Would you yield a minute on that? 

48

Ms. WATSON. Yes, I will. 

Mr. PAYNE. Just last week, as it was indicated 2 weeks ago, I 

don’t recall the gentleman’s name, but he testified before the Committee, and he was the most impressive person dealing with the 

whole question of corruption. He was just, you know, courageous, 

and he gave examples of some of the things Mike was talking 

about. They even had a little investigation for President Obasanjo. 

I told the boy, now, don’t go too far. But now he really gave a fantastic report. And so I do think that things are moving in the right 

direction. Of course, we all know about 419, but we don’t want to 

get into that, and I don’t know if you have heard about it, but I 

hope we are certainly moving in the right direction on that. Thank 

you. 

Mr. ROYCE. Thank you very much. 

And we really want to thank both of our witnesses here for their 

testimony here today. And we will take your suggestions and try 

to incorporate them into public policy as we go forward. And as we 

move forward with the relationship, we are trying to build trade 

capacity and address the needs of those in civil society in Africa. 

Thank you, very much. We stand adjourned. 

[Whereupon, at 4:15 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE JEFF FORTENBERRY, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. Chairman, thank you for convening this hearing today to explore opportunities for strengthening entrepreneurship and sustainable economic development in 

Africa. 

As a Co-Chair of the West Africa Caucus, along with my colleagues Mr. Boozman, 

Mr. Meeks, and Ms. Watson, I am particularly interested in working to develop creative initiatives to help African entrepreneurs achieve both their human potential 

and economic security. 

Small and medium enterprises, however defined, play a vitally important role in 

reducing poverty throughout the developing world. 

I look forward to hearing from our witnesses on what Congress can do to help 

foster indigenous African entrepreneurship without imposing preconceived models 

that may not be appropriate to local circumstances. 

As a representative of the people of Nebraska’s First District, I am particularly 

interested in exploring the status of economic opportunities in the agricultural sector, and learning what we can do to work with African entrepreneurs to advance 

mutually beneficial programs. 

For example, the University of Nebraska is currently working with the University 

of Zambia on cooperative research in agricultural development and HIV transmission research. I believe that such programs are important vehicles for enhancing 

regional stability by improving child and maternal health and fostering private sector competitiveness in agriculture. 

For the past 20 years, the University of Nebraska has been working on efforts 

to develop sorghum and millet varieties adaptable to Zambia’s climate and needs. 

The University is also working to counsel families struggling to combat the ravages 

of HIV/AIDS in a nation where the life expectancy has dropped to 39.7 years. 

Again, Mr. Chairman, thank you for focusing our efforts on this encouraging topic. 

I look forward to hearing from our witnesses regarding prospects for cultivating 

positive and enduring economic growth in Africa.

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