American Enterprise Institute

September 12, 2007

8:30 a.m.	Registration & Breakfast
9:00	Presenters:	Patrick Mazimhaka, Commission of the African Union Joe Mollo, Corporate Diplomats
		Michael Spicer, Business Leadership South Africa
	Discussants:	Deborah Bräutigam, American University
		Witney Schneidman, Leon H. Sullivan Foundation
	Moderator:	Mauro De Lorenzo, AEI
11:00	Adjournment

[Edited transcript from audio tapes]

Proceedings:

Mauro de Lorenzo:  Thank you all for coming.  I'm Mauro de Lorenzo, a resident fellow here at AEI.  I'm the moderator today.  This event is called African Perspectives on a Rising China.  The past year has seen many, many events on this topic in Washington and elsewhere, the results of which have not always been conclusive, and sometimes the African voice or the African priorities have not always been as clearly articulated as the priorities of the two superpowers who are part of this triangle.  And what we hope to do today is to have a forum where that voice can emerge a bit more clearly.
We have leading African figures from the worlds of  politics, diplomacy, and business and two of the leading experts and commentators on this topic to react to their presentations.  Each is going to speak from his own perspective.  They are also going to highlight a very interesting and, I think,  path-breaking document which has emerged from a trilateral process between delegations from the United States, China, and Africa that has been going on since last August, co-sponsored by the Brenthurst Foundation in South Africa, the Leon H. Sullivan Foundation, the Council on Foreign Relations, and the Chinese Academy of Social Sciences, a process which was designed to create a forum in which these issues could be discussed calmly and try and help policymakers, governments, analysts focus on what is most important.
The African delegation to that process has produced a document called Business Principles for a Strong Africa.  You will find, in fact, that it is broader than that; it is about governance and it states some things which I think are pretty unfamiliar for anybody and especially from a delegation of leading African authorities, such as that the post-colonial period in Africa is over.  This document is in your packet.
More and more democratic and peaceful Africa battles today not against colonialism or neo-colonialism but against exclusion from the global economy.  In contrast to the apocalyptic humanitarianism of most media, Africa is increasingly optimistic about its own future and increasingly serious about business.  And they come to propose as a parallel, not in contrast but as a parallel to the Millennium Development goals for health, education and other important social indicators, they propose a set of MDGs for business competitiveness to organize the action of governments and donors.
I should add that the African delegation, in addition to the gentlemen here, comprised Sydney Mufamadi, the South African Minister of Local Government who was called away on government business and could not make the trip here, Lopo do Nascimento, the first Prime Minister of Angola, Greg Mills, the Director of the Brenthurst Foundation and William Nacurua [phonetic], an academic from Kenya.
I hope also that this document and an increasing focus on Africa's priorities on these questions will also lead to some - this is my own view - recalibrations in U.S. policy towards a more normal foreign policy towards Africa built around mutual interests and common threats, which would be a break from the way Africa is conceptualized and addressed in both policy and media up until now.  And I think that the voice expressed in this document is an excellent way, an excellent tool for starting to think about how to do this.
We are going to begin with Patrick Mazimhaka who probably needs no introduction.  To most of you he is the Deputy Chairman of the African Union, and has been since 2003.  He previously served in a number of ministerial capacities in Rwanda after the genocide and in the President's office as well.  He has been involved with a number of AU initiatives on development and in a number of active crises, including on the China question.  And I will turn it over to him now.
Patrick Mazimhaka:  Thank you very much, Mauro.  Good morning, everybody.  Let me first of all thank you for coming to listen to [indiscernible].  We have been in Washington for a couple of days discussing this question of rising China, and from perspectives of the Africans, the Chinese and the Americans.  It is a private endeavor and, as you introduced it, we have gained quite a lot on all sides in terms of getting better understanding of the significance of what is known now as a Rising China.  But it will not be the first time China has risen in history but, certainly, we are looking at the present situation, particularly in terms of its economic success that has definitely impacted on Africa and world trade, in particular, [sounds like] commodities in the last few years. I’ll be looking simply at how Africa views these main aspects [indiscernible] of importance to Africa and the activities that are going on with China.  And my colleagues will be talking about details of, indeed, the implications for business, implications for international trade.
Africa looks at China through two lenses.  There is the African Union, which is the organization of about 53 member states that has got clear policies on China internationally.  For example, the African Union supports the One-China concept, but that is as a union.  There are member states who do not do that and have relations with Taiwan as well as with China where it is possible.  We manage that but it is still, of course, not a difficult thing because it is a Chinese choice on how to deal with issues of diplomacy.  We do not go beyond that and we do not compel our member states to share that policy, precisely because member states of the African Union are still sovereign nations and they deal with their bilateral relations in whatever manner they wish and it has not, in any case, distracted from our relationship with China as a block.
We continue to have a developing cooperation mechanism which is known as the Africa-China Cooperation Forum that got us our leaders annually or biannually in Africa and then in China to discuss cooperation in a broader sense over their continent.  Within this context, then, we discussed with China what we think is appropriate, and I think the last summit in November in China was very significant because Africa was able to impress on China that we have our own agendas; we have developed lines of development in certain areas - the areas of government, economic development, investment - that they should take into consideration while dealing with our nations.
Consequently, I think it was one of the most successful summits because in that context, China set up a development bank to assist Africa specifically; China doubled its offer of scholarships to African students in very many areas, from 2,000 a year to 4,000 a year; China promised more investment in agriculture to deal with food security and so on.  But, more importantly, there was a clear, a firm belief in China now that they should be able to do two things:  investment through government enterprises as you know them, and also encourage private sector -- Chinese private sector to invest in Africa in partnership with African private sector.  At the same time, continue the assistance because China believes there is still room for aid to Africa besides just investment.  And that is where you get into areas of education, health; and all that they continue to give assistance.
The other area that we raised as of importance to Africa in terms of China’s policy was participation in humanitarian activities, participation in peacekeeping and looking at governance issues in Africa.  We are still in discussion with China but in particular on the issue of governance because China says they are not quite sure exactly what we mean by good governance; what it means -- whether you should prefer democratization to stability in a nation, and that is a debate that is ongoing.  It is a very lively debate and I think it is a debate which is worth having.  So we do have that engagement with China in all that.
Now in private sector partnerships, I think that my colleague Mike will talk about that.  We certainly have issues.  I mean, the country has raised issues in terms of the over-dependence on China’s labor in the projects that are being run by the Chinese.  There are practical reasons for that; I will not go into details but one example I can give, if, for example, China is going to come to construct a road or a stadium which [indiscernible] in the past, most of the engineering data and the calculations will be in Chinese.  So it is extremely difficult to transfer that.  If it is given to you as a gift, it will be too much to ask them to translate all that into French or Chinese so that your engineers can participate.  I mean, those are kind of, you know, practical things people do not look at.  But certainly, we know that some member states are worried about that type of thing but, certainly, it is not a major crisis.
Now, the question of peacekeeping.  You may have noticed, and I think it is very clear that China is joining the United Nations more and more in terms of participation in peacekeeping operations in Africa.  They are, for example, sending an engineering battalion into Darfur, particularly to deal with de-mining [sounds like] and be able to locate and provide water points in the Darfur area.  So, we are looking at China now.  As it rises in Africa, we are looking at more and more flexibility in developing common ground on the issues that are of interest to Africa.  And I think China has been coming along in a manner that is satisfactory to us.
The next event in China, of course, is going to be the Expo 2010.  In this, China has offered massive assistance to enable all African countries to participate in the Expo in Shanghai.  Again, that is a way of enhancing bilateral trade.  Obviously, it is a way of trying to develop more relations and their rising is continuing through mechanisms like that and Africa is benefiting, we believe, from the relationship with China at this particular moment since most areas of our interest are there.
Another area of cooperation that we have been working on China is [indiscernible] on WTO issues that have seemed to be stuck.  And I think that if we can manage to get more people behind the issues that interest Africa, particularly in areas of commodities and agriculture -- not to be done in a bilateral way like China has done by reducing tariffs on African products, but we want this to really feature in the bigger trade regime that we are trying to negotiate in the Doha round of negotiations.
So I would say that, in brief, the relationship between Africa and China have improved in terms of getting to a higher level, and I think it is very clear -- put clearly in the Chinese white paper on relations with Africa where the emphasis shifts to investment and considering ownership of projects by Africa and we hope that this is going to continue.  And we have also, I should say, in our discussions in the last three rounds of discussions we have had, that Africa is not worried about any possible conflict between China and any other nation, including U.S.A., of Africa and its resources.  We do not see any signs of such a confrontation.  We believe that they are mutually reinforcing and we hope that Africa can take best advantage of this and be able to invest revenues from these resource exploitation into our own agenda of socioeconomic development without having to look at the color of the revenues, where they are coming from.  I thank you.
Mauro de Lorenzo:  Thank you, Mr. Chairman.  We turn now to Ambassador Joe Mollo, who runs Corporate Diplomats, a consultancy in South Africa.  He was previously the Lesotho Ambassador to South Africa, Canada, Denmark and the UK and has for many years been a Senior Royal Adviser in Lesotho.  He has also served in the corporate world as a vice-president at BHP Billiton in South Africa and serves on the National Council of the South Africa Institute of International Affairs.
Thanks very much.
Joe Mollo:  Thanks, Mauro and good morning, ladies and gentlemen.  My colleague Patrick has given a broad picture of China-U.S. relations and how they impact on Africa and I thought it might be useful to sort of take a practical example of this, have a look at, if you like, a case study of a small country that I have come from originally before I became a South African - Lesotho.  And this is an example of where the cooperation between the two superpowers China and U.S. can actually be seen.  Because what happened is, of course, the U.S. introduced AGOA and by so doing, it actually opened opportunities for some Chinese companies to have a look at possibilities of investing in the small Lesotho that they would not necessarily have been keen on until there was the AGOA.  And, indeed, the Chinese companies came in large numbers and invested in Lesotho.  They created a lot of jobs, and I remember the employment rose from 17,000 to something like seventy-something thousand at its height in manufacturing of textiles.  Of course, you will see when this sort of thing happens that there are challenges.  When we begin to implement this cooperation, when it comes to the ground level and is being implemented, we get challenges. 
I know, for instance, that while I have talked about the welcome increase in jobs, that there has also been a love-hate sort of relationship between the Basuto and their Chinese employers.  The fact of the matter is the Basuto will complain about the working conditions; they will complain about the wages.  And the Chinese employers will complain about the productivity.  So, yes, indeed, as I said, while we all welcome this cooperation, there are challenges when it is being implemented.  With Greg Mills we have looked at a few figures there and we realize that, in fact, the Basuto laborers would be paid something like a hundred dollars -- an equivalent of a hundred dollars per month, which they do not think is sufficient.  They think it is rather low and they will complain about other working conditions. 
The Chinese, as I say [audio glitch] on their contract, will talk about $100 being a little high if compared to other countries in East Asia like Vietnam, Cambodia, now that AGOA is extended to those countries as well.  And, indeed, we have lost some jobs; from the 77,000, I think they have come down to 57,000 because now there is competition with some of those countries like Cambodia where I understand the wage per month could be as low as $40 per month.
There is always this thing about why is it that these factors [sounds like], this manufacturing does not become a catalyst.  In some other countries it would be a catalyst for other things but in countries like Lesotho, somehow it becomes that little entity there and you do not see the presence of that manufacturing extending and becoming a catalyst to other fields like agriculture.  I do not know whether this is the effect of how we manage our affairs but, as I say it, while people talk about how welcome this intervention is in terms of creating jobs, you will also find that there is a problem with the trading; there is competition.  And somehow, I think, again, the Chinese traders would become more aggressive, more adventurous than our own little traders and so they somehow get them out of business.
I was telling my colleague here yesterday that Lesotho is very mountainous and thus a lot of places are very, very hard to get into.  And I was quite surprised not so long ago to get into those mountains and find that there are some Chinese traders in there.  Is this supposed to be welcomed or not?  I do not know. But in previous times I would get into those mountains and worry very seriously about where I would get petrol from.  But somehow you will find that a Chinese trader is there and he has some buckets of petrol that he sells.  There is no petrol pump, there is no petrol station, but he does bring in some petrol and you can also get some cold cider from them.  So they are very enterprising business people. 
And while they may be welcomed by me who is looking for those services, are not necessarily that welcomed by the villagers with whom they are competing, or the traders with whom they are competing in those areas.  So this is the little bit that I thought I would share with you that I know that they are very welcome there; they have provided jobs, but it is competition.  We are beginning to lose those jobs now that the U.S. has extended the AGOA benefits to other countries in the Far East, Cambodia, Asia and others.  I look forward to your questions.  Thank you very much.
Mauro de Lorenzo:  Thank you very much, Ambassador.  We turn now to Michael Spicer who is the chief executive of Business Leadership South Africa, a roundtable organization that brings together all of South Africa’s leading enterprises.  He was previously the executive vice-president of Anglo-American and the executive director of Anglo-American South Africa on which he remains on the board as well as chairman of a wine estate.  If you need wine recommendations I encourage you to approach Michael after the event, and he is on the board of Rothschild South Africa.  He has been a member of President MBeki’s Big Business Working Group and the International Marketing Council and was on the Presidential International Advisory Board of Mozambique.  I’m pleased to introduce you.
Thank you, Michael.
Michael Spicer:  Thanks very much indeed, Mauro.  It is a great pleasure and delight to be here today and to share some of the experience that I and my colleagues have been fortunate to have over the past thirteen months or so that we have been engaged in this pretty unique trilateral dialogue between Africa, China and the United States.  I think it is an exciting development; in some ways it is a path-breaking development which has exhibited a high degree of innovation.  And I’m pleased to say it originated in a discussion between the Brenthurst Foundation on whose board I sit and the Chinese Embassy in South Africa.  I brought in a number of partners both here and elsewhere. 
And what I want to talk to you today is a little bit on the African paper which we tabled in our discussions this week here in Washington on Business Principles for a Strong Africa because I think it shows some of the new thinking that we are all going to have to bring to bear if we are going to use the opportunities flowing from the new era in Africa which Mauro referred to.  In the paper, which I believe is in your packs, there is an analysis of where Africa is today and it is exactly as Mauro says: I think there is a feeling of new beginnings and dawn of a new era.  There is optimism abroad; there is a feeling that the interest of the international community in Africa in an era of high commodity prices brings the possibility of a range of new opportunities. 
But to make the best use of those opportunities and to avoid some of the mistakes of the past, we are going to have to change the way that we think and change the way that we practice, whether it is as businesses, as the international community and its involvement, or by African governments themselves.  And so this paper sets out -- I think that some of it would be familiar and perhaps congenial to this kind of audience in terms of its critique of aid and its history in Africa.  And it then sets out to say, well, how can we do things differently?  How can we more productively use the new interest in Africa, the new engagement, the new investment?  How can we avoid some of the pitfalls of the past?
So what we have done in this paper is to put forward six principles whereby businesses can more productively engage and governments can more productively engage with Africa.
Could we speak a bit louder?  Is that better?  Can you hear me at the back?  Just nod.  Good. 
We have divided these principles and I should say like all pieces of innovation, this is by no means a set of principles that are the product of wide agreement.  We whisk [sounds like] tabling them for further discussion not only with our colleagues here and in the international community but also at home.  This is meant to launch a dialogue.
We start with some principles for business itself.  And here we propose that the first principle is that as elsewhere in the global economy, we should focus much more on transparency and good governance.  You are aware of what that means in your home markets here and in the way that you do business abroad; we are proposing that it should be no different in Africa.  Equally, we are saying that we should set up a continent-wide code of conduct or set of principles of good corporate governance, and they would follow a familiar trajectory in terms of some of the component parts of that.  We would look to referring to universal human rights, the provision of a safe and healthy workplace, the facilitation of skills and capability and compensation that provides adequate living levels, the respect for intellectual and property rights or something that resonates very strongly in this society, ensuring that corruption is eradicated.
Now, I have spent much of my working life in a large corporation and I have engaged very actively with a plethora of codes of conduct, covering the whole gamut of transparency, good environmental safety and other practices.  And I think it is worth introducing the caveat that these should be enabling principles; they should not be bureaucratic stifling  principles.  And there is a cautionary note in terms of the activities of NGOs who are the lifeblood of much of this activity but at the same time we are all familiar with NGOs who have become to some extent parasitic in generating their own continued existence by over-complexifying and ensuring that principles like this are perhaps far too bureaucratic.  So, there is a balance here but that we should contemplate a set of continent-wide principles I think is something that we are quite clear on.
Then we turn to the international community and look at two principles in terms of which it should conduct its engagement, going forward with Africa.  Firstly, we said that the purpose of aid should be re-conceptualized; Mauro, I think, used that wonderful phrase “apocalyptic humanitarianism.”  We are not proposing of course that aid should be done away with, or that the old focuses in terms of poverty alleviation and various humanitarian focuses should be swept away.  But what we are saying is that we should try to ensure that aid, to a considerable extent, is re-directed to facilitate growth and to facilitate growth by reducing -- focusing on projects that ultimately reduce the cost of doing business.  And I think you are already -- you will see that in much of the activity of the multilateral donors, the way that they are beginning to think about the role of infrastructure in terms of generating high returns for a wide range of wealth-increasing and poverty-reduction activities. 
And it is in that respect that we have talked about a complementary set of millennium development goals for competitiveness.  And I think perhaps this is the heart of the paper; this is the bit that I’m most excited about.  So I’m going to just read the paragraph from our paper in toto because I think it captures the essence of the new thinking that we are proposing.
Fourth, related to the point above, establishing a set of millennium development goals for competitiveness would incorporate measures of economic freedom and administrative efficiency and also attempt to quantify how much their absence costs businesses.  It would also add a number of other indicators that entrepreneurs find are the main obstacles to running a business:  costs of capital, electricity, transportation, telecommunications, tax, labor and corruption.  A focus on these measurable fundamentals would reprioritize how aid is spent.  To reduce the costs of capital, policy-attention should be paid to reducing risks to local commercial banks so that they can lend the money they already have.  To reduce the cost of transportation, the focus should be on trade facilitation and infrastructure.  Reducing the costs of energy requires creative public-private partnerships on infrastructure.  Each poor country has its own distinct cost structure, a unique mix of reasons why it is overly expensive or risky to do business there, both for foreign and domestic entrepreneurs.
And so I think that that captures the notion of these goals for competitiveness.  And it applies across the gamut of businesses.  We have a typology of business there, again, which will be familiar to many of you, whether it is domestic business, large, small, rural, agricultural, urban.  Foreign providers of technology and capital, infrastructure providers, providers of capital and resource extractors - all of these have different points of emphasis but they all dance to the same tune of enabling business environments, stability, certainty, predictability in terms of the regime.  So when one looks to see what governments should provide for domestic businesses, foreign investors can really ask no more than that.  So that set of indicators is also there.
Then we turn finally to how African governments should act.  Now here, just as foreign investors in China are being asked to look at technology transfer, there is an insistence on value addition; that is something that is very familiar to investing around the world.  So, African governments need to insist that there is this kind of two-way trade in terms of investment.  Again, there is a balance here; one has to ensure that there is an adequate return for the foreign investors.  But this cannot be a one-way street where all the benefits accrue to the investing party.  Things, secondly, that African governments have to do to become more competitive - here, there is a wide of range of activities in terms of improving the investment environment, focusing on the notion of competitivity.  And that is a watchword clearly in this paper; where I come from in South Africa it is at the heart of the current government program which is we have an acronym [indiscernible] there but this one is ASGISA, the Accelerated and Shared Growth Initiatives for South Africa. 
The notion of competitiveness is not something that governments in Africa have always thought about.  But it is something that is a pre-requisite if you are going to engage fruitfully and productively with a globalized economy.  There are many things in the field of governance that Africa clearly has to think about and I do not need to dwell on those.  We can come back to them in question time.
So in essence and in summary, those are the six principles;  clearly, there could be many more but we are tabling them as a discussion point and to set the ball rolling.  And I must say so far, we have been quite pleased with the reaction that we have received both in our trilateral dialogue and elsewhere.  Thank you.
Mauro de Lorenzo:  Thank you very much, Michael, for that very clear exposition.  I’m pleased now to turn to Deborah Bräutigam, professor at American University, professor of International Development.  She has conducted field work for many years in West Africa as well as in Mauritius and has been a consultant for many development organizations.  She is the author of one of the first books on Chinese aid in Africa, focusing on agricultural projects, as well as a later volume on aid dependence in governance and a forthcoming volume on taxation in Africa or in developing countries, generally.  And I’m pleased to turn to her now to put some of this in context.
Deborah Bräutigam:  Thank you very much, Mauro.  Can you all hear me?  Good.  I want to preface a few things that I’m going to be saying here by telling you a little anecdote.  I have been to many conferences on China and Africa over the past year.  And at one of them, one of my colleagues and now friends, Andobisio Biorolof [phonetic] from Nigeria, said to me as we were walking around during one of the breaks, he said, “You know, a few years ago The Economist came out with a cover story on Africa and it was called “Africa, The Failed Continent.”  And he said, “My friends and I spent weeks talking about that every time we got together.  It really depressed us.  And we wondered, what is wrong with Africa?”  And he said this in the context of the Chinese because he said the Chinese do not look at Africa that way; they look at Africa as the continent of opportunity, a continent of exciting business opportunities.  They look at Africa as a place that is emerging into the global economy and he said that, “We would like that.”  So, what I’m going to say is it comes from that, that Africa is no longer being excluded.  The Chinese got there first and they recognized this and they have been seeing this for quite a while.
The second point I want to say is that when we talk about Africa, it always makes me uncomfortable as I know it does many of my friends and colleagues from Africa to say “Africa” because there are many Africas, as a very perceptive new book by Paul Collier points out, The Bottom Billion.  There are at least groups of African countries and I’m sure all of my colleagues up here share that same sense of discomfort when we say “Africa and China” as though we are talking about two countries, all right?  And within that we have got government, civil society and business and so “Africa” has many different viewpoints.
Okay, the first point I want to make about this - and this relates to some of the comments - is that China has a very long-term perspective, a much more long-term perspective about this than we have in the West.  And this current intensive thrust that we are looking at follows a number of things; it follows, first of all, fifty years of an unusually generous aid program. Mauro has pointed out I did write a book about this, but just to put this in perspective, this aid program has covered every country in Africa except for Malawi and Swaziland at one point or another; several have gone back and forth between Beijing and Taipei, and that includes South Africa.  The Chinese have given aid to South Africa, which is unusual.
The second thing is that there has been a rising interest among Chinese individuals in migrating to Africa for the past twenty years since China relaxed its immigration rules in 1985.  And so we have seen a rise of individuals coming in as traders or staying on after aid projects and setting up the kinds of small businesses and trade competition that Mr. Mauro talked about in Lesotho.  So that has been going on for about twenty years and it is just increasing today.
The third is that this new engagement in Africa really dates back to 1990.  It is partly competition with Taiwan at that period, but from 1990 to the present - many people do not know this - the Chinese foreign minister has visited Africa every single year.  In the beginning of the year it is the first thing they do is send a delegation of high-level people to visit a group of African countries.  I do not know what other country has sent their foreign minister on a regular mission like that annually.  So they have been preparing the groundwork for a long time for this.
And then finally this current engagement really dates back to 1995 when the Chinese set out a series of statements that they were going to be accelerating their engagement in Africa for win-win purposes and they were interested in natural resources, so this was all being signaled.  And a major delegation went to speak to a number of major African countries back in 1995.  So China has been engaging steadily with Africa for a long time very strategically and with a great deal of care.  And that is something that the rest of the world just did not see until they saw the fruits of this in the past year or two. 
Now, I will say a few things about the strong features of this and then the challenges and problems that this presents.  And in doing this I am taking both the role I normally take with my colleague Adama Gaye in our debates on these issues and his role.  So I am going to coopt you a bit, Adama there.  The strong features I think were signaled in the November summit last year and they provide some unusual instruments for economic engagement with Africa; some of these have been mentioned.  First of all, there is a doubling of aid by 2009.  Many people know that the G8, the rich countries, promised to double aid to Africa as well.  But they are going to do it by 2010, so the Chinese are going to do it one year earlier which is an interesting point. 
The second thing which has been mentioned by the panelists is the finance for infrastructure.  The Chinese really got in on this before it became a big deal amongst the other donors.  And they offer very competitive financing for this.  Not all of the financing that we have been seeing is concessional, but some of it is, and some of it is at a very low interest rate that is still commercial because they want to get the business.  But they are getting business away from the World Bank and also away from a lot of bilateral countries that have traditionally financed infrastructure in Africa, including Portugal and the Portuguese-speaking countries, France and the Francophone countries, et cetera.  So that is an interesting and strong and helpful feature.  As we know, infrastructure problems in Africa are intense and there is a lot to be done. 
Third is this $5-billion development fund that Mr. Mollo also mentioned.  This is a really unusual instrument for economic engagement.  What it is is a fund for Chinese companies to invest in Africa.  And in the first $1 billion of this fund, they are going to investing in infrastructure.  So this is unusual because these infrastructure investments are supposed to be profitable.  So this means investing in roads that are going to be paid back by tolls; it means investing in electricity generation which is going to be paid back by electricity rates that are high enough to cover the cost.  So when I met with the head of this fund in Beijing in July, this is what he told me.  He said, “We want to make money; not too much money, but this is for profit.”  So that is a win-win for Africa. 
The fourth thing is they are setting up three to five special economic zones.  Two of these have already been set up and the ambassador from Mauritius is here; he can tell you more about the one in Mauritius.  There is also one in Zambia.  A number of countries have signaled to the Chinese that they want the next zone to be in their country.  They are very excited and interested about having these zones which provide opportunities for clustering of enterprises - Chinese enterprises and foreign enterprises - and that is the hope at least.  I mean, Chinese enterprises, other foreign enterprises and African enterprises all in these zones.  And this cluster should lead to spin-offs, the kind that have not been happening in Lesotho. 
Now, what about the concerns?  Well, Mr. Mollo raised a number of these and the comments by Mr. Spicer also point to this; in fact, all of the panelists have raised concerns.  And I will just reinforce some of those.  I think that the concerns are, first of all, the competition; Chinese businesses are going to be competing with African businesses.  They are going to be doing this in terms of import substitution activities which they are interested in and they are going to be doing it through trade.  So this is a real -- on the threat side, I think this is a significant threat for the young and nascent industries in Africa. 
Now, some countries such as South Africa have tried to deal with this by temporary voluntary trade restraints.  And this brings back some of the things that the United States tried to do with Asia in the 1960s and 1970s when Taiwan and Japan and Korea were breaking in to our markets; we asked for voluntary export restraints.  This is one technique that African countries can do more about asking for these kinds of things to give their industries time to get a breather. 
The second thing is labor and, what no one has mentioned, environmental standards.  Now, as we know, labor standards and environmental standards are much lower in China than they certainly are in the West.  I am not sure where the standards are compared to the standards as they are in the ground in African countries; I suspect there is much more similarity.  But this is a big problem and it is a problem in China; it is a problem in Chinese investment in Africa because the standards are quite different. 
The third area is governance.  Moises Naim did a small article in Foreign Policy last year that he called something like “rogue donors,” and I think there are concerns, certainly, and they have been expressed by the panelists about good governance and Chinese practices, particularly in countries like Zimbabwe and Sudan, perhaps reinforcing -- certainly reinforcing or not acting enough to counter these kinds of thrusts.  But I do think we see some positive moves by the Chinese in Sudan, perhaps sparked by concerns about the Beijing Olympics which have been called by some NGOs the genocide Olympics, so they are very concerned about that.  So there are ways in which their pressure points can be pushed. 
I’ll finally just say something to wrap up and I’ll come to the Lesotho case because I think that this very nice presentation captures in a nutshell many of the issues, although not the ones about the natural resources and oil that we are also concerned with.  But I have also studied the Lesotho case and I have wondered why there were so few -- in fact there were none in the -- from what I understand, there was no Lesotho investment sparked by this Chinese, and a lot of this was Taiwanese investment.  But there is Asian investment in the textile industry in Lesotho.  And I think this is an interesting question for Lesotho itself to examine: why is it that this did not happen? 
We do have examples where it has happened.  Mauritius, again, is a very successful example where in the past there was a lot of technology transfer.  We have examples in Nigeria where, again, there are very positive examples of joint ventures and technology transfer and stimulation of spin-offs.  We also see this happening in South Africa although a little bit less.  So the question then is why and what is happening on the ground and what can be done to foster more positive catalytic effects and dynamism from these investments.  And Mr. Mollo is concerned about this as well; I appreciate that. 
The last thing is about positive areas in this concern about the environment, labor standards and good governance.  And again I see some interesting things happening here.  First of all, African countries themselves have opportunities.  The extractive transparencies -- the extractive industries’ transparency initiative, I think, is a positive thing that many African countries that export raw materials have not yet signed on to this.  So this is something where they can provide a signal and they can themselves push investors like the Chinese to behave by these standards. 
And the second is that from what I have seen, the Chinese are actually very interested in this move to have standards for environment and governance.  And they have been working with the IFC arm of the World Bank, the International Finance Corporation, to learn about the IFC sponsorship of the Equator Principles in banking.  So there is a team from the IFC right now in China talking to the China Development Bank and the China Exim Bank and the other Chinese banks that are engaged in Africa about these corporate standards and what they can do to try to build their knowledge of this.  And they are doing that not because they are suddenly won over to the idea that these are all good things and they value them very highly, but because they think that this is good for business, that they should -- to push their companies to adhere to these standards.  So on that, they are signing a memorandum of understanding to work with the IFC.  They are already working with the World Bank in three countries on a memorandum of understanding.  So they are trying to lean more about how the rest are working in Africa on a positive side.  So I think there is some hope there, and I will stop.
 Mauro De Lorenzo:  Thank you.  That was a tour de force.  We will turn now to Witney Schneidman who is a senior adviser at the Leon Sullivan Foundation, which as many of you will know has been a leading promoter of good business practices in Africa and elsewhere for many years.  During the Clinton Administration he was deputy assistant secretary of state for African affairs, focusing especially on economic and commercial matters.  He is also the principal of a consultancy focused on Africa and was one of the conveners of the trilateral process, which has just concluded.  Witney, please.  Thank you.
 Witney Schneidman:  Thank you, Mauro.  Not much is left to be said here because a lot has been said and has been said very well.  But what I thought I would do was just share with you some of the outcomes of the trilateral dialogue that we have had because as Michael and Patrick and Joe have said, I think it was a very unique initiative and it was an initiative that was initiated to really respond to the perception that China and the United States were somehow in conflict or could be in conflict with one another in Africa.  We just had a sense that that was a misleading perception and we wanted to put together a mechanism to delve into that.  And we came out with a number of areas of agreement that I think are worth sharing with you. 
One is that there -- we did not see any strategic conflict between the U.S. and China in Africa and we did not see a zero-sum dynamic between the two countries, either.  Closely related to this is the African perspective that it is essential to avoid another scramble for Africa.  That was recognized that there are divergent interests between the U.S. and China in Africa but that they can be reconciled to Africa’s benefit; in other words, the principle of mutual self-interest is very much a reality.  It was also noted that there is no reason that China and the United States will cooperate automatically, so mechanisms have to be put in place to encourage that.  Business competition between the U.S. and China will take place in Africa but that, by definition, is not necessarily a negative, especially when new technologies are shared with Africans, skills are imported into Africa and jobs are created.  There was agreement that the U.S. and China are important commercial partners for Africa and that both can be helpful in the mobilization of capital and debt relief. 
When it comes to energy there was agreement on the need for the security of supply and the stability of price.  There was also a general consensus that Africa could benefit from all partners, especially the U.S. and China agreeing on a framework, or various frameworks, to ensure that revenue from these resources generally contributes to economic development and stronger institutions.  Africa will have to rely on exploiting its natural resources and using the revenues from these resources more productively for social and economic development.  And China and the U.S. can best assist by strengthening institutions to ensure that these resources are accounted for and invested in human and national development. 
There was agreement that we have to be careful not to look at Africa exclusively through the lens of energy production and consumption.  At the same time, it was noted that the global interest in Africa has never been higher; we refer to China rising but I think it is also appropriate to refer to Africa rising, and that was underscored many times, but then Africa has to cease on this for its long term benefit.  Related to this was the comment made by the Chinese delegation that not all have benefited equally from globalization.  It is the responsibility of the world to support Africa but at the same time Africa has to adapt itself to increased globalization. 
There were some other points; there was agreement that all countries have affirmed their commitment to the responsibility to protect against genocide and crimes against humanity and that there are a number of UN and African Union conventions and principles that need to be observed.  And all delegates welcomed that Africa is taking great strides forward in the area of democracy as illustrated by the success of the African Union, the African Peer Review Mechanism, the new partnership for Africa’s development, and by the fact that the AU now refuses to recognize unconstitutional seizures of power.  And this is another significant trend in the movement toward democracy in Africa. 
There are a number of areas of discussions that I will just touch on quickly.  One of those areas of discussion touched on the African development path, and it was noted that China’s path to development was predicated on an emergence of extremely competitive light manufacturing.  But there is a difference of opinion over whether African nations will be able to ascend the industrial ladder over the next generation in the same way.  I think it is useful to point out that it was not all about areas of agreement; there are some areas of divergence as well as one might expect.  Some Chinese scholars pointed out that there is no consensus on a definition of good governance.  Therefore, China does not precondition its assistance on the existence of democracy and places more emphasis on the balance among reform, stability and development.  The American delegation noted that the U.S. tends to condition assistance on the existence of democracy and provides direct assistance for democracy-building. 
Similarly, as it concerns peace and security, the African delegation challenged the U.S. and China to do more to help resolve the situation in Darfur.  Whether or not there can be agreement among the delegation on actions for recommendations is still an open question, but the prices of governance and economy in Zimbabwe and Somalia would also fall into this category.  On the issue of transparency and how best to use revenues generated from commodities, there was a difference of emphasis as it concerned external codes of conduct such as EITI, which Deborah Brautigam just referred to, the Global Sullivan Principles, the Equator Principles or others.  There is a long way to go to get governments and companies to adhere to these codes and there was no agreement among all the delegations on how to achieve this, but there was agreement on the importance of the existence of these codes. 
And finally, on several occasions in Beijing, our second meeting, the Chinese delegates underscored their government’s commitment to the principles of non-interference and mutual reciprocity.  Now, in terms of the outcome and the ways forward, we did make some policy recommendations and I think chief among them was a recommendation that this trilateral mechanism should be established at the official level and the governments of the United States, China and the African Union should establish the same kind of partnership that we have established to address areas of common interest. 
We also sought to provide a forum to generate further ideas about how American and Chinese cooperation in Africa could be of benefit to policy-makers, researchers and analysts throughout the world who are engaged in African investment.  And we also thought that our mechanism, our track to diplomacy, could be expanded to bring other stakeholders together.  There is a real sense that we have an opportunity to foster the kind of cooperation we are talking about in areas such as education, agriculture, health and energy, and that we should reach out to those NGOs and foundations and government entities who are working in this area to foster that kind of cooperation. 
But I think the most important outcome of the trilateral process was really just establishing the personal relationships between the African delegation, the American delegation and the Chinese delegation.  I think at our first meeting in Tswalu in South Africa in August, it was all pretty stiff and nobody really wanted to go too far.  But by the time we finished yesterday in Washington, there was a clear unanimity of interests among the three delegations that we wanted to do whatever we could do to help accelerate economic and social development in Africa and that between the three delegations, there is a tremendous amount of resources and opportunities that we can help generate.  So I will just stop there with that brief overview and thank you.
 Mauro De Lorenzo:  Thank you very much [audio glitch] the presenters to be brisk so that we would have lots of time for questions, and they have complied.  I already see with the levels of expertise in this room that we will have a lively discussion.  I want to start, in fact, by asking Patrick Mazimhaka about -- I noticed a few months ago that you had invited the Chinese government to be an honored guest at the AU Summit and I wonder if you could comment and help us understand better what that meant.
 Patrick Mazimhaka:  Okay.  Yes, I know after that one of the ambassadors of a prominent country, a friend of Africa, asked me the question in a different way; he said “Why did you give China publicity at the summit?”  It is in connection with a project that China has given to Africa as a gift, to construct a new conference complex headquarters for the African Union in Addis Ababa jointly with the government of Ethiopia, which gave us land, about 12 hectares of land, next to our current headquarters, which also was a temporary gift by the emperor of Ethiopia way back 1963.  We have never left the place because African countries did not agree whether we should go to Cairo or to Akra for the headquarters.  The debate is still on but the small headquarters that were given as a temporary shelter is much too small now for the organization. 
So the government of China did offer at the summit in November last year to actually construct for us a bigger conference complex and an office block.  So we invited the architects and the government to come and to present the gift to the heads of states in Akra and we gave them exactly twelve and a half minutes - that is the commercial - to present in multi- media the project.  And I must assure you that the heads of states were very pleased and we were very, very attentive to the [indiscernible] that is going to be or that has been designed by the Chinese.  So that is why they go to the place of -- on a -- at the summit, which was an important summit because we are discussing the future of Africa as a union, the question of the union and government for Africa.  The project is definitely going forward a lot faster than the union government project is going.
 Mauro De Lorenzo:  We are going to open it up to questions now.  We have people with microphones so if you would wait for the microphone and if you would also identify yourself.  Let’s start with Bob Houdek [phonetic] and Adama Gaye and -- can I have a third?  We will take I think three at a time and have responses.  And the gentleman behind you, David; there is a gentleman who is the third.
 Bob Houdek:  One of the concerns of a lot of people has been that with the Chinese policy of non-interference in internal affairs of governments, that they have not been as strong a supporter as many African states and Western countries in improvements in democracy and governance.  I have always contended that -- I contend today that given their larger economic engagement and investment, we do share a common objective in strengthening the rule of law.  And my question to the panel is has any consideration been given to promoting an African center for investment disputes, if you will, an exit [sounds like] for Africa, perhaps under the auspices of the AU?
 Adama Gaye:  Thank you.  My name is Adama Gaye.  I am a bit surprised by Mr. Schneidman’s statement about Africa.  It depicts a rising Africa, which is not what I have seen in Africa.  Even making a parallel with what the administration to which it belonged - the Clinton administration - used to do.  During the first Clinton visit, I think, in 1996 to Africa, something like that, when it hailed some of the leaders, the [indiscernible] and others as the renaissance leaders that knew they were coming into Africa, which was not.  Some of those leaders turned out to be the worst dictators that Africa sowed [sounds like].  And at the very moment we are talking all the problem that were -- examples that he had given, I do not see them as seeing they are working, the Peer View Mechanism, political laundering [sounds like] mechanism in my mind.  African Union - the chairman of the union is running away; he knows he has failed.  The African government project is failing; we know it.  All the other aspect that you mentioned, I do not see them working. 
Regarding the business principle, also I’m a bit surprised because this is once again the kind of thing that are done behind the scene without the knowledge of the Africans.  And the ideas that are put forward here do not highlight what I highlighted in my -- I wrote a book on China and Africa, unfortunately, in French and it is entitled China-Africa: The Dragon and the Ostrich.  The main concern of African leadership today which still remains - and I do not see it and I do not hear it here - is the very poor political leadership.  Most of the leaders are turning out to be consultants in Africa and they are ready to embrace China as the new tutor of Africa.  And I do not see the way you depict Africa as [indiscernible] on the ground.  I come from Africa.  Thank you.
 Mauro De Lorenzo:  Our friend from Angola.
 Jordan Markali [phonetic]:  Yes, good morning.  My name is Jordan Markali.  I’m from Angola.  It is really I’m kind of glad to see some focus here on what Africa itself can do as well.  And my question is to the panel or probably more to Mr. Mazimhaka.  Is there any mechanism, or will there be a mechanism, by which the outcomes of these trilateral discussions are actually going to be incorporated in African public policies, I mean, by the government of the African policies?  Is there a mechanism or this is going to be simply discussions going back at the fourth  that are somehow tangential to policies that the governments are implementing in their countries?
 Mauro De Lorenzo:  Thanks.  I do not know how -- maybe -- I do not know if this is, Witney, the place we wanted to discuss the pluses and minuses of the Clinton Administration Africa policy but why do you not start off.
 Witney Schneidman:  It is not.
 Mauro De Lorenzo:  Exactly.
 Witney Schneidman:  But let me just make two points in response to the professor.  When I referred to Africa rising, I think we are just going to agree to disagree on that because from my perspective it certainly -- the discussion we had at trilateral dialogue, the perception of Africa where democracy is moving forward and virtually all of the 53 countries of Sub-Saharan Africa, I think, is something that is indisputable.  The process of economic reform, the emphasis on governance, the increasing levels of investment, the increasing levels of trade -- I mean, there is still a lot of work to do.  But when you take the longer perspective, the 20-year perspective, I think there is no doubt that Africa is in position to move forward in the way of economic development that we have not seen before.  And one comment I will make on the Clinton Administration, I agree that we probably did not get everything right, but what I see as its lasting legacy is in the context of the African Growth and Opportunity Act; not so much for the trade policy, which was important, but for the bipartisan consensus that it created here in Washington that Africa is a priority and we need to have resources, more resources for Africa.  And that bipartisan consensus has been at the heart of the passage of the Millennium Challenge Act, the President’s emergency program for HIV-AIDS and many other initiatives that have been quite important to Africa.
 Patrick Mazimhaka:  Yes.  Thank you.  Thank you.  I will start with Bob’s question partially, on the question of non-interference.  I think that you will recall that on the question on non-interference in the member states on other countries, I guess, was not just a Chinese policy; for a long time it has been an African policy as well.  And it did indeed hinder our ability as African countries to engage with member states to resolve issues, particularly of governance and conflicts for the longest time.  There is a different reshift [sounds like] with African Union, a new Constitutive [sounds like] Act, which does compel member states to intervene in the case of populations that are in danger.  We are limited to that but not necessarily to other issues of governance who do not have the mandate to do that interference. 
In our discussions with China, in terms of democratization and good governance in Africa, we have been urging China to review their policy of non-interference in terms of saying, “You can use influence in countries where you are friendly to point out some of these ideas of governance that Africa itself can talk about in the countries.”  We do criticize member states for poorly conducted elections.  We do have reports on human rights abuses anywhere on each member state to [indiscernible] we tell China we are not shy to do that.  You should be able to tell [indiscernible] do the same. 
And what it is is we are not able as maybe professor [indiscernible] think, that to change regimes in Africa -- but we are certainly do not shy away from pointing out what the problems are in our countries.  I recommend reading of the Human Rights Commission reports on member states which is published annually.  That is a public report.  We do not -- now what this stands out to be, I think, in the words of the chairman who is running away, as you say Adama, it is to have a policy of non-indifference to what is happening in Africa.  You do not have the mandate to interfere but you cannot be indifferent to the situations of poor governance.  We have to point them out and put pressure on member states to do something about it. 
We may not be totally successful in changing things and the mechanisms do not exist yet because the countries have got -- they have their sovereignty protected by United Nations Charter so we cannot go inside the countries to go and change governments and change the regimes; it is impossible. 
Now, the other point I think that I may comment on is the last question by George [phonetic], which I did mention the fact that the wish of those participating in a tripartite dialogue is to find a mechanism of raising this from the level of a private enterprise to where our governments - United States of America, China and Africa - can raise this to a level of actually discussion at the level of states.  And we have not got there yet but certainly that is the wish of the participants in the tripartite dialogue.
 Joe Mollo:  I just need to make a comment here when my brother says, “What is this progress you are talking about in Africa because I do not see any?”  I think he would say we are almost acting like ostriches; we are not.  We know there is still a storm out there.  We know there are conflicts out there.  We know we can have an election but not a perfect election at all.  So we are aware of these things but we are saying, compared to where we came from without necessarily, you know, putting our heads in the sand like ostriches -- but we are saying let’s give ourselves a little bit of a pat.  We have the Peer Review Mechanism for instance, and you are saying, “When you come to implement this thing do you really implement?”  We see all kinds of countries that are saying they can be reviewed.  And really, I mean, you know, should there really be a review?  We are saying the fact that that they have adopted, at least, is progress.  Thank you.
 Michael Spicer:  Perhaps I can just supplement on these three questions.  Bob, I think what was fascinating about this dialogue, at all three meetings we had lengthy and quite passionate debates about principles of non-interference and we not only got the sort of party political set piece but then as we went along we got much more nuanced, reflective dialogue on the subject.  And I must say I think it was responding to the position that the Africans put.  My impression is there was a great deal of listening again because I think the Chinese understand that doing business in a global economy has certain imperatives.  You cannot simply stick where you are and continue to muff [sounds like] the existing position.  So it is an iterative process and I do not get the impression that there is no question of any progress whatsoever.  So I see some movement on that.
As far as the business principles, where I sit in South Africa - but also I have had some involvement in debates about good governance and codes of conduct and a variety of other things - there is a very active civil society engagement in this.  It is not only coming from businesses themselves, from stock exchanges or from governments; there is a great deal of thrust coming from the non-governmental sector and it is not just in environmental areas.  It is in the whole issue of transparency in the area of good government.  So I think this is not something that is simply being cooked up behind closed doors by one group of individuals.  There is a lot of activity on this.
 Tom Gibian:  My name in Tom Gibian.  I am with ECP Capital Partners.  I wanted to just ask the group to reflect on -- unimaginatively, my question is could the group reflect on the point that was made a moment ago about dispute resolution and an opportunity for the African Union or another body to take that on as a direct challenge and responsibility to improve the perception and perhaps the reality of what happens on the ground.
 Male Voice:  Good morning.  It is a little bit difficult to --
 Male Voice:  [Inaudible]
 Male Voice:  My name is [indiscernible] I am from [indiscernible].  It is a little bit difficult to ask a simple question about Africa but I’m going to try to ask one question.  But I find it interesting that you refer to good government practices in Africa from an American point of view or trying get China to interfere in American governance.  If I’m correct, the Western consensus in Latin America has gone on for God knows how many years and the interference aspect has not necessarily been positive.  I am a bit shocked to hear you say, “Well, we should expect China to act in certain ways.”  Will those ways be to the best interests of Africa, for one?  And, secondly, as we move towards a more investment and business-oriented focus when it comes to African development, how does Africa expect to move on without the capabilities necessary to hold up those infrastructures?  We do not have the educated personnel.  We do not have individuals who can run these programs.  So do we see these issues being a one-time thing where we say, “Well, look at what we have done for Africa.”  But these infrastructures cannot hold up, say 20 or 30 years from now and especially with the brain drain that Africa experiences.
 Ramij Banggo [phonetic]:  My name is Ramij Banggo.  I am a Congolese-American.  And my question is to Mr. Michael -- or to Mr. Spicer.  What I wanted to ask him is what do you think that the Chinese -- because from the remarks of Mr. Mazimhaka, so far it seems that most of the Chinese’s aid to Africa has been to the public sector, not the private sector.  My question to you is what do you think the Chinese can teach Africans in terms of private enterprise that the South Africa cannot because I just came back from South Africa and I saw that in my opinion, South Africa is what Africa is and what Africa could become.  It is really one complex mystery.  Thank you.
 Michael Spicer:  Shall I start?   I think that if Africa is to realize all these opportunities that we have been talking about, we are going to need the entire spectrum of enterprise.  There is room for government-to-government interactions, public-private partnerships and entirely private sector-driven activities.  And it is entirely true that much of the thrust from China has been under the aegis of the Chinese government, and the nature of many Chinese enterprises is to be linked pretty directly to the government.  So that will be one component.  I happen to agree, sitting in South Africa, that there is a great deal that South Africa can teach many parts of Africa.  One of the big benefits I think that we talked about during this trilateral is that Africa can benefit from the multiplicity of actors.  In fact, it is a boon to have not just China, not just the United States, not just South Africa, but the Russians, the Brazilians, the Indians as well as the existing players from Europe.  This competition is potentially very fruitful for Africa.  So we do not want to put all our eggs in one particular basket, neither the U.S. basket nor the Chinese basket or, indeed, the South African basket.  And in some senses we are quite used to being treated like the ugly Americans of Africa.  People are not always too thrilled to see the South Africans arrive.
 Patrick Mazimhaka:  The question that you asked about, the split resolution, sorry, we have just skipped over it and it is a very, very important question.  Let me say what is going on in the continent today, we have arbitration courts in our regional economic communities.  For example, Comesa [phonetic] has gone to court that seeks Mosaka [phonetic] to arbitrate in the business disputes.  I think West Africa also has got one; I’m not sure about Sadak [phonetic] I think he does.  That is the beginning of trying to get the regime of arbitration, international business and even local business that will help us when we have disputes in this.
 But what else we are doing -- we have got a project to harmonize business law for Africa.  There is already a common business law for West African states who want to be able to harmonize so that you have a common business law for the continent.  I think within that, there will be different elements for arbitration in case of disputes.  So very interesting question and I think it is definitely a work in progress and in some areas there is already mechanism for dispute resolution in business.  That is very, very interesting question, I think.  Thank you very much for that.
 The question that Simone [phonetic] has asked is interesting.  One, the question of investment and infrastructure -- I think the emphasis was on it being profitable business for the Chinese.  And we think that there has to be new thinking indeed about infrastructure maintenance.  The other day we were actually discussing with some people the fact that when you look around African countries which are constructing tarred [sounds like] roads all over the place, you do not have any courses in the technical schools in road maintenance at all.  Therefore, the road, instead of lasting 10 years, lasts three and a half years, four years, and it is gone and you have to negotiate another loan to redo it again.  That is absolutely beyond the money; there is a problem of actually technical capacity to maintain modern roads in African countries.  So how do you deal with that?  I think the project should be able to incorporate a permanent road toll collection.  I know some countries do raise funds on petrol pumps for road maintenance but indeed the manpower that has to know how to maintain roads does not exist in African countries.  And that is why roads cost us a lot of money, particularly given our climatic conditions.  It is difficult to keep infrastructure developing and be able to maintain it.  I agree with you entirely; that is a major problem.
 Michael Spicer:  Mauro, can I just add one point.  I think our friend over there was raising the whole issue of capacity and skills.  And many African countries, of course, have extensive diasporas reflected right here.  And I think there is a lively debate, certainly in South Africa, East Africa, West Africa, about how to engage those diasporas more productively.  And that entails of course many governments asking the questions what is it necessary for us to do to create conditions in which our people abroad would want to come back or would want to contribute in a number of ways.  And that debate, I see, is a very creative and productive one.  It is part of the answer; it is not the only, of course.  This is a complex long-range difficulty that needs to be addressed but engaging the talents of the country wherever they are around the globe is one part of that.
 Joe Mollo:  And while we are on the diaspora thing, I wonder how many are aware of the conference that is coming to South Africa on the diaspora very soon.  Because we -- this is an issue and a matter that we are very seriously engaged with.  The question of capacity and the question of skills is a big, big problem and a big issue and it is not being swept under the carpet in Africa.  It is being addressed very seriously.  Thank you.
 Deborah Brautigam:  Let me make one point about the maintenance of roads and relate that back to the Chinese.  I did mention that one of the things that they are interested in is setting up toll roads.  And toll roads actually date back -- some of the first highways were constructed in England and in this country as toll roads.  And so in an era when we were very poor in the West, we had mechanisms set up so that user charges could be put in place to maintain these roads and provide the funds and the incentive to maintain the roads.  And here we are at the American Enterprise Institute; I probably do not need to stress those kinds of things very strongly here because people probably recognize that already.
 The second thing is that right now African countries have a great opportunity to get things from China.  And if maintenance and the capacity to do that is a real concern, then I think this is something that you could get the Chinese to set up centers to train people.  They have made a promise to train 20,000 or 30,000 people over the next three years.  They are setting up 30 malaria treatment and prevention centers because that is what they were hearing from their African counterparts as to where the needs were.  If you convince them that road maintenance or infrastructure maintenance is where you need the technical capacity, I think you will find them addressing that.
 Mauro de Lorenzo:  There is one, two, and the lady here.
 Wayom [phonetic]:  Thank you, Mr. Chairman.  Good morning ladies and gentlemen.  My name is Wayom.  I’m from Georgetown University.  I have a question.  Do you think -- whether China is developing country or a developed country, is there any consensus or are there any differences among African states?  If there are any differences, what are the differences among -- what are the opinions [sounds like] of each African state?
 Mauro De Lorenzo:  Towards the Chinese?
 Male Voice:  Toward China, of course.  Yes, that is my question.  Thank you.
 Kailash Ruhee:  My name is Kailash Ruhee.  I am the Ambassador for Mauritius.  As a country that has really been in a win-win situation as far as our relationship with China is concerned, I would like first of all to discharge one of my diplomatic duty over here in taking issue with the comments that have been made about Africa.  Africa is a continent that is very much on the way of transformation.  There are still some major weaknesses but, nonetheless, there are some very, very positive stories coming out of Africa.  And I would like to, over a cup of tea, maybe, to discuss with the professor about issues in Africa.
I think it is important to situate this discussion in a much more strategic perspective.  Whereas before, Africa was essentially a battleground for geo-politics, I think it would be fair to say that today it is more geo-economics that will be the determining factor.  And I submit that all the initiatives that are being taken -- we have heard about the trilateral initiative; I suggest it should be more multilateral, including the European Union and other emerging countries like Brazil and India that are also investors - silent investors, maybe - in Africa.
And at the end of the day, we are going to gauge the success of these engagements on one criterion, and one criterion only.  And that is how successful all these people would be in getting Africa integrated to the global economy for the benefit of its people.  And I’m going to end on this note by suggesting that perhaps all of us should revisit a very interesting book that has been written by CK Prahalad, Fortune at the Bottom of the Pyramid.  And maybe there are some lessons from this book that would be applicable to the African continent where we can unleash the potential of the small and medium enterprise of the continent and that would be greatly helpful for poverty alleviation in Africa.  Thank you.
 Tantiana [phonetic]:  Thank you.  My name is Tantiana.  I’m from China Development Brief, which is an independent publication.  And in May, while the African Development Bank governors’ meeting was held in Shanghai, we together with several other international organizations bring African civil society representatives to Shanghai to meet their counterparts in China and also Chinese scholars, including representatives from countries like Sudan and Zimbabwe.  So my question is most of the dialogue discussion we have seen between China and Africa are at very high levels - government levels or business levels.  What do you see the role of civil society can play to foster a more healthy and constructive relationship between China and Africa?  Thank you.
 Joe Mollo:  Yes, we agree that there are differences amongst African countries.  Coming from South Africa, we are very aware of that because there are people that would tend to say that South Africa should in fact try and market itself differently.  They would say, “Look, you have better infrastructure.  You have better banking facilities.  You have better stability,” and so on. “You are different from Zimbabwe.”  This might go as far as saying you are different from the rest of Africa.  But I think South Africa -- the South African government has been very clever and very wise to say, “No, we are not going to market ourselves as something different from the rest of Africa.  We are part of Africa.  We may be slightly ahead of the rest of Africa, but we are part of Africa.”
They have to maintain this position because it would -- you know, whatever development, the level of development that South Africa has reached would actually not be sustainable if the rest of Africa remained behind, remained where it is.  We can all see what would happen.  So it cannot afford to be the sea of development, of wealth in the midst of all that poverty.  So while we accept that Africa is diverse and different -- and there is Nigeria and it is not an extra [sounds like] Lesotho, Lesotho knows; Nigeria does not.  But we have a lot more in common and I think we need to always -- I see the heads saying, “We do not have much in common.”  We try to pursue similar policies in the hope that they will bring us to a similar -- because in the first place, we are pursuing this regional integration.  We do that because we know that when we are trying to invite investments, as individual countries we are actually too small.  We are smaller than a lot of American states here -- single states.  So in order to make business sense, we have to integrate.  Difficult as it may be, but we have to cut down some of these barriers.  Maybe you had a different sense when you asked that question but this is the way I was meant to look at it.
Witney Schneidman:  If I could just respond to the point that the ambassador from Mauritius made and his distinction about the era of geo-politics being over and the era of geo-economics having arrived, I think when you read the paper that the African delegation has submitted - and you have - it makes that point, precisely, that the post-colonial era in Africa is over and the era of globalization has arrived.  And I think it is a very important concept because it goes to the question we have been discussing: is Africa a continent in crisis with no opportunity or a continent of opportunity with challenges just like every other region in the world is facing challenges?  And I think I certainly subscribe to the latter point of view.
And one other point in terms of making capital available, I just want to mention another public-private partnership initiative I have been involved in in Liberia where the American entrepreneur, Bob Johnson, made a commitment in response to President Sirleaf’s request for capital to come to Liberia to help the reconstruction.  He put up $3 million; the Overseas Private Investment Corporation, OPIC, has put up $20 million; the African Development Foundation has come forward with another $3 million.  So we have a $26 million - $30 million fund that we have created to make loans available to entrepreneurs from the area of $25,000 to $500,000.  I think we need to see more of that across the continent because capital is one thing I think we all agree on is lacking and is needed.  Thank you.
Patrick Mazimhaka:  Thank you, Chair.  Just another comment on the issue raised by the distinguished ambassador of Mauritius.  First of all, let me thank you for defending the African Union member states.  Traditionally, I would not do that; it is the member states who defend themselves.  Thank you for being in the audience to do that.  Now, we do not do that because we are civil servants.  We leave it to member states to deal with the politics of their countries.  Thank you very much.
On [indiscernible] territories, I think you have been right about this.  On this particular question, it came in as a concern that I think you have followed in the media about the possibility of a confrontation between China and USA over resources in Africa.  So that kind of started the conversation that we have.  But may I assure you that the African Union is engaged very actively with India as not only a bilateral partner to main African countries but also as a block of countries that run projects we have with India that are very, very prominent, like the interconnectivity and education and science and technology; we are engaged with India in that.  And we are looking forward to a summit early next year, a summit where we have a meeting with India.  We are engaged with Brazil in Latin America; again, we have had meetings, particularly starting with the cultural aspects of the diaspora and all that but also with investments in the continent.  We are in that.  We are also engaged with the Caribbean as a region.  I think we are also looking forward to a summit meeting in South Africa with the Caribbean as a region.  So we do engage in that.
On the other hand, we have the European Union as a group where we have political engagement.  We have partnerships in conflict resolution.  We have all sorts of government issues that are traditional for African countries and European Union member states.  We are engaged with that as well, as we are engaged with the G8.  Africa is always invited now as an observer in the G8 summits in order to put our case forward.  So we are [indiscernible] territories engaged in that manner.
The question of civil society’s role, I think Mike Spicer did mention the possibilities of a civil society bringing a very positive role and sometimes not so positive as such.  But what you raised as the participation of civil society in a meeting like the Board of Governors of ADB, that was very useful.  On the continent, civil society participates in meetings prior to every summit to deal with issues that are on the agenda so as to have their input into that.  So we recognize the role of civil society and in Africa the civil society is also organized in their own forum that we call ECOSOCC, which is chaired by Nobel Laureate professor Wangari Maathai; he is interim president of that group.  So we do recognize the role of civil society and we do encourage civil society to be actively engaged with all the issues that we are dealing with.  Thank you.
Tony Carol [phonetic]:  I’m Tony Carol with Manchester Trade and thank you again for a terrific presentation here in a full room.  Deborah points out about the issue of voluntary restraints; it is not so much the voluntary restraints toward Chinese products to Africa that is as important as military restraints against competing markets such as the United States under AGOA, particularly.  Africa and China do compete in certain product categories and I think the notion or discussion on voluntary restraints on third markets might be actually more valuable than on products destined for Africa.  But that is a side bar.
One of the areas that I find striking about possible cooperation among the three parties is in the area of product safety.  When I was in China on a similar mission for CSIS not long ago, China introduced a product labeling and product safety standard law which required health products to be labeled as to their ingredients and required truth of labeling for their domestic market.  Yet there has just been an unending onslaught of counterfeit medicines, medical devices and other products to the African market which have not been adequately screened or deterred.
Africa does not have the competency on enforcement for interdiction.  China has -- of course, a lot of these are small producers but has more means in which to try to thwart this on an X-factory basis.  And the US has technical capability in the form of technical assistance, whether it be in provision of spectrometers and screening medicines or in technical assistance on just being able to evaluate medicines as they come in.  So I think there is a rich ground and certainly welcome the notion of some sort of further, as Witney pointed out, technical  assistance and collaboration at the official level on areas where there is some sort of commonality of interest.  And I think in health and safety, in consumer goods and particularly medicines and health devices is an area that could be a good opener for that type of collaboration.
Lia:  Lia from VOA.  The panelists have talked about the challenge brought to Africa by Beijing’s aid and investment in Africa.  But I’m sure you are all aware that there is criticism that Beijing has been the new colonialists.  I wonder what the panelists think of this criticism.  Thank you.
Female Voice:  Hi, [indiscernible] from Manchester Trade.  My question has like two parts to it.  Please everybody do answer it because I see when three questions are asked one of them gets dropped out.  My first part of the question is, most of the development that happened in African countries is much more dependent on the domestic government than on the aid or help being received from the outside countries.  That, though, it is important it is the willingness to accept it and to absorb it from the domestic government which is more important.  So what do you see -- like, how much of the role of domestic government do you foresee in observing rules?  Are all the governments the same?  Do they do it?
And the second part is we hear so much about corruption in Africa.  So when a Chinese aid is being given to African countries, how much do they partake in this corruption?  There is no talk about that in these presentations from what I see.  Do they aid to the corruption?  Do they give aid even to the governments that are corrupted?  How does it look?  Throw some light on that.  Thank you.
Michael Spicer:  Can I take over?  Just responding to Tony [phonetic], I think one of the most interesting aspects of this dialogue over the 13 months was to see the Chinese responding to a concept that is very, very familiar to those of us in the corporate world, and that is reputation management.  As you participate in the global economy, in the domestic economy as well, but particularly in the global economy, you have to do a wide variety of things to protect your reputation.  And I think this has, perhaps, been a phenomenon that has caught the Chinese somewhat by surprise.  But as they go along now in a whole range of areas they understand that you have to do things not out of any sense of altruism but because brand China as a country and brand China as companies simply will not survive unless they undertake these things.  And that is the basis on which the kind of activities you are suggesting, I think, will go forward.  And one can see it happening right across the piece [sounds like] now because it is a necessary part of participating in the global economy.
Joe Mollo:  Neo-colonialism -- my big brother instructs me.  I think Carol actually put it very well when she said that China has been involved with Africa for a long, long time.  In fact, it became part of the liberation struggle.  If we recall the Tazara road in between Zambia - Tanzania, this was to strengthen those African states against Apartheid.  So China has been a partner of Africa in the liberation struggle.
I think we talk liberally; nobody actually means that and there would never be an official position that says China is now the new colonialist.  It simply says that China has influenced, in my view -- it simply says that China has now got itself some influence in Africa.  And it is -- I do not think it is unhealthy.  It is earned; it is because it is involved in the development of Africa.  Of course, as I said, there will be these aberrations where there is competition between traders.  And the Chinese traders tend to win against, unfortunately, our own traders.  Now, if the label will come from there, I suppose yes, you would hear those kinds of accusations.  But I do not think it is an official African position or perception, a generalized perception in Africa, that China is a colonialist.  It has never been; it is part of the -- it is a partner in the liberation struggle.  Thank you.
Mauro De Lorenzo:  And if I could -- I mean, world politics is different than it was in the colonial period and it is not a label which can be easily transferred.  And I’ll draw your attention to page four of the African document where they write, “Because the post-colonial period is over, Africa does not tend to interpret China’s increased engagement in imperialist terms.  African leaders do not mind if China pursues its interests in Africa so long as their countries benefit, too.”  And they go on: “In spite of rhetoric on win-win cooperation, only African states through tough and principled negotiation can secure their national interests.”  Deborah, would you like to?
Deborah Brautigam:  Thanks, Mauro.  I would just like to say two things about some of the questions to address them.  One is about the role of the NGOs.  I liked your question.  I think that China, as Michael said so well, is really realizing that it is a whole different world out there.  And they are dealing in Africa with very active civil societies that they do not really have at home or that is just starting out there.  And I think China is learning how to deal at home with organizations like the China Development Brief, which --  you have had some problems recently with the Chinese authorities in Beijing.
But in Africa, the NGOs can play a kind of a good cop-bad cop role I think with China.  And the bad cop would be the media that is sort of bashing China and the NGOs bashing China, and I think this is something that has really taken the Chinese aback.  The good cop would then be the really constructive engagements by NGO leaders meeting one on one; for example, Peter Bozard’s [phonetic] meeting with the head of the China Eximbank about their environmental standards.  So that is sort of shake them up; show them that there is a lot of concern; they have to address it.  And then show them how they can address it.  So I think that can work really well.
In terms of corruption, it is interesting that a couple of years ago, the Chinese Ministry of Commerce published guidelines about corruption, about how it should not happen in their foreign aid projects.  And they established penalties and they established the things that needed to be reviewed because they saw that corruption was happening.  But what was happening was they were focusing much more on corruption within China, amongst Chinese companies that were competing for contracts to supply material goods and things like this through aid projects.  And they were colluding with people in the government to get these contracts in China, so that was a response to that.  I discussed this briefly in the question-and-answer period with the head of the China Eximbank at a meeting back in April; I asked him about transparency and corruption in Africa and how they were dealing with that.  And he told me, “Well, you know,” he said, “we have a saying in China that if the water is too murky -- too clean -- if the water is too clean you do not catch any fish.”  So I thought that was rather interesting. 
But then he explained a little bit more about what the China Eximbank was doing about corruption and they actually have a very interesting way of issuing their loans.  For the most part, the loans do not go actually to the government.  The government puts in request for payment, but the payments then go to the Chinese companies that are carrying out the work.  So there are some exceptions to this, but for the most part they kind of avoid corruption by not channeling the money into the government.  So there are exceptions; again, there is corruption -- sometimes you have 10 Chinese companies bidding on a project in Africa.  And so there will be corruption there amongst the Chinese companies that have a semi-public, semi-private status trying to get this contract.  And this kind of thing happens amongst a lot of different countries.  But official corruption from the Chinese government to try to get projects and so on -- I have not seen any specific reports alleging thus with any kind of evidence.  So I think that is interesting.
Mauro De Lorenzo:  We have time for one more question.  And anyone wants to -- this gentleman up here.
Shujun Lee [phonetic]:  Thank you.  Shujun Lee from Xinhua News Agency, China.  What do you think is the biggest challenge facing China in terms of its involvement in Africa?  And also, what are the major concerns of the US government about China’s involvement in Africa?  Thank you.
Witney Schneidman:  Clearly, one cannot speak from an official point of view because nobody here is an official with any government.  But there is no question that issues - I think that what we have been talking about - that relate to Africa’s development are among the top concerns when it comes to the American perspective of China in Africa.  So in our trilateral dialogue, I think the issue of corporate social responsibility was something that we discussed.  And the questions related to that is there are many Chinese companies in the energy sector, for example.  And the questions that emerged: Are environmental standards being adhered to?  Are jobs being created?  Are skills being transferred?  I think product safety as was raised certainly falls into that category.  There is the issue of democratization; there is no question about it.  And in our trilateral dialogue, we sort of agreed to disagree.  But I think from the American perspective, we understood that the Chinese point of view is not necessarily opposed to democracy per se.  Their concern was over sequencing; it was over stability; it was over reform.  And I think in there, in that configuration, there is an opportunity for cooperation.  So I think the areas of US and China that are the biggest challenges revolve around those issues that relate to Africa’s development and, obviously, American security interests as it relates to peace and security in Africa.
Deborah Brautigam:  I seem to always be making two points; again, two.  I would say that we have to be really careful in the West with regard to the China-Africa and what are the challenges and what does it mean for us.  Not to be too hypocritical, because when we think -- where is our biggest aid recipient in Africa?  Define democracy of Egypt?  You know when we say that democracy means a lot to us - and this is where we think China should be going also - it is very difficult for our officials to say this with a straight face to the Chinese.  And they know that.
The second thing is about the environment.  And when we say we are concerned as we are about oil and the environment, well, the United States is still dealing with the problems with Exxon not cleaning up completely in Alaska.  And Shell is not, I do not think, an American company today.  Is it still from the Netherlands?  But Shell’s record of environmental protection in Ogoni [phonetic] land in Nigeria is not very good either.  So the West is a little bit weak when it comes to criticizing the Chinese activities in this area, and this is a problem.
Patrick Mazimhaka:  Thank you.  That was one other point I was going to add.  But there is that point that I think the Chinese delegation talked about - the problem of being understood on what their intentions are in Africa; the media perceptions of what they are doing; accusations like neo-colonialism.  That is a challenge for the Chinese and I think that is what we are talking about; reputation management is a problem for China.
And one of the delegates, Professor Hu [phonetic] did say they had been acting according to the philosophy of Confucius, meaning they do not talk too much but they do make contacts and make things go without saying so.  And then while they keep saying you are doing nothing and that cultural barrier -- they do not know how to do that but they said they have changed now.  They have been public in their demands [sounds like] and they gave us the example of what happened in the case of Sudan.  For the longest time, everybody thought China was blocking advances in Sudanese-U.N. discussion on deployment.  They said, “No, but why would the Chinese -- the Sudanese government who never did say so.”  Later on, they actually did go into open diplomacy and sent ministers, create an envoy just like everybody does, and everybody says policy has changed.  They do not believe policy changed; they just changed the way they are doing things.  So communication being understood is another challenge that the Chinese have in Africa.
Mauro de Lorenzo:  An excellent point.  Thank you all for coming and please join me in thanking our panel.

[End of file]
[End of transcript]