Monday, October 08, 2007

MALLOCH-BROWN speech: Making private capital work for the poor - Part 1

Not checked against delivery.

There is much to admire in Frank Porter Graham – a man who dedicated his life to campaigning on behalf of social justice.  He was a fierce advocate of freedom of speech and of excellence in education.  And I understand he was known for taking controversial principled stands on many issues of his day. 

While I am to talk about the private sector tonight, I want to start with government.  Philosophically, I happen to believe that a good private sector always begins with government.  There are two versions of American economic history: one is of a speculative, unregulated, bold frontier capitalism that created wealth that then allowed good government to follow, carried on the backs of America’s first taxpayers, its first businessmen.  The other is that government came first.  And there is no better case for that than America’s state university systems.  For it was not just that America was a nation of lawyers almost before it was one of businessmen so creating the rule-based markets that allowed business to prosper.  Rather, it was that Settler America understood from the beginning the importance of human capital.  These great state universities, such as the North Carolina system, are the apex of an education system that in my view along with America’s churches created this nation.

What has the governance, markets and social responsibility experience of eighteenth century America got to teach us about modern Africa? Well, tonight I am going to argue rather a lot.

Across America, an investment in education led to the rise of educated – and hence wealthier – people with a deep ethic of giving something back.  Education and social provision more widely has become a partnership of state and private action.  One where prominent citizens have both coaxed local and federal government into doing more but also one where private giving to schools and universities has been part of the American way.

And it is these conditions that have created the extraordinary partnership that this university still exemplifies today of public-private support and leadership that I hope we can seed in Africa.

Africa too often suffers from crude simplification of its development choices as a means of scoring a political point.  Again, on the one side are the market fundamentalists claiming Africa is a swamp of corrupt government and inefficiency and its only hope is that government will get out of the way of big business-led development.  On the other, are those who still nurse the hope that the African state and its international donors can somehow fill the space that a European government might fill of heavily public-funded service provision.  This risks an unsustainable development model where we, from abroad, fund education and health provision but with no exit strategy because there are no local taxpayers to take over the running costs.  There must be an equal attempt to build the business sector that will, through corporate and personal taxes, create the revenue that will fund public services, and that through its members own social commitment “to giving something back” will create the public-private partnerships that made America.
In 2000, at a time when I was the first, as it happened non-American, head of the UN Development Programme (UNDP), the world set itself some ambitious targets in respect of the world’s poor.  The Millennium Development Goals represented a clear call to action.  A set of measurable targets, which aim, quite simply, to give back dignity and hope to millions of people who deserve better standards of life.   The international community, in signing up to the Goals, acknowledged collective responsibility to the most vulnerable and made solid commitments for change.

This means Africans must have access to health services.  It is estimated that an African child dies every 30 seconds from Malaria.  Sub-Saharan Africa is home to 70% of the world’s HIV-positive population. 

Over 40 million children in Africa do not get the opportunity to go to school. 

Only 58% of Africans have access to clean water. 

These are basic needs. 

But Africa’s people need more than short term help to meet basic needs.  Poverty is not just about hunger and poor health.  Poverty of opportunity must also be addressed.  Africa’s next generation must feel that life in their countries, in their continent, is getting better.  As someone who lived in America for 21 years, that has always seemed to me the genius and glue of this country: that aspiration of rising opportunity for the next generation of any American family over the present.  Africa needs the same excitement of rising opportunity.

For the new middle classes of Lagos, Nairobi or Johannesburg, that is beginning but for others, life is bleak and short.  11 Million infants still die, needlessly, in Africa every year – the same number of children which make up the UK’s entire under 16 population. 

So Africa matters too because human dignity, equality and social justice matter.  These are the values that Frank Porter Graham is remembered for – and they matter.  

But Africa is much more than the sum of its challenges. 

Africa matters because of what it has to offer the rest of the world – its resources, its economic potential, its experience and its political voice. 

Africa is one of the world’s last underdeveloped markets.  But that’s changing.  And changing fast.  If we look at the growth in Chinese activity alone - Last year there was 40% growth in two way trade between China and Africa.  There has just been an announcement of a $5 billion Chinese commitment to the Democratic Republic of Congo.

Net Foreign Direct Investment into Sub-Saharan Africa from the rest of the world is on the increase – it has more than doubled in the past seven years, but there is still a long way to go.

Africa is rich in raw materials and natural resources.  10-15 % of US energy imports are from Africa, and this figure is set to double.  In the Western world, there is a growing dependence on African energy supplies and we have a clear self interest in the economic and social well-being of a continent in possession of this global asset.

But Africa will not enjoy the economic growth, which is so vital to the eradication of poverty until the perception of all Africa as dark and dangerous, violent and corrupt, is changed. 

To be continued.

Foreign Policy News British Embassy, Oslo