Monday, August 17, 2009

Special Focus: Hillary Clinton’s Africa Tour and Botswana

source: Republic of Botswana (16/8/09): TAUTONA TIMES no 21 of 2009
The Electronic Press Circular of the Office of the President
“Democracy, Development, Dignity and Discipline”

C. SPECIAL FOCUS: HILLARY CLINTON’S AFRICA TOUR AND BOTSWANA

C1) Summary

Over the past two weeks the U.S. Secretary of State, Mrs. Hillary Clinton, has undertaken a well covered high profile seven nation tour of the African continent.

Throughout the tour, which took her to Kenya, South Africa, Angola, the Democratic Republic of the Congo, Nigeria, Liberia and Cape Verde, Botswana was repeatedly cited by the U.S. Secretary of State as a model of democratic stability, good governance, economic prudence and transparent resource management.

Mrs. Clinton’s accolades in favour of Africa’s oldest multi-party democracy were made in formal and informal remarks at various media opportunities and other public events, notably including a globally televised CNN “Town Hall” interview at the University of Nairobi and in her address to the Liberian National Assembly, which was broadcast, live by various international news networks.

At the CNN event, which was moderated the Newsweek Editor and prominent international commentator, Fareed Zakaria, Mrs. Clinton observed that all too often in Africa and elsewhere extractive industries do not leave sustainable economies and environments unless there are rules that are enforced. In this content she went on to add:

“I often use an example that I think is a good model – Botswana. At the end of the colonial period in Botswana, the people of Botswana will tell you it was very fortunate because the colonialists – in that case, it was Britain – left right before diamonds were discovered right? And there was enlightened leadership in Botswana who said, ‘We have diamonds. What shall we do with them?’ And what they did was to create a mechanism so that funding and revenues from the exploitation of the diamonds went to build the infrastructure. So those of you who have been to Botswana know they have a very good network of roads, they have potable water everywhere. I mean, they invested in their people.”

In her speech to Liberia’s legislators, the U.S. Secretary of State similarly observed:

"When diamonds were discovered in Botswana, the Botswana Government, the then-president and the legislature, decided that they were not going to let outsiders or corrupt insiders exploit what was the natural right to the riches of their country of the people. So they created a legal framework, and they required that any company wishing to do business in the diamond industry had to provide significant revenue for the Government of Botswana. They then put that money into an airtight fund. And if you have ever been to Botswana, you can drive anywhere. The roads are in excellent shape. You can drink cool water anywhere, because every time you buy a diamond from DeBeers, some of that money you spend goes to pave roads in Botswana. That's what I want to see for Liberia.”

As to the importance of highlighting the continent’s best practice benchmarks to the wider world, Mrs. Clinton echoed the sentiments of many Africans and friends of Africa when she noted at a Business Forum in Johannesburg that for the sake of progress:

"…we need to tell the positive stories, the South Africa story, the Botswana story. I mean, we need to tell the story of places that have really created positive conditions, and then we need to work as hard as we can to try to improve the conditions elsewhere.”

The U.S. Secretary of State began her tour with an address before the 8th Forum of the African Growth and Opportunity Act (AGOA), in Nairobi. In her remarks to the gathering she stressed the new American administrations commitment to building a new relationship between Africa, the US and other global stakeholders, including those in the private sector, based on “partnership”.

Mrs. Clinton’s emphasis on the theme of partnership at the AGOA conference and thereafter has been generally welcomed in Botswana as it clearly dovetails with a widely circulated statement jointly issued on the eve of her tour by President Seretse Khama Ian Khama, along with Presidents Ellen Johnson-Sirleaf of Liberia, Paul Kagame of Rwanda and Abdoulaye Wade of Senegal.

In there statement the four African Presidents have explicitly called on the Obama Administration to adopt a new approach towards Africa based on "Partnership not Patronage" [below].

The joint statement was originally drafted in response to last month’s [11/7/09] historic address by President Obama in Ghana, which also called for a new approach, while affirming that ultimately "Africa's future is Up to Africans". In the same address the U.S. President further observed that:

"…ultimately, it will be vibrant democracies like Botswana and Ghana which roll back the causes of conflict and advance the frontiers of peace and prosperity [on the continent]."

AGOA Forum

Botswana was represented at the 8th AGOA Forum that took place between the 4th and 6th of August by a delegation headed by the Minister of Foreign Affairs and International Cooperation, Phandu Skelemani, which also included the Assistant Minister of Trade, Duke Lefhoko and Senior Government Officials.

The AGOA Forum is an annual high level event which allows officials from AGOA eligible countries, such as Botswana, and officials from the United States of America to review implementation of AGOA and further articulate their views and concerns in order to build closer economic ties for mutual benefit.

AGOA was introduced in 2000 and has so far played a significant role in facilitating trade and investment between the US and Sub-Saharan African countries.

Also below please find for convenient reference: C2) further Examples of Clinton/media comments on Botswana and C3) the full text of the open statement "Partnership, Not Patronage" by Seretse Khama Ian Khama, Ellen Johnson-Sirleaf, Paul Kagame and Abdoulaye Wade

C2) Sample of Clinton remarks and associated international media comment on Botswana:

Listed below are samples, from over a hundred monitored articles, of U.S. Secretary of State Clinton’s recent remarks about Botswana and associated media references.

C2a) AFP - 15/8/09: Clinton came armed with examples she repeated throughout the trip -- pointing to India as proof that democracy works in developing countries and hailing Botswana for ensuring its mineral wealth funds a first-class infrastructure.

C2b) 13/8/09: U.S. Secretary of State Hillary Clinton in Liberia, addressing a joint session of the country's legislature:

"There are examples of this around the world, but let me use one example from Africa: Botswana. When diamonds were discovered in Botswana, the Botswana Government, the then-president and the legislature, decided that they were not going to let outsiders or corrupt insiders exploit what was the natural right to the riches of their country of the people. So they created a legal framework, and they required that any company wishing to do business in the diamond industry had to provide significant revenue for the Government of Botswana. They then put that money into an airtight fund. And if you have ever been to Botswana, you can drive anywhere. The roads are in excellent shape. You can drink cool water anywhere, because every time you buy a diamond from DeBeers, some of that money you spend goes to pave roads in Botswana. That's what I want to see for Liberia."

C2c) 12/8/09 U.S. Secretary of State Hillary Clinton responding to a question on how corruption on the continent can be tackled at Press Q/A in Nigeria with Nigerian Foreign Minister Ojo Maduekwe:

CLINTON: This is an area that I want to work on with the minister and with the government. I’ll just give you a quick example. It’s one that I’ve used across Africa, because it’s an African example, and that is the country of Botswana. Botswana, as you may know, has a very vibrant democracy. It’s a very stable country. And it has used the revenues from its natural resource, which, in its case, happens to be diamonds, and put it into a fund, protected that fund from exploitation by foreigners and exploitation by citizens. It said to the countries that were exploiting the diamonds, and to their companies, you have to have an agreement with us that leads to investments in the people of Botswana.

So for example, when you buy a diamond from De Beers, part of that money still today goes to help build and maintain roads and clean water systems in Botswana. You can drive anywhere in that country and you can see services that have been paid for by a legal framework, strong regulations, and a national consensus that the money from the earth and its riches should be spent on the people of Botswana. Now, companies still make a profit doing business there. Individuals still do well. But they have protected their national patrimony, and I think it’s an example for the rest of the continent, and I think we will explore some of these ideas, and of course, it is up to the people of Nigeria to determine what is best for you. But I want to be sure that I do what I can to put forth ideas that will protect the natural resources of Africa for the African people.

C2d) From 12/8/09 PANA report: On corruption, Clinton said other African countries could learn from Botswana, which ``has a vibrant democracy and a stable economy". She said Botswana had developed a legal framework that ensured that money from its export, diamonds, was spent for the benefit of the people.

``Being a sovereign nation, it's left to you, Nigerians, to decide whether to learn from Botswana" example or not. But we will do our best to put measures in place to ensure that Africa’s natural resources are used for the benefit of the people" Clinton said.

C2e) 12/8/09 CNS News Feature on Clinton, Congo and Botswana - "In Congo, Hillary Clinton Suggests Government Ownership of Industry Would be a Good Thing" - By Adam Brickley (full text), along w/ (C2f) additional published comment posted by Dr. Jeff Ramsay:

In a television interview Monday in the Democratic Republic of the Congo (DRC), Secretary of State Hillary Clinton suggested that it would be a good thing for the government to take an ownership interest in industry.

“How can you help this country?” Christian Lusakueno of the Congolese television station Raga TV asked Clinton.

“The future of this country is up to the Congolese people,” said Clinton. “The choices as to what direction you go are truly yours to make. “For example, the country has an extremely rich reservoir of natural resources,” she continued.

“Right now, the benefits from those resources are not ending up broadly developing the country. They are either being taken out of the country or they are ending up in the hands of a very few people. There are models for what has worked elsewhere. The model that Botswana used when it discovered diamonds--it made sure there was a trust fund created for the country so that all of the money didn’t leave the country. In order to let a company like De Beers exploit their diamonds, they said we want to own 20 percent of the company. And as a result, if you go to Botswana, you see good roads, you see clean water, because the people and their leaders said we’re not going to be exploited and we’re not going to let the benefits end up in a very few hands.”

Brett Schaefer, a fellow in International Regulatory Affairs at the conservative Heritage Foundation, said of Clinton’s statement: “Her phrasing was extremely clumsy.”

“I think it’s probably a mistake to urge the government to have a control, or a controlling stake, in these types of industries because government historically, especially in Africa, has been particularly prone to corruption and mismanagement,” said Schaefer.

Botswana has indeed been successful in the diamond industry, said Karol Boudreaux, a senior research fellow at the Mercatus Centre at George Mason University and the head of that organization’s Enterprise Africa Project. Boudreaux noted, however, that while Botswana has had success in the diamond industry, it history and political culture also makes its distinct from other African nations.

“I think we should be really careful about recommendations like that because we’re assuming that that government will be a good manager and a transparent manager, and an accountable manager--the way the Botswanan government has been,” said Boudreaux. “The way it works there is that the government is actually in a 50 percent-50 percent partnership with the De Beers Company, and so they jointly control this company called Debswana,” said Boudreaux. “Originally the government had a 15 percent share in that company, when diamonds were first discovered back in the late 60s and the government has increased its ownership share over time.”

Boudreaux also said that while the Botswanan government owns half of Debswana, it does not own any shares of the De Beers Group. According to Boudreaux, Botswana is also unique for the strict spending controls that the government places on itself. “One thing that’s really unique about Botswana’s national development plans is that, once they’re passed by the parliament … they cannot be amended,” she said. “They cannot go back and adjust the plan, even if their diamond revenues increase substantially. So, putting that kind of constitutional constraint on yourself is a very unusual thing to do in Africa.”

Asked to contrast Botswana with the Democratic Republic of the Congo, where Secretary Clinton made her remark, Boudreaux said: “There’s just no comparison.” The Democratic Republic of the Congo, she said, has a “history of just incredible corruption, tyranny, et cetera.” While noting that the Congolese government is making efforts to “get a handle” on mineral production in the nation’s war-torn East, Boudreaux said it is also “benefiting substantially” from illegal mining in the area. As for a Botswana-style venture, she said, “How should I put this? It’s not clear that there’ll be an initiative to extract minerals in a transparent fashion in East Congo any time soon.”

Schaefer concurred that most African nations are not like Botswana. “What you see in African countries,” he said, “is a pattern of corruption, a pattern of poor governance, a pattern of countries not using the resources that they have for the long term interest of the people. And so, while Botswana is an exception, I don’t know if it can be applied as a rule to follow for countries unless you address this critical lack of good governance.”

Boudreaux said Botswana had an advantage in that it had avoided diverting significant resources to a military establishment. “They had no standing army until very recently,” she said, “so the monies that they were generating through the diamond sector wasn’t really going to support an army, like it would be, say, in Nigeria or Angola.”

“I think, in fact, it’s very difficult to use the Botswana example and suggest that countries that have very different historical experiences can basically do easily what Botswana’s done, because I don’t think that they can,” said Boudreaux. “One thing that’s kind of unique about Botswana that you’ll hear when you visit--that I’ve certainly heard when I visited there--is that people talk about their founding fathers just the same way that Americans talk about our founding fathers,” she said. “And so they are very aware that they had a unique group of people who set up their government, who placed limits on the powers of government, and then who themselves abided by those limitations.” “That’s not a story that you hear in many other African countries,” she said.

C2f) Additional comment by Dr. Jeff Ramsay, published by CNS:

As a citizen of Botswana I appreciate and concur with most of Karol Boudreaux's analysis. But, as a matter of detail, it may be noted that the Botswana government currently has a 15% stake in DeBeers, as well as a shared 50/50 stake with DeBeers in the local diamond mining company, Debswana.

While Government has equity in the companies, it allows them to run as commercial operations, earning revenue through resulting dividends as well as royalties etc. It is also not true that our National Development Plans cannot be amended; they can but only with Parliament's consent. Over the years our planning procedures, combined with executive prudence, has indeed ensured spending restraint.

The Botswana Defence Force has been in existence since 1977. Unlike elsewhere it has remained under effective civilian control. While there are some ex-soldiers, including our current President, in political leadership positions; in each case they left the military before taking up politics.

C2g) The Vanguard (Nigeria) newspaper, August 12, 2009: Mrs. Clinton had, at the weekend, criticised Nigerian leaders for the continuous importation of refined petroleum products while occupying the position of world’s number six crude oil producer. She said it was a sign of bad leadership in the country.

“Nigeria is the 6th largest producer of crude oil but the country still imports fuel,” Clinton said at the weekend during her seven-nation tour of Africa, adding that this was a sign that the nation has poor leadership,” she was quoted as saying.

On the other hand, she praised the Southern African nation of Botswana which she described as a good example for Africa because her leaders judiciously utilized that country’s resources. The US Secretary of State had warned, “Investors will not be attracted to states with failed or weak leadership, crime and civil unrest or corruption that taint every transaction and decision.”

C2g) From Interview of US Secretary of State Hillary Rodham Clinton by Christian Lusakueno of Raga TV in Kinshasa, Democratic Republic of the Congo, August 10, 2009:

SECRETARY CLINTON: Well, I think there are several things. As President Obama also said in Ghana, the future of Africa is up to Africans. The future of this country is up to the Congolese people. The choices as to what direction you go are truly yours to make.

For example, the country has an extremely rich reservoir of natural resources. Right now, the benefits from those resources are not ending up broadly developing the country. They are either being taken out of the country or they are ending up in the hands of a very few people. There are models for what has worked elsewhere. The model that Botswana used when it discovered diamonds – it made sure there was a trust fund created for the country so that all of the money didn’t leave the country. In order to let a company like De Beers exploit their diamonds, they said we want to own 20 percent of the company. And as a result, if you go to Botswana, you see good roads, you see clean water, because the people and their leaders said we’re not going to be exploited and we’re not going to let the benefits end up in a very few hands.

So there are ways that the government of the DRC could be doing things differently. I think also in terms of transparency and accountability, many institutions in the world, like the World Bank, would be very willing to come in and help in this country. But they want to make sure that whatever help they give doesn't end up in a very few hands. I mean, you know that the human rights issues, the corruption issues are very serious. The impunity of people who commit either financial corruption or abuses of human rights means that the investors around the world don’t come unless they think that they can get their investment secure. So there’s a lot to be done, but a lot of the decisions really depend upon the government of this country and the desire of the people.

C2h) Hillary Rodham Clinton, Secretary of State, at International Development Corporation Business Event, Johannesburg, South Africa, August 7, 2009:

"So I think that we need to tell the positive stories, the South Africa story, the Botswana story. I mean, we need to tell the story of places that have really created positive conditions, and then we need to work as hard as we can to try to improve the conditions elsewhere. And that’s something that is not just to be left to government. I think investors making it clear that they would go into some places under these conditions will help to give a push to the political leadership. You need outside pressure oftentimes, and so I hope that together we can make some of those changes happen."

C2i) From Globally televised CNN Forum moderated by Fareed Zakaria of CNN and Beatrice Marshall of KTN, University of Nairobi, Nairobi, Kenya, August 6, 2009

SECRETARY CLINTON: Thank you. Look, I think that’s one of the most important questions for Africa. Africa historically has been exploited during colonialism and post-colonialism by corporations and by your own leaders so that the fruits of this richness that exists in the earth, in the waters of Africa, have not gone to the people. And it is one of the biggest concerns that I have, because there is so much money being made right now, and it’s not any one country; it’s not any one corporation. But it is unfortunately aided and abetted by poor governance that doesn’t realize that the money needs to go back to the people in very tangible ways to build the economy, to build the infrastructure, to create sustainable employment. Because extractive industries do not leave sustainable economies and environments unless there are rules that are enforced. And I often use an example that I think is a good model – Botswana. At the end of the colonial period in Botswana, the people of Botswana will tell you it was very fortunate because the colonialists – in that case, it was Britain – left right before diamonds were discovered – (laughter) – right? And there was enlightened leadership in Botswana who said, “We have diamonds. What shall we do with them?” And what they did was to create a mechanism so that funding and revenues from the exploitation of the diamonds went to build the infrastructure. So those of you who have been to Botswana know they have a very good network of roads, they have potable water everywhere. I mean, they invested in their people.’

C2j) From 6/8/09 US State Dept. Press Release: "Clinton cited Botswana as a good model country that developed well after its independence, discovering diamonds just after the British granted the country its independence. She said insightful leaders there made the decision to set up a mechanism to funnel diamond revenues into public accounts to aid the public, and that is why "they have a very good network of roads ... potable water everywhere. They invested in their people."

C3) 3/8/09: "Partnership, Not Patronage" by Seretse Khama Ian Khama, Ellen Johnson-Sirleaf, Paul Kagame and Abdoulaye Wade*

Just three weeks after President Barack Obama's triumphant return from Africa, the real challenge to achieving strategic change lies in Secretary of State Hillary Clinton's own upcoming visit. Left unsaid as the president boarded Air Force One is the fact that Africa seeks not patrons but collaborators who will work "with" rather than "for" the continent. If the Obama administration wishes to truly make a difference, it must do so as an equal partner, addressing several low-cost, high-impact priorities.

To start, developed partner countries must curb corruption abroad. Efforts by African governments to strengthen democracy and governance are weakened if money stolen from the continent can find safe havens in secret accounts in the West.

Chillingly, major OECD countries have yet to prosecute a single defendant for fraudulent and corrupt practices overseas. Poorly enforced international covenants won't deter collusion and bid-rigging in large African infrastructure contracts.

Economic equations need to change as well. Since 1970, Africa's share of global exports has declined from 3.5% to 1.5%. To reduce poverty and sustain growth, Africa must reverse this decline. Secretary Clinton has an opportunity to secure a quick win while in Nairobi, Kenya, for the Africa Growth and Opportunities Act forum this month. Expanding AGOA--the showpiece of America's trading relationship with Africa--to include a larger number of agricultural and processed commodities will help.

But if Clinton does not address U.S. agricultural trade subsidies that distort the forces of the marketplace AGOA will never realize its potential--nor will Africa be able to trade its way out of poverty.

The global recession has hurt Africa. The surge in private capital flows to the continent, driven by efficiency gains from policy improvements, has helped fund badly needed infrastructure development. Since the economic crisis, however, these private flows--which topped $53 billion in 2007, exceeding foreign assistance for the first time--have fallen by 40%. There remains an annual $40 billion infrastructure financing shortfall.

The deficit can be quickly addressed by catalyzing private partnerships to raise equity finance and by increasing funding to companies that want to invest. In addition, only a quarter of Africa's population has access to electricity. Public-private investments in hydropower would offer a carbon-neutral solution.

Loan guarantees by the U.S. Export-Import Bank for American firms wishing to invest in Africa amounted to $400 million in 2007. That year, China's Export-Import Bank guaranteed loans of $13 billion to Chinese firms investing in Africa. Closing this gap would do much to project Africa as an investment-grade destination.

In extractive industries, U.S. companies should be encouraged to change the practice of building extensive private rail, power and port assets that remain detached from the host country's often sparse infrastructure network.

Ultimately, Africa's quality of life will depend on the health of its citizens. The centrepiece of U.S. support for HIV/AIDS in Africa--the President's Emergency Plan for AIDS Relief--has helped expand life-saving treatment. President Obama has an opportunity to make PEPFAR more effective by moving from emergency to long-term support--as in the Millennium Challenge Corporation's five-year partnership model, with each country taking ownership of the design of its programs.

Finally, we need more effective and predictable development lending. The U.S. remains the main exception to the common donor practice of channelling development assistance through financial systems of recipient countries. Done with sufficient safeguards, this strengthens country ownership, responsibility and accountability. The U.S.'s reluctance to embrace shared multilateral approaches limits the impact of its foreign assistance.

President Obama's charisma, oratory and heritage have excited Africa as never before. Now substantive action that realizes the promise of his visit needs to be on Secretary Clinton's agenda during her visit to seven African countries.

* Seretse Khama Ian Khama is President of Botswana; Ellen Johnson-Sirleaf is President of Liberia; Paul Kagame is President of Rwanda and Abdoulaye Wade is President of Senegal.

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