Photo Credit: Flickr stream of futureatlascom
Last month, at the African Growth and Opportunity Act (AGOA) Forum, Secretary of State Hillary Clinton spoke about continuing challenges and new solutions for success in US-Africa trade relations.
AGOA is a trade preference program which aims to jump start economic development in Africa by allowing African businesses to export certain products to the US duty-free. As Clinton discussed AGOA’s successes in increasing exports of African valued-added products like marmalade and apparel, she also noted the need to strengthen AGOA by increasing opportunities for women, improving infrastructure and ensuring transparency in government revenues generated from AGOA.
While AGOA has successfully broken down many trade barriers and created new markets in the US for African entrepreneurs, improved transparency is necessary to realize the full benefits of AGOA. With transparency, citizens are empowered with information that allows them to recognize corruption, and to question and hold their leaders accountable. Despite an abundance of natural resources, government corruption too often stands in the way of economic development in Africa.
The extractives sector is the most lucrative industry in Africa, generating billions of dollars from oil, gas and mining, and yet public revenue generated from these resources is often lost to corruption and mismanagement. As the oil industry alone constitutes more than 90 percent of AGOA exports to the U.S., transparency in the oil sector is critical to African citizens experiencing the full benefits of AGOA.
In a May 2011 speech at the Organization for Economic Cooperation and Development donors conference, Secretary Clinton spoke about the importance of transparency to successful development:
“Corruption stifles entrepreneurship and it siphons funding away from critical services, hurting the people who rely on those services. Poor transparency makes it difficult if not impossible to determine how governments raise and spend their funds, and therefore, how to hold governments accountable.”
Some of the most resource-rich countries have the poorest populations because corrupt leaders steal public money rather than investing in public services like education, health care and infrastructure, which are necessary to societal well-being, employment and overall economic growth and security.
She reiterated this statement, this time to recipient countries, in her speech at the AGOA forum in Lusaka, and offered improved transparency as a solution to corruption and the next step in realizing AGOA’s full potential, then announced America’s new policy to implement this objective, saying:
“And let’s have a very frank conversation about corruption… The United States now requires oil, gas, and mining companies that raise capital in our markets to disclose the royalties they pay to foreign governments, which will help ensure that Africa’s natural wealth benefits the people of Africa rather than corrupt officials.”
Secretary Clinton was referring the Cardin-Lugar Transparency Amendment, which was passed on July 21, 2010. The new law requires all companies listed on the New York Stock Exchange to publish their payments made to foreign governments for oil gas and mining. The bill will go into effect once the Securities and Exchange Commission publishes the regulations implementing the law.
The Cardin-Lugar Amendment puts new muscle behind the US policy of partnering with African countries for meaningful development, of which transparency is a critical component. Once information on payments is available, African civil society, watchdog groups and law makers must use it to hold their leaders accountable. This new law has the potential to unleash billions of dollars worth of domestic resources to fund Africa’s needs and attract investment for lasting economic development.