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SPEECH DELIVERED BY: James A. Harmon Chairman, Export-Import Bank of the United States

FOR IMMEDIATE RELEASE October 20, 1999

Media Contact Name/Phone: 

(202) 565-3200

Good morning Mr. Vice President, the Senate President, Ministers, Senator and Special Advisers here present and distinguished guests.

It is a pleasure to be here in Nigeria with such a distinguished group with whom we share a common interest in developing trade and expanding upon Nigeria`s great economic potential.

This is the first visit of an Ex-Im Bank Chairman to Nigeria in our 65-year history and I hope it will prove to be a memorable one through the trade and business we create in the coming months and years.

I am pleased to be serving as Chairman of the Bank at this time because there has never been a President of the United States who cared more about partnering for trade and development with Africa.

For those of you who do not know us, the Export-Import Bank of the U.S. is the Unites States government`s official export credit agency. In 1999, we financed $16.7 billion of U.S. exports worldwide by providing loans, guarantees and insurance to creditworthy buyers in emerging markets.

In sub-Saharan Africa, we provided loans and guarantees of $600 million in 1999 à more than ten times the previous year. In the coming year, we expect to exceed $1 billion.

Today, I would like to focus on the potential for increasing trade between the U.S. and Nigeria, and how the Export-Import Bank proposes to expand its financing to support this increased trade.

The importance of Nigeria in the overall economic development of Africa is clear to the U.S. government and business leaders. That is one reason why I am here today, why Secretary of State Albright was here yesterday and why so many high-ranking U.S. government officials have and will come to your country this year.

Africa`s time has come. The World Bank is forecasting a 4.2 percent annual growth rate for sub-Saharan Africa during the next 20 years. Government subsidies and barriers to trade and investment are being reduced. Net foreign direct investment in the region has increased four-fold from 1990 to 1997. Aircraft and aircraft parts, oil and gas equipment and machinery are leading the way, but there has been recent strong growth in sales of telecommunications equipment and motor vehicles.

Africa`s time has come - and the moment is now - for a strong U.S.-Nigerian partnership. Never has U.S. leadership supported this more than it does now, never has there been a larger, more successful African-American population residing in the U.S. - almost 30 million, and never has there been more liquidity of wealth in the U.S. searching for investment opportunities.

Nigeria`s transition to a civilian democracy is helping to lay the foundation needed to improve economic conditions and attract capital that will provide greater prosperity to the country and to other countries on the African continent.

We are encouraged by President Obasanjo`s first actions as head of state. He has taken a prominent leadership role in the region.

If there is anything we at Ex-Im Bank have learned from the recent global financial crisis - it is that we cannot have economic stability without political stability and we cannot have political stability without economic stability. Where these two conditions exist - by example Korea and Brazil - recovery progressed.

Conversely in Russia and Indonesia, more difficult economic conditions continue to persist. Where there is transparency, good government, respect for the rule of law and leadership against corruption - there is also capital investment.

President Obasanjo has spoken of a democracy dividend. I like this term. I will copy it. I told him that there is such a dividend. Where there is economic and political stability of the kind that promotes transparency and good corporate governance, the investment climate becomes attractive and the country prospers. Ex-Im Bank programs may be considered a democracy dividend.

Ex-Im Bank operates in high-risk, emerging markets but it does not act imprudently. Ex-Im Bank has not done business in Nigeria for 10 years. So I am especially pleased to report that two weeks ago, the Board of directors of the Bank approved the opening of our programs in Nigeria.

Ex-Im Bank chose to open its programs in Nigeria because we believe there has been progress in promoting transparency and good governance, and routing out corruption. We believe that further progress will materialize because your President is committed to reform of the economic and political systems.

It is for these reasons that Ex-Im Bank makes its financing available and that I believe there are tangible dividends accruing to Nigeria from these important steps of reform.

If Nigeria pursues a realistic budget, tax reform, and privatization - investors could become very bullish. In short - business confidence and attracting foreign capital is not difficult to attain if Nigeria follows this recipe for economic reform.

Two weeks ago, we took a significant step forward in our partnership when we opened our financing in Nigeria. By providing financing in the private sector, Ex-Im Bank is opening the door for Nigerian businesses to obtain capital goods, raw materials, spare parts, and services from the United States.

We will consider applications for any of these purchases - small or large dollar transactions. Ex-Im Bank pre-cleared credit authorizations for 11 Nigerian banks and we are considering other banks at this time. So, qualified businesses in the private sector can access Ex-Im Bank financing directly or through these banks.

During my visit to Nigeria, I have discussed with Nigerian leaders, the signing of a memorandum of cooperation that will lay the foundation for developing the specialized financing structures needed for large-scale economic development to proceed by using hard currency commodity export contracts as security.

Entering into a project incentive agreement with the Government of Nigeria and Central Bank will allow us to take an important step forward that has the potential to create another form of financial empowerment, one that will provide economic growth and stability, along with the ability to invest in infrastructure development. With this project incentive agreement, the bank would be interested in considering financing for the Escravos Gas Project and the West Africa Pipeline.

As someone who spent 38 years as an investment banker in New York City, I cannot emphasize enough how important it is to have a strong private sector economy.

But the U.S. Capital markets must come to know Africa better. During my private banking career, rarely did anyone make the case to me that there were investment opportunities in Africa.

The private sector must be engaged in the economy, and the best tool is through trade and investment. Africa will make its way onto the front pages of the American business and financial communities.

At the time President Clinton came to Africa eighteen months ago, Ex-Im Bank was open for business in about one-third of the countries of sub-Saharan Africa. I felt strongly that we should do more. So I am pleased that we were able to expand our programs twice this year, now making Ex-Im bank financing available in two-thirds of the countries of sub-Saharan Africa. That`s right, over the course of last year, we have doubled the number of African markets where we are open from 16 to 32.

I am personally taking Ex-Im Bank`s message directly to Africa`s governments and businesses through forums like this and through official visits. In addition to my visit last year and this year, both members of Ex-Im Bank`s board of directors and our senior Africa specialist have visited in Africa in the last 18 months, visiting 12 countries.

As I said earlier, I truly believe that Nigeria and Africa`s time has come. With the tools available through Ex-Im Bank, together with our sister trade-finance agencies, OPIC and TDA, we can make a difference in the region.

Expanding commerce between the U.S., Nigeria and the rest of Africa is more than just good business. It is also good for the people of all our countries. It helps foster greater understanding and cooperation among nations. Trade is essential for African development and for continued American growth and prosperity.

I hope that when people look back at this time, they will recognize that the year 2000 marked a turning point in U.S. Africa trade relations, and our trade partnership, Beyond the symbolism, I hope that economic statistics will tell the story of expansion in trade that will have helped ignite economic growth throughout Nigeria and Africa. Most importantly, I hope the people of our nations see the benefit of expanded trade and I hope that Ex-Im Bank will have played an important role in making this happen.

Thank you very much.