Via Conference Call
3:24 P.M. EDT
MS. HAYDEN: Thank you very much. Thanks, everyone, for joining us on this call. The call today is on the record and embargoed until 6:00 a.m. tomorrow. We’ve got two senior administration officials to talk to us about food security, both the speech the President is giving tomorrow and how it will be addressed at the G8. Our officials are the USAID Administrator Raj Shah and Deputy National Security Advisor for International Economic Affairs Mike Froman.
They’ll each offer brief opening remarks and then we’ll just go ahead and get to your questions. So why don’t we go ahead and turn it over to you, Mike.
MR. FROMAN: Great. Thanks, Caitlin, and thanks, everybody, for joining us. I thought I’d start by just providing some background to set the stage. Food security has been a top priority for the President since he came into office. In the early days of his administration he went to the G20 summit in London and called then for a major food security initiative. And later that summer, at L’Aquila, he played the lead role in marshaling $22 billion of support for food security -- setting up a fund at the World Bank called the Global Agriculture and Food Security Program; getting a lot of other countries to participate in this initiative, including countries beyond the G8.
And very importantly, the L’Aquila initiative was more than just about money, because in that initiative leaders agreed to put their money behind country plans that had been developed and that were owned by the developing countries themselves, and to increase investment in research and development, to better coordinate our efforts, and to act both bilaterally and through multilateral institutions.
So over the last few years we’re been implementing this initiative. And as we head to the G8 this weekend in Camp David, the President will be rolling out the next phase of this initiative, which our second administration speaker will speak to in a minute. But just by way of context, this past decade, Africa’s economic output has surged. And the IMF projects nearly 6 percent growth for the continent of Africa this year. And while it’s still a poor continent, it’s one with a growing middle class and with real income per head growing at 3 percent a year -- twice the global rate.
It’s also a continent where the development is not driven entirely by assistance and where there's a lot of trade and investment going on. Over the past decade we’ve seen a rapid growth in trade, labor productivity and foreign investment, and major reductions in foreign debt and inflation. For example, between 2000 and now, trade between Africa and the rest of the world has increased by over 200 percent. The rate of foreign investment has soared tenfold. Labor productivity has grown 3 percent a year. Inflation has dropped from 22 percent in the 1990s to 8 percent in the last decade. And foreign debt has declined by a quarter, and budget deficits by two-thirds.
In 2010, foreign direct investment in Africa was more than $65 billion -- five times what it was a decade earlier and much more than Africa received in official foreign assistance. And this transformation from a continent where foreign assistance is a dominant feature to one in which trade and investment play an increasing role have allowed us to also help evolve our development policy to complement what we’re doing in terms of foreign assistance with efforts to drive trade and foreign investment.
And that’s what the new alliance that we’ll be laying out tomorrow is really all about. It’s not about replacing aid; it’s about combining aid with private capital, tools to scale innovation and strategies for managing risk.
With that, why don’t I turn it over to Raj to go into further detail.
MR. SHAH: Great. Thank you. I just want to start by picking up where -- a point Mike made about the extraordinary commitment and leadership that was demonstrated at the L’Aquila summit in 2009. That was an extraordinary moment because it was the first time in decades that the world came together and made real commitments to reinvest in agriculture and nutrition as the solution to food insecurity, and to make sure that countries had enough food and economic vitality in the agriculture sector to avoid large-scale hunger and malnutrition.
In response to that strong commitment, as the Global Agriculture and Food Security Program was created at the World Bank, more than 30 African countries completed the process of creating country plans and investment programs, many of them achieving the target they set for themselves of 10 percent of local resources being invested in the agriculture sector. And many of the donor partners coming out of the L’Aquila summit met and have been on track to meet their commitments made in that setting.
As a result of those efforts, we’ve seen real progress: agricultural productivity growth in our own target Feed the Future countries is eight times that of the global average. And that extra agricultural product has protected millions of people from needing food aid during times of emergency crisis like we saw during the drought -- severe drought in the Horn of Africa last year.
The G8 summit and tomorrow’s announcement will really seek to maintain and extend those commitments. It will seek to maintain the high level of public investment in agriculture and to ensure their strong agriculture institution. It will seek to continue the transition of aid programs through country-led plans and efforts, primarily prioritize those things that countries themselves are investing in and believe are most valuable to help themselves move out of poverty and hunger. And it will seek to replenish and take forward the Global Agricultural and Food Security Program as a particularly efficient vehicle for supporting country plans that have been vetted and are of high quality.
But in addition, as we looked at this, and as my colleague’s introduction in terms of the overall economic context for Africa makes clear, we’ve also taken extraordinary new steps -- much more private sector investment and trade, both locally and internationally, to address food security. And tomorrow, the President will announce a new alliance for food security and nutrition designed to bring people together to expand private sector investments against the goal of reducing hunger and poverty.
Governments will come to the event to make clear their commitments to reform certain policies and create more space for businesses and private investors and local farmers to succeed. Private sector companies -- we estimate nearly 45 of them -- will make clear and concrete commitments to invest more than $3 billion in agricultural projects and programs that will help reach millions of small-scale farmers -- most of whom are women -- improve their product and improve their outcomes. And G8 partners and other international development partners will reaffirm their commitment to coordinate their activities in-country and support this new public/private approach.
By taking this new approach, we believe that it's possible to move 50 million people out of the condition of poverty and hunger, and will additionally create accountability systems to make sure that we're both achieving that target goal and holding all of our partners and ourselves accountable for the commitments that are being made.
In addition, there are a handful of important enabling actions that will support more innovation in the global agricultural research system, will support more rapid investment in agricultural-related infrastructure in countries, and will support countries in their efforts to manage risks more carefully so that droughts and floods and other natural occurrences don’t wipe out the capital base of farmers who are often the pillars of growth for rural communities.
And I guess I'll just conclude by saying when you actually look at some of these private sector commitments and partnerships, they really do feel quite extraordinary -- whether it's Pepsi investing to reach smallholder farmers with -- and build out chickpea products that they can use for both their commercial products and that the World Food Program can use in targeted feeding programs, or local companies like Tanseed in Tanzania, that will commit $11 million to purchase improved seeds from contract growers and package them in small packaging so they can market them specifically to small-scale farmers, most of whom are women, or Yara’s commitment to build Africa’s first major fertilizer production facility to lower the cost of access to that incredibly important input.
These are the kinds of transformations that are really only possible when the public sector and private sector overcome sometimes their skepticism of each other and work together to create more opportunity for the African farmers who, at the end of the day, are the ticket out of poverty and hunger and food insecurity.
Do you want to add to that?
MR. FROMAN: Yes, let me just include by just highlighting a bit about what’s going to happen at the summit itself.
The G8 summit has, for years, had an Africa outreach session -- we’ve seen the Gleneagles commitments, part was on debt relief; gains on global health; et cetera. And this year, the President decided to focus the Africa outreach session on food security to highlight the importance of this issue in particular. Not because the other issues aren’t important, obviously, but because he thinks this is an issue that warrants extensive and serious deliberation among the leaders.
So he’s invited four African leaders from Ghana, Ethiopia, Tanzania and Benin. The Benin President serves as chair of the Africa Union. He’s also invited some representatives of the private sector from Africa and, more generally, who are active in agriculture or in investing in agriculture. And there will be a robust discussion among them about the new alliance, the next steps forward, and what the G8 can do to support increased agricultural productivity, growth in Africa, and strengthening food security and nutrition.
MS. HAYDEN: Okay, thank you. Just to remind folks who may have just joined the call, this call is on the record and embargoed until 6:00 a.m. tomorrow, Friday, May 18th.
And with that, we’re ready to take some questions.
Q Thanks so much, all of you. Mike, a question to you as to how you see the balance between governmental action and private sector investment. Just what would you say to people in the NGO community who are concerned that this initiative could be part of a way that governments who are obviously hard-pressed are trying to deflect some of their responsibility to the private sector.
MR. FROMAN: Why don’t I start and then, Raj, feel free to jump in.
I think it’s absolutely clear that the President has been fully supportive of our foreign assistance efforts. He’s developed for the first time a comprehensive development policy for the administration. And we’ve seen, even in this sluggish environment, our commitment to food security go up, and even while other things have had to be cut. So I think it’s absolutely clear that we stand behind the importance of the official assistance.
And what this initiative is about is recognizing that in addition to official assistance, there’s an important role to play by the private sector in investing in sustainable efforts to increase agricultural productivity. So he was the one who generated the $22 billion of commitments at L’Aquila. He’s put forward several budgets that have demonstrated his commitment to foreign assistance and to food security in particular. And this effort builds on that foundation, and talks about using tools intelligently by the government to leverage private sector involvement as well.
And, Raj, if you’d like to add anything.
MR. SHAH: I would just add two thoughts. One is, in taking this forward, we are absolutely reaffirming the L'Aquila effort. And that means that 30 countries that have developed plans, we are accelerating our own and asking others to seek to maintain high levels of investment and commitment, and accelerated efforts to coordinate and support those country plans. So we're taking that forward with the very clear recognition that you must have a certain level of effective and results-oriented public investment for this project to work overall.
That said, I think we've also seen that the private sector brings some incredibly unique technologies and business models that simply can't be replicated by public sector investment alone. Vodafone, for example, is committing to reach 500,000 small-scale farmers with SMS text-based services that would allow them to ascertain local market prices. In previous studies, we've found that that service alone helps farmers improve their incomes by 20 percent because they can negotiate better farmgate prices with middlemen when they have that data at their fingertips, and they wouldn’t otherwise have that date in their fingertips. And it's highly unlikely that there's a public sector solution that could fill that gap.
So when you look at the examples, I think it becomes more clear that we need both public and private partnership in order to achieve these extraordinary results.
Q Thank you, both, very much.
Q Yes, just two quick things. One is, in terms of the commitment from private companies, is there a dollar estimate of where it's at right now? I've heard $3 billion to $3.5 billion. Also wondering -- I’m understanding what the U.S. is proposing to do and what the private sector looks like it's going to do. What about the other seven of the G8? What will President Obama specifically be asking of them?
MR. FROMAN: Raj, do you want to talk about the private sector commitments and I can comment a little bit on the G8?
MR. SHAH: Yes, sure. Well, we have approximately -- we expect that tomorrow there will be approximately 45 different private sector commitments that are made. A little bit less than half of that comes from African companies and entrepreneurs and businesses, and the remainder from partners from around the world.
We don’t know the exact total. And there's many ways -- although the number is easy to communicate, it will be more than $3 billion. In many ways, it's less important than the precedence and the logistics capacity and the businesses and the talent that companies will bring to these markets and to these challenges.
And so, for instance, when DuPont indicates that they'll bring some of their best managers and crop breeders and scientists to their Ethiopian business, we may not be able to price exactly the value of that, but nevertheless, it will make seed production, duplication and distribution much more effective in Ethiopia. So I think that’s probably the best answer in terms of the private sector commitments.
And, Mike, do you want to tackle the other G8 partners?
MR. FROMAN: Yes, let me just say -- I'd say the following, and feel free to add to it.
The way that this works in the G8, and the way we did this in L'Aquila with the agreement on the principles, and now here on the agreement of -- on the new alliance, is we've laid out a series of streams of work and priorities for the G8 donors to focus on. And each country will do -- may emphasize one part of it more than another. They may partner with countries in Africa -- some set of countries in Africa more than others, due to historical ties. But they've all agreed that these various initiatives around mobilizing capital and access to markets, taking innovation to scale, and reducing and mitigating risk are the three areas of the new alliance that they will all work to align their programs with as they work with these countries who are putting forth their investment plans.
And so we would expect that individual G8 countries would, over the next few days and weeks, lay out additional information about their own plans in this regard.
Q So there won't be a $20 billion number like what was coming out of L'Aquila?
MR. FROMAN: No. I think what this will be is -- I mean, there may be commitments that individual countries make around particular parts of this initiative. But what this is going to be I think is more cooperation and a whole series of work streams along these areas. As my colleague said, G8 members will seek to maintain the level of commitments that they've had since L'Aquila in this area. So they are very much looking forward to continuing down the road that they started three years ago. And this is really about how to channel those efforts into the most innovative and productive ways possible.
Q I was under the impression that you were going to publish an accountability report in the interest of transparency on how much of the $22 billion has been raised, how much has been spent. Have you done that yet or are you about to do it, and what’s in it?
MR. FROMAN: Raj, You want to take that one?
MR. SHAH: Sure. Yes, in fact, I believe on Saturday the G8 accountability report will be published. It will be -- as far as I can tell -- the most detailed accountability report ever put out by the G8, and it will demonstrate that, by and large, countries have worked hard to meet commitments. There are some areas where improvements need to be made, and they will be called out as well.
But it is a very serious effort to put forth in detail how the $22.2 billion has been accounted for, the fact that nearly all of that -- I believe $22.1 billion -- is fully budgeted and appropriated, and that some percentage is dispersed and some percentage is still yet to go as we get to the last eight or nine months here of the L’Aquila pledge period and timeframe.
It also, importantly, in addition to describing the financial accountability, we’ll also describe how countries have performed in trying to adopt what are now known as the Rome Principles that were outlined when the commitment was made. And those were the principles to focus on small-scale farmers, mostly women, to focus on country plans and support those plans, to better coordinate efforts.
And I think you’ll see in that setting that some countries, notably the United States, have made real efforts that are very, very serious efforts to adopt those principles. And we’ll all continue to try do more to implement those principles as we go forward with this effort.
Q Hey, thanks for having the call. I just wanted to check -- my questions got asked, but let me ask for like the third time on what this means in terms of the commitment or -- so you’re saying you’re not going to let the money from the last summit in 2009 expire? That would continue to go forward from the U.S. and you expect the other countries, too?
MR. SHAH: I can start with that, Mike. I think that’s right. Look, we’re not -- we haven’t completed the timeframe of disbursement of that commitment. So the first task at hand is to accelerate and completely live up to that commitment. And we have a strong expectation that that will be one result coming out of this dialogue.
Second, we’re reaffirming the need for that level of commitment and seeking to maintain those high levels of commitment going forward.
And third, launching this new alliance to help supplement that effort with accelerated private sector investments in the public/private partnership. So hopefully, that addresses that point.
You may want to add to it.
MS. HAYDEN: I apologize to everyone. Mike actually just got called away for a moment, but I think we have time for a few more with his colleague still, so we can go ahead and take the next question.
Q I guess I’m continuing along the same lines. So there won’t be a new dollar commitment from the United States? And also, is there a time period on this program? Like, I think the L’Aquila commitment was for three years. Is there a particular time period in which all of this is supposed to happen?
MR. SHAH: The timeframe for the L’Aquila commitment was a little bit different based on different countries and their appropriations cycles and fiscal years, but it largely goes through the end of 2012 overall.
Going forward, our goal is to recognize that this is going to be a long-term effort. It will take at least a decade to achieve our objectives, and we want to maintain and seek to maintain the level of support on an annual basis that the L’Aquila pledges represented.
As my colleague had indicated, there are a number of opportunities here for cultural development and nutrition and food security, but there will be a broad range of options for other countries to also make their commitments and accelerate their efforts. And we fully expect that we will be able to take forward the current level of support.
Q Hi. My question is regarding the mitigating the flood and drought risk, and to what extent this administration will push for measures to either adapt or mitigate climate change in the upcoming summit with respect to food security.
MR. SHAH: Yes, we would need my colleague to address that more broadly than food security. In the context of food security, I would point out that very clear climate changes -- including hotter and dryer growing conditions in sub-Saharan Africa, more frequent droughts that are leading to really serious and dire consequences on the food security side -- are a big part of the motivation toward this effort.
And as part of this effort going forward, it will be reinvigorating investment and partnerships in areas to create improved crop varieties that can perform well in poor climate and bad climate outcomes. We’ll be investing in efforts to help countries develop risk mitigation strategies, some of which are public/private partnerships with insurers and others, some of which have been proposed by the African Union to create risk pools that will help countries mitigate the risks that we know exist with the changing climate.
So in many ways, the motivation for and the content of this approach is fundamentally designed to address the reality that climate changes are making -- are putting downward pressure on food production in precisely the place that is most food insecure, and with precisely those producers who are most dependent on improved agricultural production to feed their families and send their kids to school and ensure their children are not malnourished. And so, I thank you for asking.
Q Thank you.
MS. HAYDEN: Thank you. This will be our last question. And before we have people drop off, just a reminder that this is embargoed until 6:00 a.m. And with that, we’ll take the last question.
Q Thank you. Will there be -- and I know we’ve talked about this -- will there be any specific commitments -- well, has the U.S. filled its own commitment from the last time around? And the second question was, will there be new, specific commitments that we can measure to see whether or not countries are living up to those in this round?
MR. SHAH: I appreciate it. I think that just three quick points. First, the U.S. -- the data on U.S. commitments will be in the accountability reports, along with other countries. But I think you’ll find the United States as fully budgeted and, in fact, Congress has fully appropriated the U.S. commitment. And it’s being disbursed as we speak, and we’re on track -- although, we had to accelerate dramatically the rate of disbursement on track to meet and fulfill our commitment in its absolute entirety. That speaks to the U.S. commitment.
Going forward -- both the United States and our aspiration for other partners is to seek to continue that level, that high level of focus and attention and resources for agricultural development while being smarter and more modern in how we do it by actually bringing in private partners and private investments so we can have more impact for every dollar that we spend, and we can bring the new technology and the new solutions to small-scale farmers.
And finally, I’d say that there absolutely will be a way to track results. In fact, we will be establishing a leadership council that will meet regularly and be at a very high level with international partners and the African heads of state that will be able to track not only continued expenditures in agricultural development, but also evaluate whether the private companies are living up to the investment commitments they’re making. And most importantly, whether results are being achieved on the path to moving 50 million people out of poverty and hunger, specifically agricultural productivity, growth and agricultural GDP growth, both of which are measurable and transparent, and can be the basis of that evaluation.
MS. HAYDEN: All right, I think that’s all we have time for. Administrator, thank you so much for doing this. And to all our journalists, colleagues, thank you for joining, and have a good day.
3:55 P.M. EDT