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CALIFORNIA / News and Insight on Business in the Golden
State | HEARD ON THE BEAT / INTERNATIONAL TRADE

U.S. Pushes for More African Deals

April 08, 1998|EVELYN IRITANI | TIMES STAFF WRITER

Southern California companies looking for alternatives to Asia's troubled economies should consider pursuing the nearly $2 billion worth of aerospace contracts coming up in Africa and the Middle East, according to the U.S. Trade and Development Agency.

In spite of its mammoth size and potential market of 650 million people, Africa has not been a major target for U.S. companies. In 1997, their exports to Africa came to $6.4 billion, or less than 1% of foreign sales.

But trade between the United States and Africa has assumed a higher profile thanks to President Clinton's recent 12-day trip to that continent, the most ambitious visit ever by a U.S. president.

During stops in Ghana, Uganda, Rwanda, South Africa, Botswana and Senegal, the president told audiences that promoting democracy and increasing U.S. trade with Africa is not "charity" but "enlightened self-interest."

His economic initiatives include a plan to help African countries acquire the technology and infrastructure to improve air travel.

As part of that effort, the U.S. Trade and Development Agency is holding a symposium April 20-22 in Manhattan Beach to introduce U.S. firms to African and Middle East government officials involved in airport construction, air traffic control, manufacturing and airport privatization.

The projects include the $400-million renovation of airports in Cape Town, Durban and Johannesburg and the construction of a new international airport in South Africa, the $25-million upgrade of the air traffic control system in Botswana and the $600-million-to-$700-million renovation of the King Abdulaziz International Airport at Jeddah, Saudi Arabia.

Jane Garvey, administrator of the Federal Aviation Administration, and six U.S. ambassadors based in Africa, who are participating in a U.S. tour organized by the Corporate Council on Africa, will also appear at the Southern California event.

The Washington-based Corporate Council on Africa, whose membership has grown to 200 from five founding members in 1992, is promoting greater transparency in business dealings as a way of combating corruption.

Those U.S. firms that have succeeded in Africa--whose land mass is nearly four times as large as the United States--have formed strong partnerships with local companies, according to Mary Swann, a council spokeswoman.

"The way you sustain it long-term is you go hand in hand with the indigenous African private sector," she said.

J. Joseph Grandmaison, director of the Trade and Development Agency, said the abundance of aerospace and communications expertise here gives Southern California firms a "disproportionate advantage" in the competition for the aviation infrastructure business that is developing in Africa and the Middle East.

"Lord knows, it's easier to sell Asia than it is to sell Africa," he said. "However, the African market is changing. For any company, especially small and medium-sized companies, the opportunities are significant."

While Africa's economies have been hurt by political turmoil, ethnic rivalries and widespread poverty, many governments are moving forward with ambitious modernization plans designed to attract foreign investors and boost tourism.

Grandmaison said these aviation projects are particularly attractive to foreign investors because they can retrieve their costs through such avenues as airport taxes and landing fees.

"The types of projects we see slowing down in Asia are those that don't have their own revenue stream," he said. "One of the nice things about aviation is you can develop your own dedicated revenues to pay for whatever you have to borrow to build the facility."

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Evelyn Iritani can be contacted by fax at (213) 237-7837 or by e-mail at evelyn.iritani @latimes.com

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