Marcia L Fudge

CBC: Increasing Access to Education and Financial Services in Africa - Sept. 14, 2009

Marcia L Fudge
September 14, 2009— U.S. Senate, Washington, DC
Congressional floor speech
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Certainly I appreciate the opportunity to join my colleagues of the Congressional Black Caucus, the CBC, for this Special Order. Currently, the CBC is chaired by the Honorable Barbara Lee from the Ninth Congressional District of California.

My name is Congresswoman Marcia L. Fudge, and I represent the 11th Congressional District of the State of Ohio. CBC members are advocates for the human family nationally and internationally and have played a significant role as local and regional activists. We continue to work diligently to be the conscience of the Congress, but understand all politics are local. Therefore, we provide dedicated and focused service to the citizens of the congressional districts we serve.

The vision of the founding members of the Congressional Black Caucus, to promote the public welfare through legislation designed to meet the needs of millions of neglected citizens, continues to be a focal point for the legislative work and political activities of the Congressional Black Caucus.

As Members of Congress, CBC members also promote legislation to aid neglected citizens throughout the world. We understand that the United States, as a bellwether, has the ability to positively impact our neighbors abroad.

The United States is a leader in advocating for the underprivileged at home and abroad. Americans understand that if we uplift others, then we, too, will be advanced.

With this in mind, tonight's CBC hour will focus on poverty reduction and the economic, social and political outlook for the continent of Africa. Specifically, I will discuss increasing access to both education and financial services in Africa.

As a member of the Education and Labor Committee, I know well the far-reaching effects of education on individuals' quality of life and a nation's economic competitiveness. In the context of improving developing nations such as many African countries, the basic education offers the hope of a more prosperous world.

The benefits of basic education are innumerable. For instance, we know that when all citizens receive a good education, their nation's economic prosperity is increased, preventable illness is decreased, democratic ideals are spread, violent conflicts are reduced, and women are able to advance further than if they were discouraged from pursuing their studies.

Mr. Speaker, I see we have been joined by our Chair, the Honorable BARBARA LEE from California. I would now like to yield to the gentle lady, Mr. Speaker.


Thank you, Madam Chair. Mr. Speaker, I would just very much like to thank our Chair for being here at every Special Order, for the support that she has given to me personally but, more importantly, for the leadership she gives to the CBC. I thank you, Madam Chair, for being here.

Mr. Speaker, if I may continue, I wanted to just talk about the economic prosperity on the African continent. Many African countries do still, indeed, struggle to achieve economic sustainability and growth. This pursuit is undermined in part by the large number of citizens who have not received a basic education. Not a single economically viable nation achieved its prosperity without implementing near universal primary education. Additionally, education increases a Nation's gross domestic product. Adults with a primary school education earn twice as much as adults without any schooling.

In the areas of health, education and behavior changes are also the most effective way to address preventible diseases, including smallpox, tuberculosis, diarrhea and other water-borne illnesses. According to some estimations, if all children completed primary education, 700,000 new cases of AIDS and HIV could be prevented each year.

We also need to improve the political stability and reduce conflict. Education and the free exchange of ideas also encourages democratic styles of government. When citizens are well informed, they are more likely to participate in their democracy. As it relates to violent conflicts, education that teaches tolerance, the value of each individual, and respect for different beliefs is the best method to reduce violence and extremism.

Basic education provides girls and women with expanded employment opportunities, which is important for the overall advancement of families. Women's employability is especially crucial if they are the family's sole support. Children of educated women are in better health and are twice as likely to be enrolled in school.

Mr. Speaker, 75 million children worldwide are not at school; 55 percent of them are girls. Sub-Saharan Africa accounts for nearly one-half of the world's school-age children who are not enrolled in school. Twelve percent of the developing world's primary school-age population is not in school; more than 80 percent of them are in rural areas, and the vast majority are poor. Globally, 134 countries account for two-thirds of the out-of-school children, and current projections show that those countries will have 29 million out-of-school children by the year 2015.

Among African nations, there are various barriers to basic education. The lack of school buildings, shortage of teachers, prohibitive compulsory fees, and unique challenges faced by girls all limit many Africans' abilities to access formal education. However, these challenges are not insurmountable. Nearly 80 million new places of instruction must be created in order for all school-age African children to be accommodated. This will be a large undertaking, to say the least.

I applaud African governments for making progress towards the goals advanced in the Dakar Framework for Action in 2000. That framework was a statement signed by 164 countries during the 2000 World Education Forum stating that their commitment to universal education was strong. But without diligent support from the international community, these great goals will remain elusive.

In addition to the need for new schools, it is estimated that an additional 3 million teachers are needed in Africa in order for the continent to reach its goal of universal education by the year 2015. In Nigeria, which is the most populous country in Africa, there is a shortage of 1 million teachers.

Not only are workforce shortages caused by the difficulty to obtain thorough education, the availability of teachers on the continent is also impacted by the HIV/AIDS epidemic. The disease, itself, has robbed education systems of manpower and knowledge and continues to drive up cost. In a report released by the World Bank in 2002, an estimated 860,000 children in sub-Saharan Africa lost teachers to AIDS in 1999. In some cases where there has been an increase in class enrollment, the loss of one teacher can affect hundreds of students. The cost of replacing these instructors is prohibitive for many countries. If the nation of Swaziland hired and trained enough staff to replace the teachers lost to HIV and AIDS, the estimated cost would be $233 million, more than half of the government's budget for 2001-2002.

Again, there are too many primary and secondary schools in the developing world that are forced to rely on student fees to supplement government funding. These fees, while modest by American standards, often prevent children from enrolling. Similarly, some families cannot afford the uniforms commonly required by the schools.

In 2003, Kenya eliminated primary school fees in a step towards universal primary education for its entire population. In Kenya alone, 1.5 million students who had

not previously attended school then enrolled, increasing the average class size from 40 to 120. Kenya took a step in the right direction, but these actions must be coupled with greater investment by local governments and donors to address the issues of quality that arise when access to education is increased.

While this statistic represents an improvement in the rate of primary school enrollment during the early nineties of over 10 percent, we should also be aware that the problems still remain. In countries such as Djibouti, Ethiopia, Niger and Mali, less than half of all school-age children go to school, and there is a disparity in enrollment rates between boys and girls. Forty-two percent of girls as opposed to 38 percent of boys are out of school.

As the international community and donors discuss the importance of quality education, we must remember the vast numbers of teachers who will need to be trained and what this means to the international partners who work with African governments and civil society groups. Education is a long-term path to economic viability. Stimulating small businesses through microlending is another method of improving the economies of developing nations, which will ultimately lead to expanded trade and business opportunities for all of the world.

I and several Members recently returned from a congressional delegation to Tunisia, Rwanda, Zimbabwe and Senegal. Our goal was to educate Members on the impact that the global financial crisis has had on the continent of Africa. Additionally, we examined the regional impact of multilateral development banks, international financial institutions, and the International Monetary Fund.

The codel spent significant time examining the effect of the global economic crisis on local economies. We were especially interested in how the multilateral development banks and the United States supports, particularly the African Development Bank, are helping countries to obtain grants, loans and technical assistance. We also explored the role and impact of the IMF on the region during this period of economic crisis.

Africa is of increasing strategic interest to the global economy. The continent is expected to soon provide the United States with more petroleum than the Middle East. Again, I will repeat. The continent of Africa is expected to soon provide the United States with more petroleum than we get from the Middle East.

Several reports state that more than half of all Africans are estimated to live on a dollar or less a day. The nations we visited were interested in help up, not a handout. Well-intentioned countries and organizations have poured billions of dollars into improving conditions for Africans, but their efforts have repeatedly failed to stimulate large-scale sustainable growth. This is, in part, because many of these groups do not fully incorporate local traditions, values and attitudes into their assistance programs. Assistance can only be successful if it is culturally sensitive and adapts to the needs of the local community.

The direct impact of the global crisis on Africa, however, has been relatively contained. Many African nations have not been severely affected by the crisis since African banks generally are not well integrated into the global financial system. Nonetheless, African countries still are at risk of indirect adverse effects, such as reduced worldwide demand for African exports, a dampening of economic growth, a tightening of credit, and reduced remittance flows. Despite these setbacks, Mr. Speaker, African countries can greatly benefit from programs that both encourage productivity and promote economic independence.

Access to formal financial services is a key component of economic development. One method to facilitate development is microfinance. Microfinance is when banking institutions or even individuals grant small loans to other individuals, usually to establish or expand a small or self-sustaining business. When individuals gain access to credit, they can start a business, hire their neighbors, and stimulate local economic growth. For example, a loan made to a woman to buy a sewing machine can yield an income when she offers her sewing and tailoring services. Or if a loan helps a family purchase a cow, the milk produced from the cow can generate both nourishment and income.

The average microfinance loan amount ranges from $50 to $5,000, and the repayment cycle can range from 90 days to 18 months. Repayment of microfinance loans is 98 percent compared to regular business loans by traditional lenders. Official microfinance organizations are currently only reaching 5 to 8 percent of the businesses who are in dire need of loans. Access to credit for the poor is in dire need as well. Microfinancing institutions also provide access to savings accounts.

Microfinance has proven to be successful because of its ability to reach the poor, especially women with highly sustainable programs that have a positive impact. As the United Nations Office of Special Adviser on Africa reports, women are a better credit risk than men and more responsible managers of meager resources. Furthermore, women are, and I quote, more committed to using their loans for the benefit of their household rather than self-gratifying consumption, as is common among many African men. Empowering women sets families on the path toward economic independence. This case study demonstrates how microfinance can help alleviate poverty.

In 2007, Absa Bank Group in South Africa established a dedicated microenterprise finance unit to make funding more readily available to businesses that are formally excluded from getting regular bank loans. It has been estimated that as many as 97 percent of microentrepreneurs in South Africa had no access to loans prior to receiving funding through the AMEF. Today, more than 4.5 million people on low incomes use Absa Bank services for everything from microloans to saving accounts and transactions, leading the way for microenterprise loans in South Africa.

In addition to providing loans, microfinance institutions can also support individuals by keeping savings in a secure manner and by helping to accumulate interest on deposits.

This allows the poor to lift themselves out of poverty.

Self-reliance, Mr. Speaker, is the key. I've seen both the despair and the resiliency of Africans. In Rwanda I met a woman who was given a cow. Shortly after she received the cow, the cow had a calf, which she was then obligated to give to her neighbor. But based upon the cow she had and the milk that she could harvest from that particular cow, she was able to not only feed her family but to sell enough milk to then buy a bicycle.

She bought a bicycle, Mr. Speaker, so that she could ride the 3 miles it took to get clean water. So instead of walking, now she could ride and send her children to get clean water. She then made enough money to send her children to school and pay the fees. She then took out a loan and bought another cow, and with that cow she is able now to buy food and clothing. She is able to do much more than she was before. She is really quite an entrepreneur. And, by the way, Mr. Speaker, this woman has AIDS. But she is raising five children on her own because someone gave her a cow and she had the ability to go from there.

Mr. Speaker, in the very near future, microloans that support small-scale entrepreneurship will improve the lives of Africans and empower them to work their way out of poverty. Microfinance is already proven in India and Bangladesh to be an effective economic development strategy. According to World Vision, one loan, just one loan, can create 40 jobs in a community of approximately 600 to 700 people.

The difficulties faced by African nations should not deter us from providing assistance. Through America's support of expanding basic education and access to financial services, we can assist African leaders and people in creating a more vibrant continent and, in turn, a richer world. My recent experience has confirmed for me that both of these approaches can empower people by providing them with confidence, self-esteem, and the financial means to contribute to their economic advancement. Our leadership and our moral strength is only enhanced when we help others. Truly, Mr. Speaker, we lift as we rise.

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