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Foreign Affairs, Defence and Trade References Committee
11/05/2018
Australia’s trade and investment relationships with the countries of Africa

ABRAHAM, Mr Fessehaie, Private capacity

[09:35]

CHAIR: We now welcome Mr Fessehaie Abraham, the former Ambassador of Eritrea to Australia. Thank you for your time. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. Would you like to make a brief opening statement before we proceed to questions?

Mr Abraham : Yes, indeed. I did make a submission, and I just want to highlight a bit from my submission.

I think what I really want to say is that the opportunities for trade and investment in Africa are huge. As you know, the Africa of today is not the Africa of 20 years ago. Over the last 20 years there has been massive investment and development in Africa.

While I was doing some research, I just couldn't believe the amount of foreign governments that are actually investing in Africa. One of them is China. I think that China's investment is over $188 billion in trade only for 2015. I think India is also similar—around $50 billion or $60 billion.

Before these things were happening, I came to Australia about 40 years ago. I was actually one of the first Eritrean refugees to come here. I helped to build the relationship between Australia and Eritrea. When Eritrea became independent, Australia was actually one of the first countries that came forward and helped build Eritrea, starting with The Fred Hollows Foundation IOL factory.

With the mining sector, while I was the Ambassador, I processed over nine applications from Australian mining companies for investment in Eritrea. This was before the current activity in the mining sector. Australia helped to develop the Eritrea mining code. Because of that, there was a lot of interest during my time. Now, after almost 20 years, I was hoping for a big engagement by Australia in Africa. When I think of it, Australia has invested so much in Africa—there is so much goodwill—and yet not much seems to be happening from the government side in trade and investment.

One of the things that I have found very hard to come to terms with is the thinking that Africa is very far away. I would like Australia to think that Africa is actually part of the Australian region. There is a focus on the Indo-Pacific, but there is only one ocean, the Indian Ocean, between Australia and Africa. What I would like to see is for Australia to actually think it is part of the African region. There is this huge trading and investment opportunity, and the government, in many ways, ought to lead companies, create incentives and provide guidance for trade and investment.

The number of Africans in Australia is increasing—it's almost 350,000. Australia ought to use them as a link back to Africa. If we think about how Asia developed—how China developed, for that matter, and how India developed—that helped Australia tremendously. And now, right next to Australia, there are huge opportunities, and Australia doesn't seem to be doing much.

Senator MOORE: Thank you, Mr Abraham. If the other members of the committee get a chance to read Mr Abraham's book about the history of Eritrea, I thoroughly recommend that you take it up. You might get some sales, Mr Abraham!

Mr Abraham : Sure.

Senator MOORE: Thank you for your submission and also for the attachments, which are obviously from presentations you've given. I want to ask about your statements about the Australian overseas development assistance. You've given figures about the fact that we have reduced significantly our expenditure across Africa, and also at the same time our engagement with China and India has grown to a great extent. If there was to be further investment from Australia, when it's gone down so low, how do you think it should be done? It's really difficult when you have got a low investment over a period of time to look how you would reinvest in the world. There was a range of areas in which Australia was engaged that we aren't anymore. If there was the opportunity to have more investment, how do you think it should operate, where should it go, and what process should be used? I know that's a very wide question but I'm just wanting to get some idea from you about what the priority should be.

Mr Abraham : In my view, one thing we have known from the last 30 to 40 years is that you can't develop a country through aid.

Senator MOORE: No.

Mr Abraham : A country has to develop through economic development. My view is that, perhaps for the first time in many years, now there is an opportunity for Africa to actually develop, and perhaps for international aid to be used to actually build the capacity to build the infrastructure, to help with governance and certainly with energy. I think what needs to be done is capacity building. There is a lot of need in that area. Clearly, that will have to be aligned with the respective government's priorities. It looks obvious that in regulation, in capacity building, in governance, in infrastructure, in trade capacity—the list is huge at the moment—China and India are doing some of it at the moment. So, in my view, following along those lines, perhaps, would help a lot.

Senator MOORE: You also state that the extractive industries are the ones that had the highest profile across Africa and naturally they're focused where the resources are available. Do you think that that will continue to be the widest area of engagement with Australia? Or do you think there are other opportunities that we should be looking at as well?

Mr Abraham : I think certainly. Again, out of any other country, Australia has had the experience in how to develop the mining and extractive industries to the benefit of its own people. Certainly Australia can share that with Africa. But also there are other areas, like agriculture, water management, forestry. All these things are actually areas that Australia has expertise in. In my view, out of all other countries, Australia has a unique education experience to help Africa. In many ways, Australia had to go through that process over a hundred years or so. It has the experience of how to actually develop a nation basically from scratch so I think the opportunities in Africa are almost unlimited.

Senator MOORE: And your attachment gives some indication of areas where that could happen. You heard the previous witnesses. They talked about the renewable energy and powering focus that's happening in Ethiopia, which of course is next door to Eritrea.

Mr Abraham : Yes.

Senator MOORE: Does Eritrea have the same focus, to the best of your knowledge? I know there are issues around the situation, but, to the best of your knowledge, is that same engagement with renewable energy happening in Eritrea?

Mr Abraham : I think it is, actually. There was, of course, a power plant in the Port of Massawa. Lately, apparently, a Chinese company has helped build power plant for the capital city, Asmara. Certainly, the Chinese are quite active in Eritrea.

Senator MOORE: The Chinese have been there for a while, haven't they?

Mr Abraham : Yes, for quite some time. Not as much as in other African countries. I think there is one mining company that was initially an Australian mining company, and then it was bought by a Chinese company. They are not as high profile as in other African countries, but certainly the Chinese are there.

If you're going to talk about Eritrea and Australia, we do have the Fred Hollows Foundation factory, which is currently operating. There is also one Australian mining company which is currently developing a big potash deposit in the Danakil Depression. It's one of the biggest deposits for high-grade pptash. I think it will go into production next year. So Australia has some activities in Eritrea, and, of course, that could increase alongside other African countries.

Senator MOORE: I have a question about the diplomatic network across Africa. You're attachment talked about your concern about the number of Australian high commissions and embassies across Africa. I think there are nine. I'm trying to remember the exact figure.

Mr Abraham : Yes, about that many.

Senator MOORE: Why do you think that is a worry, and what do you think should happen?

Mr Abraham : When I was ambassador for Eritrea, until 1997, there were only about seven African countries that had missions here. Now there are about 16.

Senator MOORE: Yes. I think we're seeing them all this afternoon!

Mr Abraham : Yes, apparently you'll be seeing them all. For me, it's a question of, if African countries can afford to be in Australia—I would hope the main reason that they are here is for trade and investment—why not Australia?. I did see the DFAT submission. I think there are a lot of good plans in the DFAT submission. They want to fully engage with Africa, but it appears that there's not enough money or there's no big backing from the government to actually move to Africa. Until the Australian government actually sits down and discusses what it should do in Africa and how it can increase investment and trade, I don't think much is going to happen, except with the mining companies.

Once Australia decides it wants to move, there would be huge trade and investment opportunities. The time zone is only four hours from Perth. There are billions of opportunities for Australian mining, for Australian trade and investment. I just can't imagine how a government could actually turn its back to that. Once that happens, once this clears at the government level, I think it will certainly be backed by it opening diplomatic missions. At the moment, without a change of direction and a change of government policy, having nine diplomatic missions—you could even have 10 or 15—isn't going to make much difference as far as engagement with Africa and investment is concerned. The more, the better, but what needs to happen is a change in mentality—that Africa is a neighbour of Australia. It's a very strategic area, especially now, and I would hope that the Australian government would take it very, very seriously and fully engage with Africa.

Perhaps I should mention that the Chinese had organised about three Africa-China forums that started about three years ago. I think the last one was in Senegal. Also the Indian government had a high-level African countries forum in India. Until Australia thinks it ought to move, not much can be done. Just opening diplomatic missions is not going to significantly advance the process.

Senator FAWCETT: Mr Abraham, thank you. I'll take your last point. You said 'until Australia decides it wants to move'. If we look at the landscape, even if we had a 50 per cent increase in our ODA budget we would only just be matching what China already puts in in aid, which is around $6 billion, into Africa as a continent. Their foreign direct investment I believe was in the order of $60 billion in 2015. Clearly, we can't compete on purely a quantum basis, which means that any engagement needs to be in areas where we actually leverage some unique Australian capabilities. In your mind, what are those? What are the areas where Australia brings capability and partnership opportunities that countries clearly with very deep pockets, such as China, aren't providing opportunities for countries in Africa?

Mr Abraham : I take the point. Obviously Australia can't match the billions that the Chinese or any other big governments are going to do. I think the main thing is psychological, that wanting to do things. At the strategic level, if Australia decides it wants to fully engage with Africa economically then obviously things will follow. There could be some technical cooperation to facilitate economic development. There may well be some things similar to Aid for Trade or there could be a huge drive for capacity building and for governance. It's one thing for Africa to develop, but I think the other side is for that development to be used for the betterment of the people, to have the right governance and to have the right skills. I think the opportunities are quite huge in agriculture. The untilled land in Africa is huge. Certainly the government could create some incentives for some Australian companies to move to Africa. It's all about backing Australian companies or even trying to interest them. If there is a will, I'm sure there would be 100 ways that Australia can support. The current ODA allocation is very small. Clearly, if the government is going to move, that amount has to increase, not just for humanitarian but mainly for the economic empowerment of Africa.

Senator FAWCETT: I want to come back to your point on agriculture. I notice that the McKinsey report says that some 65 per cent of the world's untilled land is in Africa. In your view, why is that? Is it land ownership issues? Is it a lack of technology and know-how? Is it a lack of rainfall? Is it a lack of security or infrastructure? Why is there such a large unproductive area of land? What are the barriers to actually developing that?

Mr Abraham : One thing is that Africa is huge. I think in my submission I have indicated that sub-Sahara Africa can just fit in China, India and the United States. It is such a huge area. The dry area is mainly the sub-Sahara, but the rest of Africa is very fertile. Even Ethiopia and parts of Eritrea are tropical. It is very fertile land. It's very hard to access. I think it's really a question of access. I think there would be huge areas if you do modern cultivation, or modern agriculture. I think there is a need to do it in an industrialised or a modern way. You could have big areas where you could actually have big production. I have lived in Australia for the last 40 years. If I compare Africa with Australia, it is a lot different. The type of soil is different. The soil there is very deep, black, organic. It's really thick and fertile. You won't even need much fertiliser. So I think there is a lot of fertil land in that area. The reason is that it is huge, plus the population is few. Well, at the moment it is about 1.1 billion. It is supposed to double in a few years. Also, mainly the agriculture has been subsistence farming. I think that also has been the problem. So there is a huge potential to revolutionise the agricultural production of Africa.

Senator FAWCETT: We see that even here in Australia. One of the characteristics of modern productive agriculture is scale, and there is already controversy in Australia that family farms are often being bought up by large corporations. Do you think there is the appetite within African nations, their governments and their communities, to see thousands of families who currently practise subsistence farming being subsumed into large joint ventures or corporations, or is that a cultural change that would not be supported?

Mr Abraham : Personally I would have some concerns with that. In my view, there are enough opportunities to increase the production of the current farmers and help to improve the way they do farming, small-scale farming. There could be a place for big farming, but not all of Africa, because there is quite a bit of land that has not been used at the moment. I think we have to keep a balance of the two. But then again I am not an expert in that, so I can't say more than that.

CHAIR: I sat on a plane—I can't remember when—and next to me was the Auditor-General of Kenya. He'd been to Canberra for a conference and training. Is that a common thing, where we have public officials in Africa coming to Canberra and accessing training and development? Is that an established process? Are you aware of that?

Mr Abraham : I know that some officials do come to Australia as part of the engagement of the government, where they take them around, show them around. I am aware of that. I'm not sure how much is done.

CHAIR: How structured that is.

Mr Abraham : I think in many ways that is also quite a good way of showing how a modern economy operates, how you can actually have good governance. One thing that has sunk into my head over the last 40 years is that the only difference between a developed and a developing nation is that of governance, rule of law, where all money that the government generates actually goes into one basket and is only paid out by law. That is something that I have actually got some concerns with on the African side. Unless that happens, unless people can have a look and see how it's done, unless they firmly believe in that, I think the economic progress of Africa will not be as much as we'd like it to be. That's something I hope would continue.

CHAIR: I attended the Inter-Parliamentary Union in Geneva, and one of the comments that was made to the Australian delegation was that we were seen as a model of democracy, a free and fair democracy, with a free press and a stable government—although we have our own excitement from time to time. But basically governance functions are well regarded. Do you think the Australian government—and it wouldn't be a huge cost, I would imagine—could really ramp up any program they have at the moment about engagement with auditors-general and people with statutory functions, who underpin a strong economy? I understand Kenya's growing at quite a significant rate—in spite of the perception of facilitation payments, corruption or whatever, it's still going very well. But it would be growing much faster if corporate governance and due diligence were more widespread. I don't want to offend anybody there, but do you think there is room for Australia to move into that space in a more structured way?

Mr Abraham : Again, that's my personal view. As you know, I'm here in a private capacity. But, really, out of all things, that governance and rule of law is making sure that a nation is going in the right direction—it's like a steering wheel. I think that is an area of help: interaction by people coming here, perhaps, or even by experts going from here to Africa and trying to share experiences. We have to be careful: democracy is not a domain only of the West. Actually, it is natural; people, by nature, are democratic. It's just that in Africa, unfortunately, we have had the distortion of foreign occupation and whatnot. That tended to distort things for some personal, private interests. Other than that, for me that is a key. That's one of the areas that Australia could help in—financial management, governance, rule of law and supporting elections. All of that, hopefully, could be done on a much bigger scale.

CHAIR: What are the biggest risks for Australia if it doesn't improve its position in Africa? We have people in the parliament who don't think that foreign aid is a good thing. That's natural in a democracy—you're entitled to that view—but what would be the risk for Australia not to engage with Africa?

Mr Abraham : I think the biggest risk I see is opportunity cost. There are huge—billions and billions—of trade and investment opportunities for Australian companies. It's not so much about aid. My personal view is that I would not have sleepless nights if there were no aid from Australia to Africa. I think other countries are moving in. I have lived here for the last 40 years and have benefitted from Australia. Australia is my country, too. For me, watching these huge opportunities passing Australia by because it hasn't done anything, that actually is a huge loss and a huge risk. Plus, of course, if you look at it with regards to security, economic security and this whole terrorism area in the Indian Ocean, I think Australia depends a lot on that trade route. I recall that in 1995 there was an Indian Ocean forum in Perth. Australia was engaged so much and had a big plan to engage with Africa. That is where the Indian Ocean Rim Association started from. But, in my view, there is not much happening on that side. In fact, from what I can see, Australia is moving away from Africa. I think that is at the risk of missing opportunities for Australia.

CHAIR: I note that the connections to Africa have vastly improved with Doha and Dubai, and Emirates and those types of airlines hubbing there. You can fly almost anywhere in Africa in a few short hours from your major haul to Dubai. I went to Nairobi—which was Doha and then Doha to Kenya—very, very easily. I think they are also building quite substantial air and transport hubs in that region with a view to exporting into Africa. They are going to replicate their airport in Dubai with a link to a port terminal and will be able to land—I think; I'm not sure exactly—five A380s simultaneously. The cargo capacity that Australia is already exploiting into the Middle East is then an easy route into Africa as well. One of the things that struck me in Kenya, when I was there for 10 days, was that fruit and vegetables are about the same price as they are in Australia. There are enough people there who can afford to buy them and there is an enormous opportunity for exports in that area. Do you agree with any of that?

Mr Abraham : Absolutely. I remember 20 years ago when I had to go back to Eritrea after Eritrea became independent. The only way you could go back was either through Europe or through the Middle East. You could go through South Africa but it was twice as expensive. Now, I believe, the prices are the same or almost similar. I think that in many ways Africa is connected now. As you would be aware, now there is an increased presence of the super powers on the Red Sea in Djibouti and Somalia.

I think, China has a base now, the Americans have a base and the French have a base, and it's incredible. There is a very high concentration of competing powers along that region. There is even a plan—Martime Silk Road is supposed to be passing through that area down to Mombasa, I think. Africa will certainly be more connected, either by air or by sea. That's why, in my view, Australia ought to take advantage of that, if it's going to be easier to communicate. I think this is the time to move towards Africa; not away from Africa.

Senator MOORE: Mr Abraham, your submission mentioned the growing number of the African community in Australia. You talked about the fact that we should be working more closely with them to develop the networks and develop the ties back with African nations. Do you want to put anything else on record about how that could happen? It's been raised in a number of submissions. We know that we have many more people living all around Australia who have African backgrounds—more than ever before. How do you think that could be put in place?

Mr Abraham : I guess if I'm going to take my example mine is a little bit of an exception. I came out as a refugee. My desire was to tell Australia about Eritrea. While I was studying I met Fred Hollows. I eventually sent him over to Eritrea. Then I met Thomas Keneally. Until the early 90s, the activities about Eritrea were so huge, but our number was few. When I first came there were only about 10 of us in all of Australia. So it's not about size in many ways. There was a perception that the number of Eritreans in Australia was really huge, but it was only about 10 of us. I think that now the number has increased.

New migrants have new challenges. I think that when people first came here in many ways they are totally disempowered. If they are university educated they still have to go back and study even—if they had qualifications. It is really a big struggle.

There are some who migrated based on their professions. There are doctors and engineers, quite a lot of them, who studied here and who have decided to stay here. There is scope for organising them to create a link with their home countries, like has happened with the Chinese or with the Indians. That would have to be something that Australia has to seriously think about and have a plan on. I do know that there are some activities now—some Africans out on their own—with business and trade, but it's only on a very small scale. I think there is scope to create some incentives or support from the Australian side for them to meet in an organised manner. I think the potential could be huge, because they have the advantage of culture and have the network and the links. Also, there are over 13,000 Australian awards alumni who live in Africa now. Even in Eritrea we have about 40 of them. When I was ambassador we brought about 30 to be trained here. So for those who are trained here who are there plus the ones who came here, I think there could be a link created here.

Senator MOORE: Thank you very much.

CHAIR: We took some evidence from companies engaged in mineral extraction, and they had a view that the proposed post in Morocco wasn't particularly going to help them because they didn't operate in those areas. Why are we going to be in Morocco? Do you have any view on that? Is there a stronger tie or trade with Morocco, or is that a gateway to Africa?

Mr Abraham : Again, that's my personal view. I'm sure DFAT would probably have a more informed view on that. But, for me, though, the northern part of Africa is a link to Europe. Actually, in many ways it's more developed than the rest of Africa because of the interaction with Europe—Tunisia, Algeria and Libya. Libya, of course, is another story. That whole area has a lot of resources and also they have a link to the Mediterranean. I think my view on that one is that Australia ought to follow opportunities wherever they are. I don't think in this modern age we can be confined by geography or by space. I think, if they are closer to us, it's better. But, of course, Australia trades with Europe; it trade's with the UK; it trade's with Germany—which is way past Morocco. My feeling is that there are some opportunities also in Morocco. I think they are developing. I think they are improving their governance. I don't think it is like it used to be. Then, of course, there is the Western Sahara side to it. So, certainly, in my view, there is potential in that region. It's more or less similar to the Middle East.

CHAIR: This might be a completely wrong perception, but I had the perception that a number of countries in Africa look straight at Europe; they don't actually look the other way. Their ties are with the European Union, so to speak. Is that a fair assessment?

Mr Abraham : I think, in many ways, it is. But, again, it's out of ignorance, really. I think Australia ought to try hard to, if you like, sell its expertise to Africa. The amount of business opportunities from international financing is huge in Africa. But most Africans don't know about Australia. That's might not be totally correct, because I think 19 out of the 53 countries in the Commonwealth are actually African countries. So, because of the Commonwealth, there is some awareness generally, but I think they may not have specific information about Australia. Certainly, one thing Australia is known for is its role in apartheid. I think it was at the forefront of the fight against apartheid. Certainly, in Eritrea—if I can talk about Eritrea—every Eritrean loves Australia because, during the war, Australia was, in many ways, one of the only countries since 1984-85 that provided humanitarian aid through the Sudan, bypassing official government channels. Eritrea was fighting a war. It was officially part of Ethiopia. But I do remember in 1982-83 there was a parliamentary inquiry by the Joint Committee on Foreign Affairs and Defence. It was chaired by Senator Kerry Sibraa. I actually gave evidence to that committee. Because of that committee—their recommendations were accepted by the government—there was this life-saving aid provided through the Sudan, and over 15 Australian NGOs were working in Eritrea because of that. Australian wheat was provided—3,000 tonnes of wheat per year was sent through the Sudan to Eritrea. Because of that, in Eritrea, if you're an Australian and you say, 'I'm from Australia,' people will probably not charge you and say, 'I'm going to give you free accommodation,' and what not. I think they are the kinds of things we need in Africa—those people-to-people relationships. I have to say again—I'm not acting for the government of Eritrea—because of that Eritrea and Australia had always been, in many ways, close, and as far as I know Eritrea had always voted for Australia at all the international forums, even breaking from the African group. So I think there is a lack of ignorance from both sides. So I think we need to work harder from this side to tell them about Australia's expertise. Then, of course, also to bring Africans here—we only have got one sea between us. It's only about four hours time difference. There is this mental divide between Africa and Australia. I think we ought to break that and break it for the sake of Africa and also, more importantly, for the sake of Australia, because the next growth is going to be in Africa.

CHAIR: Thank you very much for your submission, your evidence and your appearance here today, Mr Abraham. It's been very engaging and very informative. Thank you.

Mr Abraham : Thank you very much. I really appreciate the opportunity. Thank you.

P roceedings suspended from 10:16 to 10:32