John Jovanovic, EXIM Chairman, on Advancing U.S. Investment in Africa

Chairman, thank you so much for joining us. I told everyone you changed your schedule to be here. >> I I absolutely did, but when uh when Gracing calls, we all respond. So, >> John, your path to this role, I'd love to hear more about your role, right? I mean, your your your Pat's role runs through energy trading, critical infrastructure, and opening DFC's first overseas office. in a couple of minutes. What did that mix of private capital and development finance teach you about how deals actually get done? >> So, uh throughout the course of my career, uh I've spent my entire career in energy, commodities, critical infrastructure, infrastructure related services across the country and around the globe. And I've sat on every single side of the table at this point, right? Um, I've been uh an equity investor, been a project developer. We've been in companies where we've tried to build out and operate or service large critical infrastructure, been a lender. Uh, and now, you know, as you know, I'm a repeat offender, right? Uh, I I was very uh fortunate enough to serve the president in his first term. So, you know, we've seen the power that government when channeled properly can partner with the private sector and make an enormous impact. And we're seeing that more and more on the continent. But what I think it allowed me to do was really appreciate what everybody was missing and and how we could work together. You know, the biggest eye-opening um lesson from being at DFC and opening its first overseas office was every time I would come back to Washington and I'd debrief uh my colleagues or the Hill uh about our strategic competitiveness and how we could put our best foot forward and compete particularly with non-market actors around the world and Africa in particular. And they'd say, "Let me let me get this straight, right? So don't tell me we've got to pollute the environment. We've got to bribe people. we've got to break local laws. We've got to import local labor. That that's the way we can compete, right? And what I had known by then was that that was absolutely wrong. But we had to show up and we had to show up credibly and we had to show up and compete. And another lesson and this is particularly true for our work uh on the continent and we're very proud to have a congressional mandate which we wouldn't need anyway but we have one to help support subsaran Africa in particular but we're very active on the continent. We'll talk about that today. Um Africa is not for beginners. It's not a place to go alone either. And so another great asset that we have as American companies, of course, many of you are in the audience, American investors, and as US government policy tools, is nobody goes home and brags about their partnership with the North Koreans or the Iranians. Nobody goes nobody goes home and is really excited about their new partnership with the Russians, right? People want to be America's partner, especially on the continent. We have to outstretch our hand. We have to be competitive, but we have to be present. And I would say that's the biggest thing that's prepared me for uh both the challenges and the opportunities we have uh and in Africa in particular. >> John, we've talked about this. People haven't always known what XIM is. And there is a lot there's alphabet soup when you come to the US government, right? There's USDA, we have MCC, we have DFC. Um and it all kind of blurs together at some point. what is XM able to bring to the continent that it is uniquely positioned to do? >> So, one of the most eye-opening things for me having joined the federal government the first time in and the president's first term is how many acronyms there are. And I and I promised myself I said I'm not going to become an acronym junkie, right? So, I'm going to call things what they are. Not, you know, these cryptic conversations, right? Um, so how many of you here have heard of XM before today? Raise your hand. You guys are being very charitable. All right. How many how many people worked with Exxon before? Oh, wow. Okay. So, uh you know, XM was started 92 years ago by President Franklin Roosevelt with a very clear objective in mind. How can we help create more jobs here in America that are wellpaying, that are stable? How can we drag the US economy out of the Great Depression once and for all? By opening up new markets and helping American companies compete and win around the globe. And it turns out it's a very big part of American competitiveness. American companies, American farmers, American energy producers are only worldclass and worldleading because they serve the world. right now. I'm not sure Franklin Roosevelt had the foresight, but maybe he did to appreciate that only a few short years later, he would need a lot of the industrial capacity that he was nurturing in America to help our allies win World War II, free the world, to help then rebuild many parts of the world, to shape Pox Americana, to prepare us and fortify us to take on our strategic competitors in the Cold War, and then to usher in an unforeseen and other than never seen before, you know, era of prosperity and technological advancement and whatnot. And so we inherited though Graceland as you probably remember because you were you were there at the beginning uh as as a friend and supporter and and a oftenimes a critic of what we were doing in the best possible way, right? And we need critics too. uh we inherited a very sleepy institution uh with a lot of muscle memory though and the bet we had made and thanks to President Trump's vision and his support we [music] believed that XM could be a frontline economic tool again uh and we believed it had a very important role to play in domestic supply chain security so here's what we did we said okay let's organize the bank around four strategic priorities let's go back to basics help American companies win around the globe especially in Africa where we have a mandate number Two, how do we help deliver American molecules and our technologies on the energy side, every corner of the globe? Number three, how can we be a tool in supply chain security both at home and abroad via supply chain resiliency, project vault, which we talked about. Four, how do we help deliver advanced American manufacturing in partnership with our allies uh to help usher in the industries of the future? It's global AI export program, whether it's advanced mobility, dual use technologies. And so with regards to Africa, here's what we really have to concretely offer, right? We want to position American companies, American technology, American equipment to be a partner to the continent. [clears throat] We want to make it attractive, easy, straightforward, and competitiveness for you to buy American because we believe if you choose to buy American and bet on a partnership with America, it'll really pay off in the long term. That's what the record has shown. That's what we think the future will hold. Let's help you buy Americans so you could build a better future. Let's also help usher in and forge partnerships to help build out infrastructure and other critical needs in Africa where American companies and American content can play a role. Uh and last but not least, let us help be a tool for energy security to the continent. So, um, what we've seen is recently, you know, we've supported, uh, about $2 billion worth of US LG exports to North Africa. Uh, we've just completed a hundred million dollar loan, uh, to Afrascell in Angola to help usher in trusted technology and trusted vendors. These are a few recent examples, but, you know, we have legacy examples, too, that we inherited that we're making sure can deliver and can succeed. John, you mentioned earlier there are still challenges to doing business in Africa. Where do you see projects are stalling in your own pipeline and how is XIM addressing some of that those challenges? >> I I think that the challenges facing Africa and our pipeline at least rhyme with some of the other challenges that we have elsewhere. Um you know there there are equity shortfalls. Um, here's where, you know, now, thank goodness, you know, we have a robust DFC that's now been reauthorized with an increased uh allocation of balance sheet with more robust equity authorities now forging their own partnerships with uh, you know, equity providers and other fund managers. So, you know, we see more and more that DFC run by a great CEO, good friend of mine, Ben Black, who's doing a tremendous job with his great team there. You they're more present on the continent. So number one is you know equity shortfalls but that befalls projects in America right so I think that's number one uh number two is also having you know there are varying degrees of institutional capacity right ready to work with us and run with us and so where we try to be very thoughtful is how do we try to look around the corner with our African partners and friends and as you can imagine next week going into the UN General Assembly there's there's not not a lot of free time uh and we'll be meeting with many of our partners from the continent is start early, right? Come have a conversation with us early because the biggest challenge we have beyond the typical kind of things that befall any project development or largecale business transaction is things are fully baked by the time they come to us and there are flaws or tweaks that we've could have made together that would have allowed an American partnership to flourish and so nothing's too early for a conversation especially when it comes to the continent. And one of the things I'm most excited about next week is we convene our advisory board quarterly. We have a dedicated advisory board to our work in subseran Africa. A fantastic group. And so you know we in that forum we also have deputized if you will um key either thought leaders, business leaders, investors to help us start to modernize our tools to be able to deliver on the continent. And I want to deputize all of you here today. Right? You will leave here hopefully knowing a little bit more about XM and what role we could play. Hopefully thinking a little better of us. If any of you have had previous experience that's not so great, I hope you forget it quickly. And there's one way to do it is to start engaging with us again. Uh but you know, I want to deputize you to know in your own lives and your own portfolios where we can help. Um but also come talk to us if you think there's something we should do that we're not. And your team has been so generous with meeting with companies both here but I mean we've met with some of your your team in Africa. >> Listen, it's their job, right? It's you know it's very kind of to you to say generosity. It's the expectation we have of them especially when it comes to Africa, right? So you know one of the things that I was I was uh I was told uh as I was preparing to go through my Senate confirmation and take the helm at XM is you know you know the problem at XM. I said, "Tell me what's the problem at there's there's low morale over there." I said, "Okay, well, why is there low morale?" I said, "It's very simple." And anytime somebody tells you there's a very simple answer to a very complex question, your antenna should go up, right? And they said, "You know, you need to hire more people." I said, "Oh, interesting." I said, "Okay." So, you know, I come from most of my career has been in the private sector, and if someone tells you the answer to something is to just spend more money, you should really be skeptical, right? So I said okay well let let's see right uh and it turns out they were only partially right but they were mostly wrong. The big asset we have in the bank is again that big muscle memory of doing large transformative things that has attracted missiondriven people. Now what do missiondriven people want to do? one thing they want to win, but it's really hard to be a self-guided mission-driven winner, right? That's ve very rare, right? So, people want a path to winning. [clears throat] Turns out when you offer strategic architecture like we have, if you keep the main thing the main thing and what we realized is at every level, you got to offer people a path to success, right? So, we would sit down, we'd sit with an underwriter. We say, "How many deals did you underwrite last year?" They say, "Two." Okay. By the way, that may be a great answer. Two may be a home run, but what was your expectation for it? What was the sideline? What was gauge to be a win? What was the impact? How many jobs did it generate? How much private capital did you bring into it as a result? Was it a part of the overarching strategic goals of the bank? Was it on the continent, for instance? What did it start to fulfill some of our congressional mandates? These were they're good people, but they had just never been talked to that way or talked with that way. And so what we did was we created a framework for winning, right? And everybody wants to win and everybody if they work hard get to win. And what you realize is when you put people in the right position, you motivate them, you orient them in the right direction. You XM is exploded with activity, with good results. We've returned the bank to profitability for the first time in over a decade. So, if you're a US citizen, we'll be virtually sending you a little dividend check this year, right? So, you're welcome. Um, you know, we've we've set a record for the most loan activity in any one year in our 92-year history. We're we're achieving strategic results that really move the needle for our companies around the world and hardworking Americans here at home. You know, yesterday I was at I was in Minnesota for the day. I was in the you know you know Graceland is one of the thought leaders one of the best best sources of knowledge and pulse on what's happening in critical minerals and raw materials anywhere in the world right so I'm going to nerd out with her for a second so I was on the Iron Range in Minnesota Graceland knows but I'll tell you guys for over 145 years the Iron Range has been producing iron ore that built America that won World War II that shaped shaped the world, right? In fact, my grandfather, we started over in America like many American dream stories. Uh he worked at a steel mill that I'm fairly certain process fabricated and forged iron ore that came from the Iron Range. And yesterday, we opened up the first new iron ore mine in America in 50 years. Right. Uh, I got to hit a cool button and it detonated a 1.1 million pound explosion of red, white, and blue. So, you'll you'll kind of see that it's it's out there. But, you know, we did something that nobody thought was possible. They said, "Oh my god, you can't mine anymore in America." Well, that's not true. Uh, you can't refine and process in America. That's not true. You can't make steel in America. That's not true. Oh, and you definitely can't do it if you respect the environment, protect the environment, and follow local laws, and get local stakeholders on board. Definitely not true, right? And we demonstrated that that that um that yesterday. And so, you know, punchline is um you've got missiondriven people in government. They're not perfect, but they're not perfect anywhere. Approach us early. Talk to us like a partner. Be transparent about what your challenges are because we're going to find them anyway, right? And let's start working together to resolve them and partner. John, you've really transformed Exom and put it on the map and especially at a very important time for strategic sector. One of your signature and most impressive accomplishments is Project Vault, which is a $10 billion loan to build America's economic security stockpile. I'm from Detroit and our auto industry came to a grinding halt last year owing to these rare earth export restrictions. really showing us that within weeks of what happened in Beijing, our you know, your your factory floors were feeling it in America. Now, all of that stockpile has to come from somewhere. What role do you see Africa playing in potentially filling some of those stock piles? >> Yeah. So, first off, Project Vault doesn't happen without the president's leadership, president's um brave vision, and his unwavering commitment to re-industrializing America. And President Trump realizes that you cannot re-industrialize the United States without starting with the building blocks, right? Critical raw materials need to have a place in our ecosystem here. We need to mine in America. We need to refine and process in America. And here's where people lose the punchline. We need to work constructively with our partners around the globe to make that a reality. Now these markets didn't get to a place where they weren't free, fair functioning overnight. So it's going to take some time. It's taking an whole of government approach which President Trump has organized and he's called us all to action to take. But Project Vault plays a piece in that. Um here's how Africa can help and here's how we're actively working with our allies. So, first and foremost, it's a blueprint that we hope other people emulate and copy. And we've been very to to use a techie term, we've been open source about it, right? We haven't been shy. We haven't been covert about what we aim to do. Why? Because we're partnering with the private sector to do it. We want it to be demandled, demand driven. Um, and so maybe you and I will make some news next week about it in New York. You know, we'll see. Um, but, you know, we're we're operationalizing it. We're standing it up. Um the bottom line is that Africa is a tremendous partner and ally in supply chain security. I think where what Africa has woken up to is the market reality that when you invite in non-market participants who just happen to be our strategic competitors and you allow them to dominate every corner of your extractive industries, it's bad for business, right? It's nobody wants to be a market participant in a market that isn't free, fair functioning, that isn't healthy, that isn't robust, that doesn't clear supply and demand. And so with initiatives like Project Vault, but there are many others, right, with the great work that the White House and David CPPley is doing in the National Security Council, you're going to speak to, you know, an incredible uh energy secretary here in a moment who's uh whose team is doing a tremendous job at pushing that forward with Audrey Robertson and others. uh whether it's folks at Department of Treasury, Secretary Burham's great leadership, fast 41 being put on track. This is a holistic solution. You know, we didn't we didn't get here overnight, but we're going to fix it together and Africa has a very key role to play. >> Now, when we take a step back, where is XM financing going to help get these projects off the ground >> with in the continent in particular? >> Yes. I I think having US technology play a big part in infrastructure development is key. Why? It's not as simple as buying a component. It is making a missionritical decision. Do you want to partner with America? Right? And what's that worth to you? and for servicing for after installation relationships for what it means to crowd in other goods and services from the United States other contractors other partner nations right because remember I said it's not for beginners Africa and it's not a place you go alone so how do we crowd in the right partners and the right people I think that's going to be the key um and so think about where American equipment American American technology, American service providers could play a role. That's that's where we come in. Now, if you're looking for American equity investors, DFC is your place, right? If you're looking for early stage help with feasibility studies, USDA is a fantastic place to come. If you have very clear-cut development objectives that align with the Millennium Challenge Corporation, which uh president's just nominated to lead that, which is tremendous news, right, which Ben and I have cheered on, right, because MCC has an important role to play. Um, use the portfolio of tools that the US government has at your disposal. It's an outstretch hand. President Trump has a deep commitment to advancing US relations with Africa. Let's do that together. Let's crowd in the private sector to make it happen. >> And John, how do we go faster? I mean, you talk about winning. Winning is getting stuff done, but winning is also going faster to get there because we know that our adversaries move very quick to get these deals done. And that the deal the the decisions we make today, tomorrow, in the next year are going to shape the next three decades of supply chain security >> at the very least. Do you want my unpopular answer? >> Love it. >> Perfect. um you know having grown up you know among the pro Protestant ethic of the Lord helps those who help themselves right so um I'll take it a step further like help us help you right come to us early the biggest problem we have with large-scale opportunities on the continent is they come to us presenting something that they've been working on with someone else for 9 to 12 to 18 months and they say can you match or beat this or oh my goodness we just woken up to the fact that these terms aren't what they thought what we thought they'd be or worse yet there are all these hidden little booby traps that now we want to relieve. So start with us early. Think about us as an early partner. Help us develop it. Uh and you know number two is you know think about our punch list. Come meet with us even before you have projects in mind. As you mentioned you know we have people who are missiondriven who are on the ground in Africa constantly but you know where to find us. Our doors always open here as well. and CSIS and the work Graceland, all jokes aside, that you do uh to help put the continent on the map here to ensure that private sector has a place to come and have a real conversation about how we can engage together in Africa is mission critical. Keep doing what you're doing and come see Graceland at CSIS as well. >> John, again, thank you so much for your leadership. I mean, so many of our conversations in your office have been about some of the harder jurisdictions in Africa and how do we unlock the structural barriers to investment to get these multi-deade investments to move and your thoughtfulness and your in the way you approach each one of these as an individual challenge I think is such a refreshing uh approach to leadership. So I have one last question for you today um which is what does success look like for Africa? You've talked about this, you know, your your e subsaharan ex advisory board. When you look at what success is in a year from now from an exm perspective, what is it? You know, the headline would be partnering with America pays off, especially in Africa. But let's do it together. And keep in mind that a little bit of American participation in a project, in a capital structure, in a loan sends a very clear signal to everyone else in the world that you want to partner with. They want to be a part of it, too. Don't be fooled by terms and conditions that seem too good to be true day one. They're too good to be true. They're too good to be true. So, come be our partner. Let's do this together. >> John, thank you so much. And I think it echoes so well what Assistant Secretary Garcia said this morning about the fact that we >> He's great, isn't he? >> He's amazing. that we really can be the partner of choice through a whole of government approach and with the strength of our private sector and our manufacturing here in the United States. So, please join me in giving uh Chairman Javanovich a round of applause. [applause] [music]