Last Updated
Friday 19 December 2014, 09:33 am.
Exporters pin hopes on AGOA revival

Local exporters particularly those in the textile sector, are hoping this year's African Growth and Opportunity Act (AGOA) forum in Washington will extend their favourable trade terms with the United States.
By Staff Writer Mon 22 Dec 2014, 02:36 am (GMT +2)
Mmegi Online :: Exporters pin hopes on AGOA revival








Under AGOA, local companies exported US$15.5 million (P115 million) to the US in goods last year. The 12-year-old AGOA allows certain goods produced in Botswana and other African countries, duty and quota free access to the US which is the world's single biggest market.

Local manufacturers exported goods worth US$11.6 million (P86 million) and US$12.4 (P92 million) to the US under AGOA in 2010 and 2009 respectively, securing thousands of jobs locally and contributing to Botswana's non-mining Gross Domestic Product (GDP).

However, the lucrative access to the US market will diminish later this year at the expiry of the Third Country Fabric Provision in September, under which textile and garment firms were allowed to use foreign fabrics in the manufacture of products exported to the US.

All local AGOA garment exporters import material from Asia, as they argue that adequate qualities and quantities are unavailable locally or regionally. In addition to the Third Country Fabric Provision, AGOA itself is scheduled to elapse in 2015 following the extension of its original end-date in 2008. June's AGOA Forum in Washington is expected to make pronouncements on both topical issues with experts at a national AGOA forum held in Gaborone on Tuesday urging exporters to make hay while the sun shines.

"We need to take advantage of these opportunities," said the Southern African Trade Hub acting chief of party, Kathleen Montgomery, "Whether or not there are extensions to AGOA, these opportunities will erode as other countries secure similar arrangements with the US."

Montgomery however said there was strong support for AGOA's extension in the US. US embassy economic officer, Aaron Karnell echoed Montgomery's optimism on possible relief for local and other African exporters. "There's no specific news right now, but from my own research it looks like the signs are positive (for the Third Country Fabric Provision)," he told Tuesday's meeting.

"We know how much this provision means for Botswana and we are in touch with our advocates in Washington to lobby for that. The challenge, it appears, is finding a piece of legislation on which this extension could ride. I would therefore say the signs look positive because it does have key support." While industrial affairs director, Ontlametse Ward suggested the possibility of AGOA transforming into a negotiated, reciprocal and thus more permanent arrangement, the US experts said there were no indications of such thinking in Washington.

Montgomery and Karnell encouraged Botswana to emulate Lesotho's example in the utilisation of AGOA. The mountainous kingdom's AGOA exports average US$260 million per year with the arrangement fostering a bustling textile and garment sector while catapulting the country's brand abroad.

"There are a number of things going on in Lesotho," said Montgomery. "They are benefiting from a clustering of industries that cooperate. One of the problems I have seen in exporting under AGOA was in Tanzania where someone received a huge order from a large USA chain. That person was asked to fill three containers per month and ship all of them. This was a great opportunity but that person was unable to accept the order because of under-capacitation."

Local exporters have cited cost of compliance in terms of product quality, cost of export arrangement and ignorance of AGOA at US borders as some of their challenges. These challenges and the future of AGOA are expected to be mapped out at the forthcoming Washington meeting.



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