Gov't acts as AGOA exports hit zero
Mbongeni Mguni | Friday June 4, 2021 14:50
AGOA is a trade arrangement between the US and sub-Saharan African countries, including Botswana, which runs till 2025 and provides relaxed access to the American market.
From a peak of P1.8 billion in AGOA exports by local firms in 2008, the figures have been plummeting over the years as key exporting sectors such as textiles and garments have struggled with a plethora of issues. While the US remains the most lucrative market for local textile players, issues such as scale, capacity, distance, costs, high competition for the American market and government reluctance to keep extending incentives for producers, have led to the closure of some factories and relocation by others.
Thomas Newberg, an International Trade Specialist in the US Department of Commerce told BusinessWeek the last exports from Botswana under AGOA occurred in 2019 and consisted of wooden ornaments worth about $3,500.
The last textile exports under AGOA from Botswana were in 2017 and consisted of women’s garments worth about $970,000.
Since the beginning of this year, no AGOA exports have been recorded from Botswana.
“The potential for AGOA in regards to textiles and apparel is very high,” Newberg said.
“AGOA is one of the most liberal trade preference programmes that the United States offers and allows eligible countries like Botswana to source fabric from third-party countries and will continue to be in place until September 2025.
“AGOA eligible countries have consistently fallen short of the quota fill rate for third-party fabric, indicating that AGOA has been historically underutilised for its potential.”
Information dug up by BusinessWeek indicates that the local textile sector has generally refocussed to target the local retail market, government procurement as well as exports into South Africa.
Ministry of Investment, Trade and Industry acting deputy permanent secretary, Gideon Mmolawa told BusinessWeek the recent revision of the country’s AGOA strategy meant focus would be placed on supporting the exports of meat and meat products, natural/indigenous products, handicrafts, jewellery and semi-precious stones.
“Horticulture and agro-processing, textile and apparel (as well as) and leather and leather products remain important,” he said in a written response to enquiries.
“Some local companies have made encouraging progress in exporting natural/indigenous products with a global value worth an estimated $37 billion.”
Mmolawa added that jewellery and semi-precious stone producers had already established contacts in the US while the arts and crafts talent in northern Botswana was expected to take advantage of the AGOA trade deal.
He said the government continued to support the local textile sector through a ‘stern focus’ on the manufacturing of uniforms for disciplined forces and schools as a way to penetrate local supply and retail.
Regional clusters in rural areas are being developed to strengthen the value chains, while awareness campaigns were also taking place on the advantages of AGOA, the acting deputy permanent secretary told BusinessWeek.
“(There is also) use of diaspora in the US to disseminate information and products through established channels,” Mmolawa said.
The country’s previous AGOA strategy had recommended that potential exporters be profiled and these profiles shared with the Botswana Embassy in the US.
Other interventions were to include the participation of firms at international trade events, training initiatives, buy-seller linkage programmes and duty or rebates on sourcing of raw materials.