African Growth and Opportunity Act
I wonder how many people on the continent of Africa know about the African Growth and Opportunity Act or AGOA? At the risk of being or even sounding patronising, I would guess not that many and that those that do, don’t exactly know how they can benefit from it.
This ACT was passed in 2000 and is reviewed annually and the idea behind it is to enable African countries to export their wares into the USA tariff free, they are further details about the ACT here
The Act has had some impact on trade between the USA and African countries and it was interesting to note that Paul Collier one of the leading experts on African economic growth acknowledging it as a model that has potential to bring about growth within Africa having had his doubts when it was first announced (source THE BOTTOM BILLION BY PAUL COLLIER April 2007 OXFORD PRESS).
A few questions
Have folk in African been able to take advantage of this Act and if so how?
Who in Africa is actually taking advantage of this ACT?
I haven’t done extensive research in this area and therefore my answers come from mere observations made in the course of my work work at Ethnic Supplies and certainly one of the industries that should benefit from this AGOA is the textile industry and on observation the industry has. But when you scratch on the surface of this benefit you will discover that at least in East Africa (certainly KENYA, UGANDA and RWANDA) the textile companies that have benefit are not necessary owned by indigenous Africans. You will find that there are owned by Asians!
You may wonder why this is such a bad thing after all these companies provide/create jobs for locals! Granted you would have a point and one such factory I visited in Rwanda at the back end of last year employed 4000 locals.
I am aware that some indigenous textile producers in Kenya were very unhappy about the fact that they cannot compete against the might of the Asian financial muscle. I interpreted this to mean that the smaller textile producers are not able to meet the supply standards required by the Act nor keep up with demand as they mainly one man band outfits!
Therefore whilst the Act is a good idea, it appears that they are no systems and process on the ground to ensure that it benefits the people who need it most and this would include capacity building of such enterprises.
Interestingly I recall hearing one of those Asian owned companies (based in Uganda) that signed up complaining that he had not been able to meet his commitment and at some point he had to import cotton from somewhere! I would like to think that this “somewhere” was not the USA!
So what can be done about all this?
You may be aware that the countries that benefit from AGOA are selected each year and meetings take place in that country to discuss the way ahead etc
2009 was Kenya’s turn and I was invited to take part in a televised discussion of Clinton’s visit to Kenya and I have posted it here for your information.
Excellent piece, AGOA is a good start and Congratulations to both Bill Clinton and George Bush for seeing it through and making it what is today.
The question however is why just textiles? If the West really want to make a dent in poverty, opening their markets to trade from Africa will go a longer way than any other ill thought out project.
However when we look on the African continent, they are still to achieve free trade amongst themselves, what does that say about African countries. The regional trade groupings that exist at the moment haven't worked as well as was expected.
Is it time to practice “Real” Free Trade?
Welcome to the discussion Tony. Yes AGOA does indeed have the potential to offer routes out of poverty. Apart from Oil and textiles I am not sure what other items are included in this scheme, but I suspect not many if at all.
The reason why African countries cannot trade with each is a real puzzle to most folk. They are easily many more consumers in Africa than Europe, but as the saying goes “it is complicated”!
Never heard of this Ida. I am going to ask a friend at home(SL) who should know.
Issue is how do we become competitive ourselves as the larger, more advanced companies will always be in a better position to take advantage of benefits as the one you describe if we do not start working together at country and regional levels. We as Africans are still just too fragmented in our offerings. Instead of the checks on the US side who in the African countries taking advantage of this is checking whether it is their own home grown businesses who benefit. I wonder?
Yes there is a real disparity there and almost a lack of confidence in our own abilities!
You are right about confidence. We find ourselves saying 'they' have not done this or 'they' have done this wrong and I stopped myself one day and thought who are 'they'. Why cannot 'they' be me?
That's how I left my job and started the childcare service I wanted after saying for a while that 'they' did not provide the right hours for working parents!
The same thing is driving my new venture now.