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June 08, 2011

African Business Leaders Eye Expanded Exports Under US Trade

by Scott Stearns

African business leaders are meeting in Zambia for talks on how they can take better advantage of U.S. trade preferences. The Obama administration wants Congress to extend those duty-free imports.

In the 10 years of trade preferences under the African Growth and Opportunity Act [AGOA], exports to the United States have grown from $23 billion to $64 billion.

U.S. Assistant Secretary of State for African Affairs, Johnnie Carson, said that has helped improve African business and African governance.

“AGOA has made progress in creating jobs, spurring economic growth and facilitating a dialogue on key economic and political challenges facing many countries in sub-Saharan Africa,” he said.

Extending AGOA

The AGOA program is set to expire in 2015. The Obama administration wants Congress to extend it for another 10 years. AGOA-eligible countries are allowed to export certain kinds of products to the United States duty free, which Washington says encourages trade, not aid.

Ghana, for example, exported nearly $400 million worth of AGOA-eligible products in the first quarter of this year, twice what it did last year.

The director of export services at Ghana's Ministry of Trade and Industry, Gerald Nyarko-Mensah, says AGOA opens doors but investors will only pass through those doors if a country has the right business climate.

American retailers Pier One and Target have ordered more than $3 million worth of Ghanaian home décor products through AGOA.

“Thousands of artisans had to be mobilized to produce the large quantities that these buyers wanted," said Nyarko-Mensah. "This kind of mass production had never happened in our country before. In the beginning, even the banks had difficulty because pre-financing such large orders was something they had not done previously for artisanal producers. So it has opened a whole new paradigm, particularly for micro-enterprises.”

Trade, not aid

Ugandan businesswoman Anne Babumba Magero exports organic soaps under AGOA. She said the program gives African women the power to make their own decisions about their own finances.

“We are more independent," she said. "Now we can look after our families. We can educate our children. We have done a lot for ourselves. We are not there waiting for our men to do each and everything for us. Yes.”

The director of private sector development at Angola's chamber of commerce and industry, Jose Rodrigues Alentejo, says his country is just starting to take advantage of AGOA.

“AGOA is a good opportunity, but we are not yet feeling the results," said Alentejo. "Only now are we starting to produce some products of quality and competitive prices. This means that we are now starting to approach the international market.”

Angola is part of the Common Market for Eastern and Southern Africa, or COMESA. The trade group's director for investment promotion and private sector development, Chungu Mwila, said the continent has not yet fully exploited AGOA's potential.

Tapping the full potential

“African governments have not been able to create the productive capacity to make them competitive with other economies elsewhere," said Mwila. "So it is narrow. The range of products is limited. If you look at the volumes, yes, there have been some increases here and there. But I think we could be doing a lot more under the provisions of AGOA.”

Textile and oil products still dominate AGOA exports. Mwila said his goal for this meeting in Zambia is to improve Africa's performance, especially in areas where it may have a competitive advantage, such as agriculture.

“The potential lies in agriculture, semi-processed agricultural products," said Mwila. "We need to diversify away from the textile industries, from petroleum products, so we are able to put semi-processed goods on that market.”

U.S. Secretary of State Hillary Clinton arrives Friday in Zambia to help close this AGOA forum. While in Lusaka, she will meet with Zambian President Rupiah Banda and speak to the U.S.-Zambia chamber of commerce.