This week in our feature series we’re looking at the African Growth and Opportunity Act (AGOA). It became a US law six years ago, designed to increase trade and lessen the need for aid. The act eliminates tariffs on some products from African countries that move toward opening their economies and creating free markets.
But some research shows that while AGOA has helped the petroleum sector in African countries, it has not made much difference in the agricultural sector. And experts say it is agriculture, not oil and gas, that will help achieve AGOA’s goal of poverty reduction and wealth creation in sub-Saharan Africa.
Daniel Karanja is a senior fellow at a Washington-based NGO, the Partnership to Cut Hunger and Poverty in Africa. In an interview with English to Africa reporter Angel Tabe, he describes what he sees as the inequities of distribution of AGOA’s benefits. “In 2005, oil and gas accounted for 93%. With agricultural products, it was .6%. Where we thought AGOA would be most useful for Africa, that has not happened yet. We are talking about very highly concentrated benefits to a few countries.”
Karanja says obstacles to sub-Saharan Africa being a huge exporter are two-fold. “One is dealing with technology, infrastructure and information about the market. Farmers need to know that in order to invest. Number two, transport linkages. It’s easier to get perishable products to Europe because it is closer, but also there are more flights from Europe to Africa. There is also the need to start processing raw materials so that they can stay longer in the market and transport easier.” Karanja adds that in order for AGOA to be really useful, entrepreneurs need government support to establish business-to-business relationships that will stimulate local and regional markets. “There are examples of small-holder farmers who are already very competitive in international markets. How do you scale that up so that they can produce more, and have more income?”
Karanja says the Comprehensive Agriculture Development program helps Africans identify where investments should be channeled. “So AGOA and Aid for Trade need to focus on how they can help African small-holder farmers become more competitive in the global trade.”
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