The African Growth and Opportunity Act (AGOA) is widely acknowledged as an important milestone in the growing trade and investment relations between the sub-Saharan African, AGOA eligible countries and the United States of America. It aims at enhancing U.S market access for qualifying sub- Saharan African (SSA) countries using preferential trade access to the U.S market as a catalyst for economic growth in SSA; encourage SSA governments to open their economies and build free markets; and integrate SSA into global markets through trade, investment and economic liberalization.
The Senate and House of Representatives of the United States of America in Congress assembled, enacted the Extension of the African Growth and Opportunity Act for a period of 10 years, the Generalized System of Preferences on 17 April 2015.
A set of criteria has been laid for a sub-Saharan African Country to qualify for the preferential trade regime under AGOA which inter-alia includes democracy, respect for human rights, accountability and good governance.
The African Growth and Opportunity Act includes a total of about 6400 tariff lines for imports to the United States on a duty free and quota free basis from the eligible AGOA beneficiaries from the sub-Saharan Africa.
Main achievements and constraints
The impact of AGOA on exports and job creation has been significantly meaningful for both sides of the Atlantic. The Textile and Apparel sector has been one of the most visible success stories in terms of AGOA’s impact in Africa, with a particular effect on employment, although apparel trade data shows that currently a relatively small number of countries export the bulk of apparel products to the U.S market namely Kenya, Lesotho, Mauritius, Swaziland and Botswana.
There have been several impediments to making full use of the scope provided by the AGOA. Lack of awareness of what is contained in AGOA; failure on the part of the concerned authorities to bring up AGOA to the real actors and players in the private sector particularly among the public and small businesses and entrepreneurs;inadequate supply-side capacity of African producers; particularly Small and Medium Size Enterprises, to meet Sanitary and Phyto-Sanitary requirements for the exports of the products to the United States; Low level of value-added production that reduces the overall value of trade and level of producer income;under-developed supply chains, incapable of effectively mobilizing and transporting products to the United States in the right volume, right quality and at the right time, and mutual lack of understanding and knowledge of one another’s markets-Americans and Africans, are some of the constraints that have denied the full utilization of AGOA
AGOA is not only about textiles, apparel and garments making
A glance at the GSP and AGOA duty free and quota free tariff lines clearly reveals that AGOA is not only about Textile, Apparel and Garments making. AGOA has missed its targets right from the very beginning not only in Mauritius but in the entire sub-Saharan Africa. Time is of essence and we need to redouble our efforts to make good or rather to catch up on what we have lost over the last 15 years. AGOA was first enacted by the U.S Congress in 2000. While we should continue to move up scale and towards high end in the production of textile products, apparel and garments, we should take immediate steps to diversify our exports base to gain better and more diversified access to the American market under the Act.
The way forward
1. Develop, put in place and execute a national AGOA exports strategy urgently.
2. Set up an AGOA Implementation and Monitoring Mechanism. The institutional structures must be centered round the main priorities of the of the AGOA country strategy. We need to set up small coordination committees to oversee and implement strategic actions and priority sectors.
3. Dissemination of the AGOAbenefits-6400 tariff lines under AGOA for export to the United States, to the general public through workshops, seminars and training courses in different parts of the country.
4. Annual AGOA Forum with the participation of government officials, private sector representatives, civil societies and those already engaged in exports to the United States to take stock of progress achieved, constraints and recommendations for remedial actions.
5. Research and Analysis and Products Development having potential for export under AGOA. Aside from the main focus of AGOA, which has been the textile and apparel industry, the next profitable sectors in Mauritius are jewelry, agro and seafood processing of speciality food, light manufacturing of plastic and metal based products; and leather handbags and fashion accessories. Set up strategies for each sector.
6. Identify and connect with businesses including textile and apparel which are already exporting to the United States. Identify success stories for replication purposes for existing and new entrants. Workshops with cross-sector participants will help collaboration between current, successful exporters and new entrants.
7. Develop a new mindset among young boys and girls to become entrepreneurs. Create community outreach campaigns and programs to encourage young students to pursue business careers. Develop and implement entrepreneurship training curricula in schools; develop after-school mentorship programs etc.
8. Linkage with small and medium size enterprises. Engage with them and show the way for value addition in the value chain. Connect the Mauritian enterprises to one another through periodic workshops that focus on helping businesses become export ready.
9. Create awareness of markets available for items under production or processing for the U.S markets.
10. Constitute a dedicated group of public officials, private sector and business representatives to:
(i) Connect and make linkages and visit likeminded groups in AGOA eligible countries so as to understand and take stock of their efforts in respect of AGOA.
(ii) Assist and provide data to the regional economic blocs of Sub Saharan Africa such as SADC, COMESA, ECOWAS, EAC for the purposes of developing regional strategies. Link successful Mauritian exporters in network of all AGOA exporters to the U.S across the different economic regional blocs to promote regional AGOA strategies.
(iii) Connect and organize visits as necessary to the U.S congress and meet with members of the congress dealing with AGOA.
11. Revamp and re-engineer the agro-industry to promote and to boost the production, processing and exports of spices, cut flowers, and the creation of medium size orchards, etc.
12. Set up an AGOA PROMOTION AUTHORITY for advisory, oversight and funding of operations of the above said items (1-11)
13. Review the economic policies and priorities and also revisit the taxation policy in line with Economic Mission Statement of the Honorable Prime Minister.
14. Link the cross cutting issues and common denominations of the China-Africa Summit, India-Africa Summit and Turkey-Africa summit with AGOA.
15. Appointment of a Consul General in New York for a specified period of time for the purposes of business and industry, and to connect with businesses, chambers of commerce in the major cities of the United States.
While it is understood that the Services Industry, including financial and the Ocean Economy, is expected to occupy the center stage and that the Services Industry including Financial Services will continue to remain important fundamentals of our economy, we remain convinced that the priority of priorities for the sustainable development of Mauritius remains ”Export, Export and Export”. AGOA which is already at hand for the next nine years can easily deliver on it both at national and regional levels if we are able to utilize it appropriately by reaching out to the major players, big and small.
By pushing the agenda of AGOA together with the eligible sub-Saharan African countries, we are guaranteed of a common platform which allows us to move with confidence with our African partners in the pursuit of our common and differentiated goals, particularly, in Africa.
Again coming back to the area where Mauritius has achieved significant success in the context of AGOA, particularly Textiles, Apparel and Garments making still remains a great asset in our hands to be passed on to many of the sub-Saharan African countries which have yet to experience the job creating possibilities of this industry. This in the context of South-South Cooperation and Regional integration of Africa! We have a window of opportunity in the remaining nine years of the recently re-authorized AGOA; let us take advantage of this opportunity! This can also be instrumental in laying the foundation for the success of the proposed Special Economic Zones in Madagascar, Senegal and Ghana. There is an imperative urgency to act on AGOA in an inclusive manner in the larger interest of the country and the region. Act now