Sunday, October 14, 2012

Malawi among Agoa’s worst apparel suppliers

Malawi has failed to capitalize on trade opportunities availed to textile and apparel products under the African Growth and Opportunity Act (Agoa) as the country is listed among five least exporters in the past 12 years.
This is contained in a 37-page report published by the U.S.-based Brookings Africa Growth Initiative titled ‘The African Growth and Opportunity Act: Looking Back, Looking Forward’ released in June this year.  The report, which has analysed the past 12 years of Agoa’s implementation, comes after completion of research by Witney Schneidman and research analyst Zenia A. Lewis.
Mauritius, Lesotho, Swaziland and Kenya exported the largest percentage of apparel and textiles to the U.S. Smaller suppliers of apparel products were Botswana ($15.5 million; Approx K43,090,000.00), Malawi ($13.5 million; K37,530,000.00), Ethiopia ($10.0 million; K27,800,000.00), South Africa ($6.1 million; K13,358,000.00), Tanzania ($5.2 million; K14,456,000.00) and Ghana ($1.3 million; K3,514,000.00),” reads part of the report.
An earlier report on ‘Textiles and Apparel: U.S. Imports from Sub-Saharan Africa released under Generalised System of Preferences and the Agoa’ released by the U.S. Department of Commerce also indicated that Malawi came second to Botswana on the list of small suppliers of apparel products, although it beat countries such as South Africa, Tanzania and Ghana.
However, the Brookings report attributes the poor performance pointers that, while agriculture provides 70 percent of employment in Sub-Saharan Africa and 30 percent of the region’s gross domestic product, agriculture products comprise less than 1 percent of Agoa exports. It also notes that a greater proportion of U.S. agricultural imports from Sub-Saharan Africa are covered
by other restrictive trade agreements that hamper access to U.S. markets.
It also apportions the blame on sanitary standards and observes that these impose additional demands on exporters, and limit market access for Agoa eligible products.
Although the U.S. provides a great deal of capacity-building support to Africa, more support is needed to help countries meet these standards and export agricultural goods to the U.S. market—as well as coordinate the activities of the U.S. agencies that provide this support,” adds the report.
However, the report observes that implementation of Agoa has attracted the interest of leading American companies to source from Africa. Levi’s, Wal-Mart, Gap, Old Navy, Victoria’s Secret, Target, Calvin Klein, Gloria Vanderbilt, and Vanity Fair are among those that have managed to source t-shirts, jeans and shirts from Lesotho, Kenya, Swaziland, Mauritius and Madagascar (before it lost its AGOA eligibility in 2009).
Exports from Agoa beneficiaries also increased, hitting the $53.8 billion bill in 2011, representing 21.5 percent increase in exports from 2010 and a more than 500 percent increase from the initial $8.15 billion in 2001, a development largely driven by mineral fuels and crude oil.
Oil exports to the U.S. have underscored the importance of Sub-Saharan Africa as a source of imported energy resources; with Angola and Nigeria accounting for about 10 percent of U.S. imported oil during the last decade. Indications are that U.S.’s dependence on African oil reserves may increase in the wake of recent oil discoveries in the Gulf of Guinea, U.S.
On part of nonpetroleum products’ exports to the U.S. southern Africa, textiles and apparels accounted for more than $850 million in 2011, translating into more than double the level of 2001. However, this represents a decline from a peak of more than $1.6 billion in 2004.
In addition, transportation equipment exported under the initiative, which mainly came in form of automobiles from South Africa, grew from $296 million in 2001 to $2.1 billion in 2011.
Since its enactment on May 18, 2000, Agoa has seen the U.S. abandon its cold war policy of donor disbursements, aid poverty alleviation, and emergency relief to pro-trade in a bid to alleviate poverty among African countries..
The initiative has also been linked with Africa’s changing economic fortunes, boosting the performance of the 1990s, described by some economists as ‘Africa’s lost decade’. For instance, when the Agoa concept was being developed in 1995, the per capita growth rate in Sub-Saharan Africa was negative, at –1.1 percent.
However, the regional growth rate on a per capita basis increased to 2.9 percent during Agoa’s first year in 2001 and, between 2000 and the onset of the global financial and economic crisis in 2008, the region’s average growth was just under 5 percent.
The Economist reported in 2011 that six of the top 10 fastest-growing economies of the last decade were from Africa, while the World Bank’s and International Financial Corporation’s Doing Business indicators continue to show positive change for a majority of Sub-Saharan African countries, a trend linked to the creation of a pro-business environment among member states.
In addition, the International Monetary Fund (IMF) projects that the growth rate in Sub-Saharan Africa for 2012 will be 5.5 percent.
For a country to benefit from Agoa, it is expected to abide by three principals, namely: commitment to a market-based economy, the rule of law, elimination of trade barriers, economic policies that reduce poverty, systems that combat corruption and protection of workers’ rights; non-engagement in activities that undermine U.S. national security, and; non-engagement in gross violations of human rights or terrorism support activities.