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.