Build your business through AGOA

On the eve of his departure for Kenya last month, US President Obama hosted a reception at the White House to celebrate the African Growth and Opportunities Act (AGOA) which was extended for another ten years.

AGOA was born in May 2000 and has since then facilitated billions of dollars in trade between Africa and USA. But have you benefited from it? If not, how can you benefit from it? Opportunity only pays dividends to those who seize it.

Last year, US imports from sub-Saharan Africa through AGOA and the broader Generalised System of Preferences (GSP), excluding energy products, were $4.4 billion. Although Kenya has benefited immensely from AGOA, it still lags far behind in overall US goods imports globally, coming in 92nd in 2013 when it exported $451 million worth of goods to the US. This was a 15.7 per cent increase ($61 million) from 2012, and an 81 per cent increase from 2003. Rosy as this looks, the US benefited more from this bi-lateral trade relationship, exporting $651 million worth of goods to Kenya, up by 14.5 per cent ($83 million) from 2012.

It is clear then, that the US exports more goods to Kenya than the reverse. To take advantage of this most lucrative global market we need to diversify our exports urgently and strategically.

Kenya’s five largest exports to the US in 2013 were: Knit Apparel ($160 million), Woven Apparel ($148 million), Spices, Coffee, and Tea (coffee) ($39 million), Edible Fruit and Nuts (macadamia nuts) ($29 million), and Electrical Machinery ($22 million). One year later in 2014, Kenya raised its game and exported $423 million worth of apparel to the US, thanks to AGOA. Although this made Kenya Africa’s leading apparel exporter to the US, it was still a tiny fraction of China’s $30.7 billion apparel exports and Vietnam’s $9.2 billion exports during the same year.

Accordingly, there is more room in the US market for apparel imports. African entrepreneurs should rise to the occasion and export more to the US. This will be possible if the wool and cotton industries are revamped drastically to bolster local apparel products. In the same vein, rural farmers should look beyond ‘marikiti’ markets in our local cities as the premier destinations of agricultural products. It is time to sell our diverse green products to the US.

Although exporting agricultural products to the US is fraught with logistical and bureaucratic challenges, it is well worth the effort and may be more feasible for counties, cooperatives and investment clubs as opposed to individuals.

Indeed, it is time for Africa to reap billions from the US market as we create employment opportunities. Farmers and entrepreneurs should be guided to plant and manufacture with one eye on the multi-billion dollar US market. This way, they will diligently work on the comprehensive quality assurance that is often a pre-requisite of US exports.