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Africa should take full advantage of Agoa agreement

By | August 8th 2009

The eighth US-Sub-Saharan African Growth and Opportunity Act (Agoa) forum that brought together policymakers, business leaders and civil society from the US and Africa ended in Nairobi on Thursday.

They had met to take stock of the successes, challenges and future prospects of the trade pact signed in May 2000. The forum received attention not just because it took place in Kenya, but also because this was the first time it was held in East Africa.

While there was a lot of excitement, especially over the presence of key personalities, including the US Secretary of State Hillary Clinton, the conference was an eye opener to the Kenyan political leadership on the need to create an enabling environment for the growth of the private sector.

During the three-day conference, it was apparent that African countries have not taken full advantage of the opportunities created by the US-Africa trade pact before the preference expires in 2015.

Eight years since the US opened its market to 6,400 products from Africa duty and quota free, the continent is still languishing in abject poverty and soliciting more donor aid.

More than 95 per cent of Kenyan textile and apparel exports comply with the Agoa provisions. In addition, Kenya is regarded as a ‘Lesser Developed Country’, allowing it to use third-country fabrics and yarns until 2012. But statistics show that US exports to Kenya have increased significantly from $57.8 million in 2001 to $584.2 million in 2007. But it compares unfavourably with US imports of $12.8 million and $325.4 million from Kenya in the same period. The result? The balance of trade still is in favour of the US despite the preferential trade agreement with African countries.

This should be a wake up call to the Government to engage the private sector and improve productivity and exports to the US market.

The Government should create an environment that improves the competitiveness of local products in the international market. It is regrettable that while the Agoa forum was meant to promote the shrinking trade and investment with the US, Kenyan manufacturers were still grappling with water and power rationing, high taxation, delay in business registration procedures, lack of access to finance and high cost of communication.

These have combined to increase the cost of production and make Kenya an unattractive investment destination. No wonder, the theme of the forum was ‘Realising the full potential of Agoa through expansion of trade and investment’.

It was resolved that African governments build strong partnerships with the private sector and civil society to boost trade and investment. This would begin to address the continent’s development needs.

Clinton underscored the key pillars of this partnership to include trade, good governance and involvement of women in all spheres of development.

The forum acknowledged that good governance and reforms in politics and business are necessary ingredients to stimulate and attract private investment in Africa.

But of crucial importance is the need for African economies to address non-tariff barriers and other bottlenecks that hinder intra-regional trade.

During the conference, it was said that Sub-Saharan Africa must re-double its efforts if it is to tap the huge Agoa market potential.

The ball is in Africa’s court: To shape up and benefit or sleep on its laurels and lag behind.

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