Botswana set to benefit from AGOA
Botswana is one of several countries with limited success in utilizing the preferential market under the United States’ African Growth and Opportunity Act (AGOA), it has emerged.
Acting Trade Minister, Sadique Kebonang told parliament that the country will develop new strategies during the 2016/17 financial year to better take advantage of opportunities under the Act.
These strategies are expected to strategically increase competitiveness and diversification of beneficiary exports to the United States, Kebonang said
Kebonang said after years of implementation, there is evidence that AGOA has resulted in a substantial increase in exports from Sub-Saharan Africa to the US.
Between 2001 and 2014, exports from AGOA-eligible countries increased by threefold from $1.3 billion to $4.4 billion.
In spite of these impressive statistics, Kebonang acknowledged that only a few countries have taken advantage of AGOA while the products coverage under of these countries’ exports to the US still remain limited.
AGOA is a unilateral trade preference between the United States and African member states that was signed into law in 2000, for a period of eight years. It expired in 2008 and was extended to September 2015. In 2008 Botswana’s exports to the US was $15million compared to Lesotho, which exported goods worth $350 million through the AGOA scheme.
In 2011, the export levels stood at US $15 million for the textiles and apparel, diminishing to US $10 million as at December 2012.
The president of Botswana Exporters and Manufactures Association (BEMA), Nkosi Mwaba said the government need to introduce incentives like duty incentives, rebates, and sourcing of raw materials.
The number of companies participating in the scheme has also decreased over the years. For Botswana, the AGOA comprises of 6,400 product lines, but the country’s textile and garment sector has been the beneficiary of AGOA over the years.
“We appeal to government to introduce incentives that will ensure competitiveness and sustainability of the sectors. We recognize the stimulus packages that government has extended to the textile industry however these are temporal solutions. As manufactures we solicit for incentives that will make Botswana export competitive globally,” said Mwaba.
Since inception of AGOA, Botswana managed to participate in about eight sectors in agriculture, machinery, minerals metals, textiles apparel, chemicals, forestry, transport equipment and electronic products.
Although African countries benefit individually from the African Growth Opportunity Act, Botswana is likely to reap the rewards if the US can carry out its threat of suspending South Africa from the programme, a senior government official was recently quoted as saying by the Daily News.
South Africa has until next month to comply with the US demands to open its market for US poultry, failure to which the US would suspend duty-free treatment to all AGOA-eligible goods in the agricultural sector from South Africa.
AGOA is a unilateral trade arrangement by the US for Sub-Saharan Africa.
Ontlametse Ward, the deputy permanent secretary in the Ministry of Trade and Industry, told media that if South Africa was suspended, it could be to Botswana’s advantage as companies producing for the US market could come and set up shops in the country in order to benefit under AGOA. Botswana, she said, does not have a bilateral trade agreement with South Africa, but that the two countries were members of the Southern African Customs Union (SACU) hence they enjoy trading with each other on a duty free basis for all goods through the 2002 SACU agreement.
The ministry trade and industry is expected to conduct a countrywide workshop to sensitize the public, especially the private sector on the opportunities of the new AGOA in 2016/2017.
Of the 13 companies that have been exporting to US under AGOA, only one remaining due to challenges linked to high transport and logistic costs, inadequate capacity and stringent US regulations on sanitary and phyto-sanitary measures on agricultural products.