All Africa.com, April 08, 2011
FOR the African Growth and Opportunity Act (AGOA) to remain relevant and continue to drive export oriented growth, there should be a push to promoting United States (US) private sector investment in Zambia.
AGOA is a key tool which creates tangible incentives for African countries to implement economic and commercial reform policies that contributes to better market opportunities and stronger ties between Sub Saharan Africa and the United States.The forum will create an opportunity to promote a high level dialogue on trade and investment related issues between real businesses.
Currently 37 sub-Saharan countries meet AGOA’s eligibility criteria including Zambia and may take advantage of trade benefits the Actoffers. According to the Zambia Association of Chambers of Commerce and Industry (ZACCI), 2010 report on AGOA, Zambian exporters face stringent standardisation measures and certification procedures.
The report further highlight that sanitary and phyto-sanitary measures are some of the key challenges hindering the Zambian exporters in fully accessing the U.S. market.
In addition, stiff competition from the Asia and other regions especially in the textile and apparel sectors that Zambia continues to face under strained competition following the elimination of theMulti-fibre Agreements (MFA) quotas in 2005 and the expiry of safeguard measures for china exports in 2008.
Commenting on the role of the private sector, trade policy researcher Sajeev Nair noted that private sector development was nothing but process whereby the business sector in Zambia is empowered to grow in a conducive environment in order to be competitive on the local and international markets.
International and regional trade opportunities are a vehicle for private sector development despite Zambia not performing well in taking advantage of AGOA in the last 10 years.
This is so because the domestic supply side constraints are competitiveness challenges which have made it difficult for the business community in Zambia to penetrate the United States market.
Mr Nair pointed out that there should be targeted public intervention for project diversification, branding, adverstising, quality valuechains and thereby enhancing value addition on export oriented products.
But for the ministry of Commerce, Trade and Industry, the ministry in charge of the AGOA forum noted that about 7,000 products are eligible under the AGOA preference.
Healey Member senior economist at the ministry of Commerce, Trade and Industry observed that Zambia was only exporting a handful of products to the U.S. due to a number of factors.
However, the opportunities are immense under AGOA as the Act extends quota and duty free entry opportunities to the United States market, one of the biggest markets in the world.
The AGOA is believed to provide growth of industries and investment of businesses in Africa especially in the textile and apparel sector and Mr Mweemba says exposure to international markets, improved product quality and transfer of technology are the expected arising from AGOA.
Besides textiles and apparels, new products such as cut flowers, other horticultural products, automotives and parts and specialty foods among others, exporters stand a chance to benefit from these opportunities in their various sectors.
Mr Mweemba said despite the various difficulties by some eligible countries to penetrate the U.S markets, countries like Lesotho have employed about 10,000 in 1999 compared to 40,000 at the moment from the textile industry.
Remarkably, approximately 300,000 jobs have been created in Zambia since 2000 arising from AGOA and most importantly exports have been generated from Nigeria, Angola, South Africa, Lesotho, Kenya, Mauritius, Swaziland and Madagascar now under suspension.
Bearing in mind the exports trends, imports amounted to US$33.7billion in 2009 representing 95 per cent of the U.S. imports from eligible countries entered duty free under AGOA, GSP or zero duty rates.
Mr Mweemba explains that AGOA is a centre piece of the U.S government’s trade policy with Sub Saharan African Countries and as such it offers the largest single market in the world.
The AGOA legislation provides market access to Zambia and other eligible countries on duty free basis, there by making exports from Sub Saharan African countries ‘competitive.
‘It is rather interesting to look at Zambia’s performance with regard to the AGOA in the last 10 years.
Mr Mweemba said the value ofbilateral trade between Zambia and United States have continued toshrink in recent years.Figures indicate that from 2006, Zambia exported US$361,000 while in2008 the levels of export increased to $10,900,000 but dropped to$121,000 the following year and later went up in 2010 to $1,400,000.
With this major come back, it clearly shows that Zambia can maximiseits potential and utilise the opportunities from the African Growthand Opportunity Act forum to increase its exports.
According to CUTS International chairman Love Mtesa, Zambia shouldmove away from traditional exports of primary commodities anddiversify into value added products in order to benefit from AGOAMr Mtesa says Zambia must take a special interest on its markets bypromoting good governance, investing in people and implementingdifficult macroeconomic reforms for it to take advantage of theopportunities arising from AGOA.
Most importantly, there are several things Zambia can do to increase investment and take better advantages of trade opportunities underAGOA and any other such initiatives.
“As Zambia prepares to host the forum, Zambia dialogue teams at theAGOA forum should be adequately supported by the private sector representatives and civil society for them to put the Zambian trade agenda on the table to be discussed and negotiated with U.S representatives.
“Such an inclusive approach will steer Zambia on the right path and can make us use the AGOA route to enhance trade with the USA in manner that will grow the domestic economy and provide opportunities to the Zambian private sector,” Mr Mtesa said.
National and sub-national level AGOA strategies should be developed and should be inclusive of labour, private sector, civil society and the media in order to determine where Zambia’s competitive and comparative advantages lie outside mining.
“Zambia should seriously work on the challenges which it faces and these include high transportation cost, poor trade facilitation system, difficulties in accessing finance and credit facilities by the manufacturers and exporters especially the small and medium entrepreneurs, lack of adequate training and modern equipment in processing value added agricultural products as well as weak infrastructure among others,” Mr Mtesa said.
To this end, it expected that Zambian exporters, producers reposition themselves and utilise the opportunities that AGOA offers in line with the theme ‘Enhanced Trade through Increased Competitiveness, value addition and Deeper Regional Integration’.
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