Archive for August 5th, 2009

Wednesday, August 5, 2009

Is AGOA Good Enough?

A Boer View of African DIY

A Boer Vision of African DIY, 1980s

On the AGOA Forum currently held in Nairobi, African Union deputy chairman Erastus Mwencha said that stringent quality and lengthy certification processes had prevented many African producers from exporting to the U.S. under what has been described as the most lucrative trade preference legislation ever passed by the American Congress. Mwencha pointed out where the U.S. could or should do more to make the AGOA a success. It is also pointed out that there isn’t sufficient diversity in the range of African exports, as energy-related products account for the lion’s share of African exports with nearly 96 per cent of the 56.3 billion US dollars.

Clothesource on the other hand believes that Kenyan complaints over AGOA disappointments miss the point, and cites Cambodia’s garment industry as an example. Even though the country never enjoyed duty-free access to the U.S. market, Cambodia’s share of US garment imports was about half Africa’s in 2004, even before the WTO Agreement on Textiles and Clothing (ATC), and all restrictions thereunder ended on January 1, 2005. “The AGOA nations have failed to attract the Asian investment that has created garment industries from Cambodia to El Salvador – and, what little they have attracted has often found a hostile local reception”, Clothesource writes.

But of eighteen garment makers in Kenya, only one is actually Kenyan-owned, the L.A. Times writes today. The vast majority of exporters in the nation’s export-processing zone Athi River Industrial Park south of Nairobi are foreign-owned, usually by investors from China, the Persian Gulf or Southeast Asia, but also some from the U.S.. AGOA is not realizing its potential, the L. A. Times quotes Joseph Kosure, acting chief of Kenya’s Export Processing Zones Authority, even though AGOA (African Growth and Opportunity Act) offers some 39 sub-Saharan African countries, including Kenya, duty-free access to the American market.

American sermons on good governance can be tedious, and are often hypocritical. But reliable rule of law is the best policy for domestic and foreign investment – and AGOA looks fair, at least from outside. The opportunities it offers to Kenya were actually convincing enough for Beijing to oppose the idea, and (unsuccessfully) trying to have the arrangement lifted by the U.S. government in 2006, according to the Kenyan Spectator. Kenya has more than 6,000 product lines to sell to the U.S. under AGOA, writes Xinhua.

Isn’t the onus now mainly on Africa to prove that it can make good use of a real opportunity?

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