AGOA 2011: HOW CAN ZAMBIA BENEFIT?

By Ben Kangwa in Washington DC

US President Barack Obama and Mrs Michelle Obama

with Zambian Ambassador to the USA, Mrs. Sheila Siwela

The African  Growth  and  Opportunity  Act  (AGOA)  was  enacted  by the United States Congress and signed into law by President Bill Clinton on 18^th May, 2000 as a component of the Trade and Development Act 2000.

The Act seeks to enhance trade and investment between the United States and Africa by providing for one way trade preferences to products originating from eligible AGOA   countries

AGOA   builds on the existing Generalized System of Preferences program to allow eligible AGOA countries to export over 6,000 eligible products to the United States of America duty-free, with a special focus on value-added and non-traditional products.

As a result of this initiative, the volume of trade between the United States and Sub Saharan African countries has increased, with notable successes in the oil, clothing, footwear, textiles and agro-processing sectors creating over 400,000 jobs and supporting millions of poor and vulnerable communities across the continent engaged in exporting industries.

Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act which extended AGOA to 2015.

There are currently ongoing consultations in the US Congress and among the African Diplomatic Corps in Washington DC.  regarding reforms to trade preferences and as to what happens to AGOA after 2015.

Some of the trade preference reforms that the African Diplomatic Corps are currently pursuing with the US Congress  include  extending AGOA on a long term and sustainable basis, making the third fabric rule permanent, granting duty free and quota free access for all agricultural products from AGOA eligible countries except  for sugar, to provide trade development assistance and capacity building and revise the AGOA rule of origin for canned tuna.

In 2010, as Zambia took over the Chairmanship of AGOA , the Zambian  Ambassador to the United States of America, Mrs. Sheila  Siwela  was appointed Co-Chair of the Economic Development Committee of the African Diplomatic Corps in Washington DC. teaming  up with  the Ambassador of the Kingdom of Lesotho, Ambassador David Rantekoa as the other co-chair

With  added  and unwavering support from her economic and trade officers at the Zambia Embassy in Washington DC,  one  of  her current major responsibilities  and ongoing efforts  are    to engage the US government and Congress on the improvement and review of AGOA trade preferences on behalf of and for the benefit of all AGOA eligible countries.

 Zambia will become  the fifth African country to host the  AGOA conference after Kenya, Ghana, Senegal and Mauritius  from 6^th – 8^th June, 2011

The 2011 AGOA theme is loud and clear,  “Enhanced Trade Through Competiveness, Value Addition And Deep Regional Integration”  

 The AGOA Forum is held annually bringing together several government leaders and private sector stakeholders from Africa and the United States.  It  is held interchangeably between Washington DC and in an AGOA eligible African country.

“The   choice for Zambia to host the AGOA Forum has come at the right time   considering that the country’s economic performance and governance record have  been on the positive in the past three years,” says Zambia’s  Ambassador  to the United States of America, Her Excellency Mrs. Sheila Siwela.

 She   observes that Financial institutions such as the World Bank, the International Monetary Fund (IMF), the Millennium Challenge Corporation (MCC), the Corporate Council on Africa (CCA)  are agreed that Zambia is on the right footing.

Additionally, she further notes that top US international Credit Rating agencies Fitch and Standard and Poor have, in the recent one month, independently given Zambia a “B plus” rating, a sign that Zambia is a good destination for foreign direct investment and that the country could be eligible to access funding from international bond markets.

Early in March, Zambia was rated B+ for long-term foreign and local currency issuer Default Ratings by Fitch Ratings, placing the country in the same league as Ghana, Kenya and Angola.

Against this background, Ambassador  Siwela  adds  that  Zambia should not miss this opportunity of showcasing her potential as the next best destination in investment  at this Forum  considering that the country is enjoying   increased   construction and rising copper prices, a  rebound in tourism, improved agricultural  performance and most of all  the  peace and political stability that the country has enjoyed since independence.

She  adds, ”The bottom line is that Zambia is now ready for business. The AGOA Forum will be a great opportunity for business   people  from Africa and the USA to interact for the sole purpose of creating partnerships and opening up new businesses in both continents.

 Zambia’s exports to the US markets under AGOA    Act  initiative have rebound to $1.4 million in 2010  representing a year on year increase of 1,093 percent.

Exports to the USA market increased to US$1.4 million from a major decline with paltry export figures around US$121,000 in 2009.

 Minister of Commerce, Trade and Industry Hon. Felix Mutati  was recently quoted in the media as saying  that Zambia’s export figures to the USA including the General System of Preferences (GSP) provisions of the AGOA Act had risen  steadily to US$10.9 million in 2008 from US$361,000 in 2006.

He however said the decline in exports posted in 2009 of US$33.7 billion is consistent with a decline from US$66.2 billion worth of exports from all AGOA eligible sub-Saharan African countries in 2008 due to the global financial crisis.

He said currently, 90 percent of all AGOA exports to the USA are energy related exports. Other notable products are textiles and garments, automobiles. Processed agricultutral products, leather products, machine parts,  metals,  gemstones and handicrafts.

Mr. Mutati said this in a speech read for him by the Permanent  Secretary in the Office of the Vice President, Mr. Davis Sampa at a breakfast meeting for Ambassadors accredited to Zambia from AGOA eligible countries in Lusaka on March 23.

And according to the Office of the United States Trade Representative (USTR) in Washington DC, for the period 2009,Zambia’s main exports to the US  included base metal (cobalt), precious stones (emeralds), spices, coffee, tea and metal ores.

Zambia’s major imports from the US in the same year were machinery, rubber, organic chemicals and aircrafts.

The  USTR  states that Zambia was the 167^th largest goods trading  partner of the USA with $67 million in total (two way) goods trade during 2009.

According to the USTR website,  the USA exported $59 million worth of goods to Zambia and that in return Zambia exported   a total of $9 million of goods  to the USA making the US goods trade surplus with Zambia at $50 million in 2009

Zambia is yet to take advantage of AGOA and translate its benefits through to increased non-traditional exports (NTEs).

 At present, most of Zambia’s   AGOA exports are dominated by the mining sector, unlike  its  neighbours such as Malawi and Mozambique which have managed to export agricultural products to the US.

Within the Sub –Saharan region, countries that have fared significantly well under AGOA include Angola, Nigeria and South Africa whose collective exports for the year 2010 were valued at over US3 billion according to official statistics from the US Department of Commerce.

Exports from the three top AGOA countries include sectors such as energy, mining and agriculture. Other countries such as Lesotho and Kenya have also done well under the textile and apparel sectors.

Expected  to  be  attended  by  37 African countries and the US, the 2011 AGOA Forum will attract between 1,500 and 2,000 delegates

The   countries   to attend are  Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Comoros, Republic of Congo, Djibouti, Ethiopia, Gabon, the Gambia, Ghana, Guinea Bissau, Kenya, Lesotho, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Togo, Uganda and   of-course  Zambia.

 Other delegates will include businessmen, international organizations and many private sector and civil society organizations

By hosting the AGOA Forum, Zambia will be at the centre stage of the global trade and investment arena.    

The  Zambia Association of Chambers of Commerce and Industry (ZACCI)  also supports the hosting of the 2011 AGOA Forum conference at it will help Zambian entrepreneurs to understand how to penetrate the US market.

ZACCI President Geoffrey Sakulanda says the benefits from AGOA would be clear for all to see because Zambian entrepreneurs would have an opportunity to discuss partnership arrangements with their US counterparts which would enable them to export high quality products into the American market

Mr. Sakulanda was also of the belief that the AGOA Forum in Lusaka would give local Small and Medium Enterprises (SMEs) an opportunity to exhibit their products and at the same time make business linkages with international SMEs

As time ticks closer to June 2011, it is important to ask a question, “ How  can Zambia  best benefit in the Africa Growth Opportunity Act (AGOA)?

 There is need to take stock of the current industry infrastructure, the role of modern technology, the quality of Zambian products in order to fully exploit the Africa Growth Opportunity Act (AGOA) provisions.

Zambia needs to use the position as current Chair of AGOA to lobby for fair trade between Zambia and the USA considering that the initiative’s lifespan is ending in 2015.