By JAMES MUYANWA
WHEN, in May 2000, the United States (US) Congress approved legislation known as the African Growth and Opportunity Act (AGOA), the congress men and women might have not foreseen the impact the Act would have on eligible African countries.
Although the purpose was to assist the economies of sub-Saharan Africa and improve US economic relations with the region, its framers might not have envisaged the impact the now famous Act will have on the stakeholders in the economic sector of the qualified African countries including Zambia.
Rosa Whitaker, The first-ever Assistant US Trade Representative for Africa in the administrations of Presidents George Bush and Bill Clinton took the final lead in developing and implementing the AGOA.
That followed nearly a decade of advocacy by activists like Paul Speck from Environmental and Energy Institute, and legislators who included Congressman Jim McDermott a former Foreign Service medical officer who had served in the then Zaire and Senator John Kerry.
AGOA provides trade preferences for quota and duty-free entry into the US market for certain goods, expanding the benefits under the Generalized System of Preferences (GSP) program.
AGOA augmented market access for textile and apparel goods into the US for eligible countries.
It expands the list of products which eligible Sub-Saharan African countries can export to that country, subject to zero-import duty under the GSP. While general GSP covers approximately 4,600 items, AGOA GSP applies to more than 6,400 items.
AGOA GSP provisions are in effect until September 30, 2015.
The AGOA has resulted in the growth of an apparel industry in southern Africa, and created hundreds of thousands of jobs. The AGOA has promoted new trade and investments, creating about 300,000 jobs in Africa.
US Senator, Benjamin Cardin noted during the AGOA Civil Society Forum last year that: “AGOA’s been a great success … it’s time to celebrate.”
In addition to growth in the textile and apparel industry, some AGOA countries have begun to export new products to US, like cut flowers, horticultural products, automotives and steel.
While Nigeria and Angola are the largest exporters under AGOA, South Africa has been the most diverse and not concentrated in the energy sector. To some countries, including Lesotho, Swaziland, Kenya and Madagascar and Zambia, AGOA remains of critical importance.
Agricultural products are a promising area for AGOA trade although much work needs to be done to assist African countries in meeting US sanitary and phytosanitary standards.
The US government provides technical assistance to AGOA eligible countries to help them benefit from the legislation, through the US Agency for International Development (USAID) and other agencies.
The US government has established three regional trade hubs in Africa for this purpose, in Accra, Ghana; Gaborone, Botswana; and Nairobi, Kenya.
Following Zambia’s assumption of the AGOA chairpersonship and it selection as the country to host this year’s forum, the impact of the Act on the business community in the country has been exposed.
As the name entails, AGOA is viewed by a lot of Zambian business stakeholders as a recipe for growth and opportunity through exports to America.
Some stakeholders view the hosting of this year’s forum by Zambia as even a greater opportunity for them to negotiate their way deeper into the American markets while growing the local production levels to increase wealth.
Different players in the economy see opportunities in AGOA from different angles but with one common factor, growth.
For Mazabuka District Business Association the AGOA will expose the Small and Medium Entrepreneurs (SMEs) to the multinational firms thereby increasing business contacts.
Mazabuka District Business Association chairperson John Kasonde says the members will be taking part in the AGOA forum because it is an eye opener for small businesses especially in the district.
The American market is so big that the Zambian entrepreneurs just need to work hard and break into it.
“Our members from the manufacturing sector, food processing and hospitality industry as well as other sector will be participating in the AGOA forum meeting to be held in Lusaka in June this year,” Mr Kasonde said.
He says the AGOA will create a platform for the SMEs through increased business linkages as a result boosting trade.
“The AGOA will expose the SMEs to the international market which will help them make business contact for the international and local markets,” he said.
The 2011 AGOA forum’s theme is ‘Enhanced Trade through Increased Competitiveness, Value Addition and Deeper Regional Integration.’
To Sylva Professional Catering Services and College Limited which has already clinched a contract to supply 15 000 kilogrammes of Zambian vegetable soups under the AGOA every month the opportunities can only grow.
Sylva Professional Catering Services managing director Sylva Banda says recently that that the firm has secured huge orders from the USA and that the delivery has not yet started because she lacked adequate capacity to meet the demand.
“With the soups section, we have huge orders which we have not delivered yet and we are talking in the range of 15 tonnes of Zamsoup every month into the United States markets,” she said.
Ms Banda, who is also African women entrepreneurship programme Zambia ambassador for the AGOA, said the orders require bulk packaging and as a result, the firm had to acquire the machine which would be in the country at the end of April.
Among the soups to be delivered are pumpkin, beans and cowpeas leaves among others.
“We will be carrying out intensive training and we are going to be holding 11 workshops across the country to prepare our farmers so when the machine comes they will find the raw materials is also ready.
“In terms of the quantity it is not much especially for our vegetable business what we do is to concentrate on those Zambian in the Diaspora who eats our Zambian vegetable,” Ms Banda said.
For the players in the tobacco industry, the AGOA forum will provide Zambians with an augmented platform for the expanded trade with the US while helping to grow the local economy.
According to Tobacco Association of Zambia (TBZ) chief executive officer Aven Muvwende agriculture in general and tobacco in particular should be one of the crops which should be given priority under the AGOA arrangement.
“In the first instance allow me to show gratitude to the Government for accepting the Chairmanship and hosting the African Growth Opportunity Act (AGOA) Forum in Zambia.
“The AGOA Forum will definitely give Zambia an increased opportunity for expanded trade with United States of America (USA),” Mr Muvwende said in response to a Press query.
Apart from tobacco, other Zambian crops that have potential for export include coffee, cotton and groundnuts.
In terms of tobacco, Mr Muvwende says Zambia produces high quality and full-flavour flue-cured Virginia, dark fire and burley tobaccos.
For example, in 2010, about 39 million kilograms of tobacco were produced by about 18,000 farmers dotted around the country.
Therefore, Zambia is in an excellent position to export tobacco and supplement production in America. This would also be an opportunity for America to import full-flavour tobacco from Zambia.
Mr Muvwende says the USA should utilize this opportunity to market their tobacco production protocols and tobacco inputs including tobacco literature, seed, fertilizer, chemicals, packaging materials as well as processing machinery.
In fact, during the Forum, the US should be encouraged to invest in establishment of tobacco processing and cigarette manufacturing factories within Zambia.
He says currently, the country has inadequate and no facilities in tobacco value adding and cigarette manufacturing industries respectively.
However, to facilitate tobacco trade, the AGOA Forum should also discuss and address the implementation of the Framework Convention on Tobacco Control (FCTC) Articles.
There is need for consideration of the fact that tobacco is a source of livelihood for many countries in the sub-Saharan Africa.
Mr Muvwende says the elimination of tobacco production will result in increased unemployment and increased poverty especially in rural communities that depend on tobacco farming.
USA needs to, through AGOA, provide support and protection to developing countries whose major income is from tobacco production and export.
He says that tobacco producing-countries in Africa should not be strangled with stringent WHO-FCTC measures that will deprive farmers of their much-needed income.
It may be necessary for the Forum to work towards developing an MoU which will facilitate tobacco trade within the AGOA arena.
Mr Muvwende says in terms of organization of the AGOA Forum, the local facilitating institution should include, in the agenda, practical presentations on specified crops grown in Zambia and which have potential for export to USA.
Such presentations should be accompanied with samples and exhibitions. The Forum should be attended by other developed countries in addition to the US to widen the market for Zambian products.
The views of various Zambian stakeholders who are anxiously waiting to participate in the forum could be accommodated given the versatility with which the Act has been operating.
Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015.
Flexibility on the venues where even eligible African countries are given a chance to host is progressive as it tries to bring all members, including the US, on equal footing, which is paramount.
Every year an AGOA Forum is held, which brings together government leaders and private sector stakeholders from Africa and the United States. The Forum is held in Washington every other year and in an AGOA eligible African country in the other years.
So far, the Forum has been held three times in Washington and once in Mauritius, Senegal, Ghana and Kenya in 2009.
While AGOA is often synonymous with preferential garment exports, the fact remains that AGOA opens the US market to a large number of African-sourced goods that are able to enter the United States free of import duty.
Statistics suggest a positive balance of trade for AGOA participant countries. In the financial year 2008, the US exported $17,125,389 in goods to the AGOA countries, and the US imported $81,426,951 for a balance of $64,301,562 in favour of the AGOA countries.
The AGOA forum to be hosted by Zambia will truly leave an indelible mark on the conomy of Zambia as growth and opportunities will abound to all those who have the desire and capacity to exploit them.
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