All 16 companies under AGOA disappear due to zero trade
As the US Africa Business Summit kicked off in Gaborone on one of the coldest Tuesdays in recent memory, it has emerged that all 16 local beneficiaries of the Africa Growth Opportunity Act (AGOA) have since been frozen out of business.
This grim bombshell was dropped by the Assistant Minister of Investment, Trade and Industry, Beauty Manake on Monday afternoon in the National Assembly.
“From 2000 to 2017, 16 manufacturing companies registered with Assistant Minister of Investment, Trade and Industry, Beauty Manake to export textiles and apparel (garments) under AGOA.
Currently, no companies are exporting under AGOA. The registered companies closed down over the years, and the last company relocated to Lesotho in 2017 after making its last export,” she said.
The assistant minister revealed eight new non-textile companies have registered to export cosmetics and oils from natural products, jewellery made from precious stones, coal products, and food items.
Various factors such as insufficient investments from the US, and high production costs have resulted in a serious decline in the value of exports under AGOA, falling from P13.5 million in 2017 to a big fat zero in the last three years.
Manake blamed high transportation costs and the expense of complying with US regulation standards as two factors that effectively signed the companies’ death warrant.
AGOA was initiated by the US and signed in May 2000 as a 15-year arrangement with the aim of facilitating negotiations for formal trade agreements with selected African countries.
AGOA was to expire in June 2015 but was extended by a further ten years to continue to find markets for 6, 500 product lines from Africa for which tariffs have been reduced or removed.
“These reduced/removed tariffs allow African exports to be cheaper in the US compared to countries which do not have an agreement with the US or are not AGOA beneficiaries. The US holds the sole power to revoke AGOA for countries it deems to violate internationally recognized workers’ rights and grossly violate other human rights,” the assistant minister explained.
She believes AGOA failed because other major players like China and India found a breakthrough following the termination of quotas under the Multi-Fibre Agreement in 2005. She said Chinese competitors are highly subsidized by the State, and their currency is undervalued, making the playing field uneven.
Even the sourcing of raw materials is expensive for many African countries to continue doing business under AGOA.
“Botswana is hosting the US-Africa Business Summit to address these challenges,” Manake said.
She was responding to a question by MP for Serowe South, Leapetswe Lesedi, who had wanted her to explain what AGOA is and whether any local companies have benefitted from the Act.
How Botswana figures fell since 2008
2000 – 2008 – P1.8billion
2009 – 2017 – P10million
2019 – P36, 000
2020 – 2023 – Nil
