African Growth and Opportunity Act

4 Min Read

July 28, 2010 By IdaHorner

I wonder how many people on the continent of Africa know about the African Growth and Opportunity Act or AGOA? At the risk of being or even sounding patronising, I would guess not that many and that those that do, don’t exactly know how they can benefit from it.

This ACT was passed in 2000 and is reviewed annually and the idea behind it is to enable African countries to export their wares into the USA tariff free, they are further details about the ACT here

The Act has had some impact on trade between the USA and African countries and it was interesting to note that Paul Collier one of the leading experts on African economic growth acknowledging it as a model that has potential to bring about growth within Africa having had his doubts when it was first announced (source THE BOTTOM BILLION BY PAUL COLLIER April 2007 OXFORD PRESS).

A few questions

Have folk in African been able to take advantage of this Act and if so how?

Who in Africa is actually taking advantage of this ACT?

I haven’t done extensive research in this area and therefore my answers come from mere observations made in the course of my work work at Ethnic Supplies and certainly one of the industries that should benefit from this AGOA is the textile industry and on observation the industry has. But when you scratch on the surface of this benefit you will discover that at least in East Africa (certainly KENYA, UGANDA and RWANDA) the textile companies that have benefit are not necessary owned by indigenous Africans. You will find that there are owned by Asians!

You may wonder why this is such a bad thing after all these companies provide/create jobs for locals! Granted you would have a point and one such factory I visited in Rwanda at the back end of last year employed 4000 locals.

I am aware that some indigenous textile producers in Kenya were very unhappy about the fact that they cannot compete against the might of the Asian financial muscle. I interpreted this to mean that the smaller textile producers are not able to meet the supply standards required by the Act nor keep up with demand as they mainly one man band outfits!

Therefore whilst the Act is a good idea, it appears that they are no systems and process on the ground to ensure that it benefits the people who need it most and this would include capacity building of such enterprises.

Interestingly I recall hearing one of those Asian owned companies (based in Uganda) that signed up complaining that he had not been able to meet his commitment and at some point he had to import cotton from somewhere! I would like to think that this “somewhere” was not the USA!

So what can be done about all this?

You may be aware that the countries that benefit from AGOA are selected each year and meetings take place in that country to discuss the way ahead etc

2009 was Kenya’s turn and I was invited to take part in a televised discussion of Clinton’s visit to Kenya and I have posted it here for your information.

Did you enjoy this article?

Have these posts delivered directly to your inbox

Never miss another post! Join 20,000 other smart readers and have content delivered on a weekly basis.

Share This Article