Thursday, February 29, 2024

AGOA 2011: HOW CAN ZAMBIA BENEFIT?

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US President and Mrs Barack Obama with Zambian Ambassador to the USA, Mrs. Sheila Siwela

By Ben Kangwa

 

The African Growth and Opportunity Act (AGOA) was enacted by the United States Congress and signed into law by President Bill Clinton on 18th 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 6th – 8th 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 167th 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.

36 COMMENTS

  1. You will see not many bloggers will contribute on this issue. Reasons
    1. Bembas are dunderheads, they dont understand economic issues
    2. Their Party president is also dull, a consultant in violence, insults and homosexual
    3. No elections or state house is mentioned in this article, so they are not interested
    4. The article is long and expounds alot of economic issues, they just read pargraph one only

  2. Black people are consumers. Even in US, African Americans are the spenders. Dr Martin Luther King could not have gone further with his civil rights movement had he not realised the ‘consumer base’ of the negro. When the negro peoples threatened to withdraw their custom, the white americans realised that they would be hurt economically. This habit of ‘buying the latest’, the most expensive, the best and so on, is what has kept black people poor. We sold our people into slavery because our chiefs wanted ‘glass beads,’ the ‘latest’ fire arm, the best calico cloth. Today, in Zambia some households have more ‘latest’ stuff from granite kitchen table tops to DVDs. We are consumers.

  3. If we carry on like this, we will always have a trade deficit against us. Whatever is made in Zambia is not good enough. I am reminded of the UNIP days when we produced Chalimbana peanuts. Zambians would not eat these unless they had been packaged in London by Willards or other. We laughed at radios and Fiat cars assembled in Livingstone until the industry collapsed. We started producing our own ‘soft drinks’ but it was not long before the crave for Coca Cola overpowered us and we got rid of our drinks. The list goes on and on. Before we start thinking of Fair Trade with other countries, we must first take pride in what we produce. There must be a campaign to ‘buy Zambian WITHIN Zambia by Zambians!’

  4. Alright, Bwalya #1 – despite your best efforts to pollute the discussion with tribalism, homophobia, and party politics, you may be right this article won’t generate a lot of comments. Still let’s try.

    The main reason I see Zambia hasn’t benefited more from AGOA is that the US really isn’t a natural trade partner. We don’t have oil, or a big textile sector, and copper is cheaper for the US to get from Chile. Similarly, agriculture is constrained by transport costs and global competition (although the article says Malawi has done well in ag under AGOA and would like to know more about that). I suspect Zambia may have done best in things like cotton, not by exporting direct to the US but by selling lint to other AGOA countries with better developed spinning and weaving capacity?

  5. @ No. 2 & 3, The Saint – to be clear, Zambia does not have a trade deficit.

    As you may have read on LT as recently as 26 Feb: “Zambia, which since January 2010 had been recording trade surpluses, last month took the good trading tides to a new level with a trade balance of K1.48 trillion, about K400 billion more than the best trade surplus recorded in March last year.”

    In fact, Zambia’s external trade is normally roughly in balance and what we have instead is a current account deficit related to the high level of indebtedness. This is different and in that respect, buy Zambian. sure, but not if this means autarky or spending to produce things for which we have no comparative advantage. It was that kind of misguided (UNIP) policy that led us to have so much debt in the first…

  6. @ No. 4 – Junta, I wonder whether you may be the one who is truly dull if all you have to offer the discussion is tribalist remarks.

  7. # 1 Bwalya and # 4 Junta. I dont see how Bembas are dull if the minister spearheading this AGOA (Mutati) is Bemba. # 1(Bwalya) You can not even find a suitable name from your region. # 5 & 6 Champ. Good comments, l guess you are Bemba.

  8. Let’s use this chance to showcase what Zambia is capable of doing on the international arena. Let’s show them the opportunities we have to offer and that they are all missing and the chances are still open, cos the Asians know the potential and have thus far abused us in all senses of the word. Tiyeni nayo….

  9. When i read this intellectual talk, yes because thats all it actually is , cheap intellectual talk.I believe your trade surplus is mainly a contribution of a single product Copper, without that we have nothing.The question is what happens after China and all the countries ripping us off finish our natural resource ? what then hah?I really believe that the only way for Zambia is get our copper dependent economy off of it diversify in other sectors like agriculture and manufacturing.We still have 80% of our people living below the poverty line so spare us the intellectual talk and actually do some ting about the problems the Zambian people face.

  10. #10 Joesi, You’re right, diversification from copper absolutely needs to be a priority for Zambia! Good progress has been made in the ag, manufacturing, and service sectors (the $251m sugar deal at Kazungula is one recent example) but much more needs to be done. Diversification is long-term challenge and that is where trade preferences such as AGOA can help create new (diversified) export opportunities. Whether Zambia is able to take advantage, however, is a completely different thing and requires knowing where to invest. Having market access for green beans, for example, does not mean we can land those beans in New York at a competitive price.

    As for things being cheap, I suppose you are right (you get what you pay for at LT) but unthinking rhetoric is also cheap and dangerous

  11. The problem is you all run away from discussions like this because you have no idea what Ben is talking about even Ben himself is just parroting someone else’ words.

    The truth is Zambia is a damaged country and unless the problems on the ground are fixed nothing will take off.

  12. Iwe chi #2,3 Saint. Walikwata amano chikamba chobe walanda bwino sana. I totally agree with you on this one

  13. A competitive world offers 2 possibilities.You can lose.Or,if you want to benefit from AGOA & beyond,you can change.AGOA actually reinforces zambias uncompetitive traits by making us believe success will bow to us thru trade preferences.Success comes on its own terms and it is for us to change because we’re not even competitive in africa &zambia itself by having foreigners run things we’ve failed to run ourselves.Thus the biggest benefit of AGOA is not the exports but the effect of unfulfilment it leaves us to let us see that even with trade preferences we’ve failed to even export 1/8 of eligible items.When that makes us see the true picture of ourselves we will then realize that our poverty is to be blamed on our own selves as we prefer politcs.

  14. .

    Ben well done. Let us keep preaching the Gospel of Development. I do not expect those from the other side to have any say on such issues. Theirs is a One Hit Miracle Wonder that is so Feeble. Zambia will not develop not until we learn to start being self-reliant.

  15. Zed lacks serious Entrepreneurs. The handful that are there are either poorly funded or engage in mediocre enterprises that fail to compete. The few funding opportunities available are mismanaged e.g. citizens empowerment loans. Zambia’s industries are dead or dying. There is no consented policy of revamping and modernizing industries. Zambians are docile and lazy. We want everything to be done for us by the govt. The list goes on. Only when we seriously reorganize ourselves shall we rise and compete internationally, and benefit from such things as AGOA.

  16. @The Saint, I don’t think your assertion of black people been consumers applies to Zed. The biggest problem that major businesses have had in Zambia is a lack of sustained market for their products. The ‘some’ houses that you’ve given an example of having granite kitchens and dvd’s are but a mayor 4% of 10.1 million of Zed population. Most electronic devices bought by Zambians originate from reconditioning factories of Dubai. These are very low priced. People did not shun or laugh at Fiat or ITT assembled in Livingstone but rather these products were out competed by better quality and cheaper imports. Check the quality of locally produced drinks and compare that with imports. The thing is there is room for improvement. Let’s just reorganize our good selves.

  17. Beloved Zambians,
    we need to change and become a nation of producers and not mostly spenders. The habit of spending time at the bar were you are spending than being found in a workplace should be reversed. Ukutemwa ukufola apo taubombele tecisuma, reaping where you didnot sow is very bad. We need to think on how as Africa will utilise our opportunities for growth in the business. this applies to all whether bemba or whatever tribe you are.

  18. Interesting blogs indeed. I never thought there were interlectually upright Zambians out there except for my friends. Well put deliberations ba fikamba.

  19. #1 Bwalya

    I think you should change your name to: Dunderhead Incarnate. You are such a loser that all you can contribute is your luck of substance. Please refrain from using our name in your blogs and find one from your own tribe or are you too dim to come up with one?

  20. #1 at least dunderheads have a head, as for you, you are an A.R,S/E hole, only s’h;i[t emanates from you, VERY PRODUCTIVE INDEED!!! Keep it up!!

  21. #2&3 are you preaching to the poor majority who have no money to spend or is it the politicians that have messed up our economy , who drive the latest cars & go to clinics in RSA & send their kids abroad for school – you seem to be barking up the wrong tree!! The problem isn’t that we don’t want to buy zambian , we have been pushed into almost irretrievable poverty by this same govt which wants to “pose ” for the AGOA, & actually steal some more!!! Yes your theory is sound on paper, REALITY IS DIFFERENT MY FRIEND, DON’T TELL IT TO THE MAJORITY OF Zambians – so Ben shouldn’t now pose & pretend that they are saints & stand for any good to our country!!!

  22. #2 & 3, by the way, what in Zambia is now wholly produced in Z?? Even the companies producing, how many are zambian owned – do they keep their earnings in Z??? Who are we enriching here??Haven’t they been given they most stupid tax-breaks, homo-habilis would stir in his grave!!!
    Don’t just copy drives from places that know what they are doing, & NOT JUST Pi.ssi.ng in the wind, pretending for all to see!

    Keep your class-room knowledge to where it belongs coz lots of things have to change before we get to your ideal, SUCH AS CHANGE OF GOVT for one!!!!!

  23. Ba ngwele if you don’t understand simple development economics or what #10 calls cheap intellectual talk, just shut up. Ben is just doing what he is paid for just like some of you bloggers get paid for cleaning tables in McDonalds or KFC or hopping on garbage trucks mukomboni mwa basungu.

  24. Kansas City MO hosted the last AGOA conf.I had a chance to meet the briliant Zambian delegation which included Hon. Felix Mutati and Amb. Sewila. The market for Zambian products is big. what we lack is proper packaging and advertising. Ifishimu, Kapenta, dry fish, dry beans,goat meat, traditional chicken can be a good start for us. Well done to the entire team that came to KCMO for AGOA last yr.

  25. #1 Bwalya You are a waste of seprms (sp) ! Thats the least I can describe you. This article makes good reading but morons like ‘Bwalya’ have already taken the tribal route. Grow up

  26. #s 2 and 3, you are very right! Yours are the words of wisdom. My colleagues and friends wonder why I drive a Toyota Corrolla, they drive VXs and the likes and yet their pockets are empty. They then come to me to borrow money and I charge them interest…LOL

  27. Gentlemen and ladies, i think we always forget that Zambia is a very young nation economically. Like a baby we need to take a step by step to build our nation. We forgot that we went thru 27 yrs of Unip socialism which destroyed our economy not forgetting the billion we used to help South Africa, Namibia, Mozambique, Zimbabwe get free. We are now heading in the right direction and what is needed most is to have young educated Zambian start taking positions of responsibility to bring a new generation of thinkers in both politics and business. Rome was not build in a day… but with all the effort we can build it in a year

  28. #1 In your posting, what meaningful and sensible contribution have you made on this issue? You have a very small brain, much smaller than that of a chicken.

  29. #2,3 – I couldn’t agree more. We spend beyond our means. The UK prime minister is on Holidays in spain using a budget airline (easyjet). I cannot foresee that happening in poor Zambia. As for #1, I dont know what you are trying to instigate – your comments are unkeeping with the article.

  30. #32 do you think a PM using easyjet TO A FOREIGN COUNTRY FOR HOLIDAY is a good thing?? Have you ever heard of the US president going on holiday abroad??? Patriotism & charity my friend, begin at home & led by example, you spend money abroad on holiday as a leader, smacks of the inferiority of your own facilities. Promote your own industries. Tories in UK are well known for hoodwinking the masses, & as such, you have fallen for it!!!

  31. How can AGOA benefit the SMES in zambia to expand their business more especially in obtaining loan without securities.

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