Botswana companies fail to benefit from AGOA

25 Apr '16

3 min read

If America's Africa Growth and Opportunity Act (AGOA) was meant to be a silver bullet for African economies, it hasn't worked for Botswana. AGOA which came into force in 2000, was extended for another 10 years last year.

Only two out of the 13 Botswana companies that signed to take up preferential trade opportunities with the US through the AGOA at its inception have prospered through the trade deal.

Botswana's Investment, Trade and Industry Minister Vincent Seretse said the majority of local businesses had failed to reap AGOA benefits in the last 15 years due to lack of diversity in export products, the Africa News Agency has reported.

He was addressing delegates at a US Embassy-sponsored seminar aimed at appraising local businesses on new amendments to the AGOA legislation,

Seretse said the two companies that had consistently benefited from AGOA were in the textile and clothing sectors, while 11 others which were part of the inaugural programme had fallen out due to lack of diversification and the sale of products that were not competitive enough to sustain their presence in international markets.

The Minister said the inability of local companies to benefit from the preferential trade agreement had led to a trade imbalance which had ballooned to 38 million pula ($3,5 million) between 2004 and 2014.

“I support the development of a new strategy (to improve bilateral trade) because Botswana has not been able to fully benefit from AGOA in the past 15 years,” Seretse said.

The new government initiatives to improve national export capabilities include the National Exports Strategy, Industrial Development, the Economic Diversification Drive and the Private Sector Development Programme.

However, the Botswana Exporters and Manufactures Association (BEMA) has called on the government to introduce incentives like duty drawbacks, rebates on sourcing of raw materials for the 6,400 AGOA product lines.

Although Botswana companies are eligible to supply goods from eight sub-sectors that include agriculture, machinery, minerals, metals, forestry, transport and electronic products, only two companies in the textile and garment manufacturing industry remained active participants in the AGOA programme.

Most of the local companies fell out of AGOA citing high transport and logistics costs incurred in delivering products to the market, inadequate capacity and stringent US regulations, especially on sanitary and agricultural products, the report said. (SH)

Fibre2Fashion News Desk – India