Expiry of AGOA to Pose Great Challenge to African Countries

By Godfrey Tung'wet Posted 04 July 2006 @ 10:30 pm EET     Print     Reprint     E-Mail     Comments

CAPE TOWN (IBTimes.com) - The third country fabric sourcing under the African Growth and Opportunity Act (AGOA) which is nearing expiry date on September 30, 2007 to pose a great challenge to African countries including Uganda which exports apparel to the US market under the quota and tariff-free initiative.

The extension of this critical provision will determine the survival of the few textile factories on the continent and the retention of the remaining 200,000 jobs. Up to 100,000 jobs have already been lost across the continent due to post-MFA (multi-fibre agreements) that expired in January 2005.

Currently, over 90% of all exported apparels from Africa to the US use third country fabrics. The way forward for Africa and Uganda in particular will be to extend the third country sourcing to at least 2015, currently being represented by Apparels TriStar which employs some 2,000 people since its inception in December 2002. The stakeholders argue that this will offer them enough time to put in place the required infrastructure for producing fabric locally. However, it is not obvious that the provision will be extended.

If the provision is allowed to expire, Africa will be left with less than 10% of its current market; further decimating tens of thousands of jobs throughout the continent. The extension issue not withstanding, all Africa needs is vertical integration to support AGOA duty-free incentives for apparels to be made with African produced cotton and yarn.

Up to 29 African countries benefiting from AGOA are landlocked and it needs to improve on roads, rehabilitate or re-establish the railway line so as to reduce the cost of doing business in Africa. Otherwise, there will be no real development in Africa. However, the special presidential assistant on AGOA and trade is adamant about any unlikely extension of third country sourcing.