The local textile sector's continued duty and quota free access to the US market will be decided mid-June, even as the country's sole exporter to that market notes lower orders caused by uncertain buyers planning for all eventualities.

Last year, Botswana exported products worth US$17 million (P125.8 million) under the African Growth and Opportunities Act (AGOA), with textiles accounting for US$15 million and the balance comprising of jewellery, crafts and furniture.

However, in September a key provision allowing local textile manufacturers to use foreign fabrics is due to expire, while the 12-year-old AGOA is also due to end in 2015. The expiry of the provision, known as the Third Country Fabric, means the local industry will have to look to South Africa for supplies, which they say are insufficient and of inferior quality.

The textile sector, government and industry organisations hope the June 14-15 forum in Washington will renew both the Third Country Fabric provision and the main AGOA arrangement as well. High-level representatives from Botswana and other 39 African countries under AGOA recently met in Washington where they strategised how to push for extensions at the June meeting. Department of Industrial Affairs director, Ontlametse Ward said while a meeting with US officials had been positive, there were still a number of unknowns.

"We had a brief meeting with the US partners and both sides acknowledge that AGOA has been beneficial to both of us," Ward said at a stakeholder debriefing Wednesday. "The US partners said they do not have a problem with the extension of the third country provision, but those were administrative officials. It's Congress that has to extend and decide what it will look like. Even though we are hopeful, the US officials are saying when AGOA comes back, it will not move on in the same format as before."

It is understood that some US decision-makers have questioned why some AGOA countries have never utilised the arrangement, while a number of those who have, are not utilising it optimally. In addition, lawmakers would want to probe whether the US private sector is benefiting from AGOA.

"The US is concerned about the investment climate in Africa and issues of competition with Asia," said Ward. "For them to say AGOA is extended in its current form, they must guarantee their private sector that it will benefit."

Executives at the only local AGOA exporter, Carapparel Botswana, told BusinessWeek the company was experiencing a slow down in orders as US buyers opted for Asian suppliers, due to the uncertainty surrounding AGOA. Earlier this month, Carapparel Botswana, retrenched 500 of its 1,500 workforce citing financial constraints following the expiry of a two-year government bailout for the textile sector.

"This year, the buyers have moved some of their orders to Asia," Carapparel Botswana director, Sam Lin said."We are still waiting to see the situation on the third country provision and if it's positive, we will inform our buyers to get back on track. We are not giving up. Our focus (this year) is on reining in expenditure and achieving a balance with income. The retrenchments were part of our attempts to keep our operations going." At one point, 13 companies were exporting to AGOA, with the figure plummeting over the years due to a variety of factors including competition for the US market, local production capacity constraints and non-tariff barriers.

The Ministry of Trade and Industry in partnership with several agencies, has begun formulating a strategy to enable Botswana to fully utilise AGOA when it is extended. Meanwhile, African governments, including Botswana, have instructed their diplomats in Washington to continue lobbying for AGOA and the third country provision's extension.

Deputy Trade and Industry Minister, Vincent Seretse, is expected to lead Botswana's delegation to the key Washington meeting next month.

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Latest AGOA Trade Data currently available on AGOA.info


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