Ethiopia: Not simply 'business as usual' for Ethiopia's AGOA ambitions
Ethiopia's share of exports under the African Growth & Opportunity Act (AGOA) is projected to rise from a mere 0.04pc to 10pc of total exports from the 39 beneficiary countries Fortune has learnt.
This is if a National AGOA Response Strategy, currently being drafted, is enacted in September 2013.
The country's exports by volume under the programme have been growing by 80pc annually, but they are now expected to grow by 200pc in the first year following the third AGOA extension, according to the finalised proposal.
Ethiopia's exports under the AGOA are primary agriculture products and textiles. The exports through the AGOA stood at 11pc of total exports to the US, in 2012. The total exports of Ethiopia through the AGOA reached 21 million dollars, in 2012.
The proposal is developed by advisers and presented to a group under the AGOA Steering Committee, named the Technical Working Group (TWG). The parties declined to provide details on the proposal, claiming it is too early in the process to release it. "First it has to be presented to stakeholders, so now is not the time to disclose details. Yet, I can say we are quite ambitious in the proposal," states Eyob Tekalign, AGOA advisor with the Ethiopian Chamber of Commerce & Sectorial Associations and the Economic Commission for Africa (ECA), who has been at the forefront of the response strategy preparation.
"Although we cannot make the proposal public right now, we can be confident that we, as a nation, will have a better opportunity to benefit from the AGOA. That is why we are strongly demanding that it be extended," added Geremew Ayalew, director of the Foreign Trade relation and Negotiation Directorate at the Ministry of Trade (MoT). The emergence of a number of large textile and leather companies backs up Ethiopia's plan to benefit from the upcoming AGOA more than any other country, according to Geremew. "Our performance, in terms of volume, has been increasing by 80pc each year, which is 67pc greater than what other countries grow annually. This is a great sign of our bright future," he said.
The proposal will be revealed in September 2013 to different stakeholders. These consist of government offices and exporters from the private sector. The response strategy, designed in line with the Growth & Transformation Plan (GTP), aims to stimulate the light industrial sectors, such as textiles and apparel, leather products and shoe manufacturing. It also includes plans to boost agro-processing, the financial sector and logistics management, as well as marketing and communications.
The textile and apparel subsector, which secured 121.9 million dollars in 2012/13, is expected to raise the export revenue to one billion dollars by the end of the GTP period, in a year and a half. Leather and leather products, which secured 97.8 million dollars the same year, are expected to reach 500 million dollars by 2015. "'Business as usual' cannot achieve GTP targets," says Eyob. Zemedeneh Negate, managing partner at Ernst & Young, states that the country needs to improve in three areas for the ambitious plan to succeed.
These include moving up the value chain, building more infrastructure and strengthening the manufacturing sector. If these conditions are met, the plan is a "realistic ambition", Zemedeneh says.
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