TRALAC - Trade Law Centre

Direct African investment is spurred by AGOA

Friday, 04 October 2002

Source: Engineering News (SA)

The Africa Growth and Opportunity Act (Agoa), promulgated by former US president Bill Clinton in 2000 to give certain imports from qualifying sub-Saharan African countries duty- and quota-free entry, has resulted in investments worth hundreds of millions of dollars across the region, the latest edition of the World Investment Report states.

The report, released in mid-September by the Geneva-based United Nations Conference on Trade and Development (Unctad), notes that a US company has paid an undisclosed sum to acquire a fish-processing business in Cape Verde, where two Portuguese companies have also invested in the clothing and textile industry.

Another US company is investing in a tuna-processing plant in Ghana, says the report.

"In Kenya, the government has so far announced new investments and expansions of existing investments in apparel amounting to $13-million and providing more than 20 000 new jobs," it says.

In Malawi, Agoa has seen companies from Europe and Taiwan invest in several garment factories, creating at least 4 350 jobs.

"Total employment could eventually increase by 10 000 jobs," says the report, adding that, on the island nation of Mauritius, an estimated $78-million has been invested in the clothing and textile sector as a result of Agoa.

It adds that major US retailers have placed significant orders with Mauritian clothing and textile companies, and there is a possibility of Asian and European firms building yarn-spinning mills there in the near future.

Unctad says a $250-million textile project could be implemented in Namibia, creating 18 000 jobs over the next ten years.

In Tanzania, a joint-venture company involving locals and a US firm is expanding a textile mill in a development which will create at least 1 000 new jobs.

A leading clothing and textile group in the French-speaking West African nation of Senegal is said to be negotiating a partnership with Malaysian and US companies to export to the US.

South Africa has also jumped on the bandwagon, and Unctad says local clothing and textile firms have received huge orders from US retailers.

Recently, Shareen Osman, the textile and clothing sector manager at Trade and Investment South Africa (Tisa), told Engineering News that several European and Asian countries are actively seeking investment opportunities in the local clothing and textile sector.

Among the companies which have been assisted by Tisa, a division of the Department of Trade and Industry, are Herdmans, of Ireland, and Richfin, of Taiwan.

Herdmans is establishing a linen-yarn plant in the Western Cape, while Richfin has built a jersey factory in Kwazulu-Natal.

Among other things, the foreign clothing and textile companies seeking investment opportunities in South Africa are being attracted by the country's reasonably-priced utilities, skilled labour force and well-developed transport infrastructure which allows easy access to world markets.