TRALAC - Trade Law Centre

Kenya: Flowers a Growing Sector Amid Recession

Friday, 23 January 2004

Source: http://allafrica.com/stories/200402200798.html

At this particular period of time when most African countries are faced with economic difficulties the need to tap the lucrative American market by taking advantage of the African Growth and Opportunity Act (AGOA), which allows non-quota, duty-free entry of a range of African products such as textiles and leather goods into the US market from countries adhering to open market reforms, is becoming more and more evident.

It will be recalled that sometime ago the Corporate Council on Africa (CCA) hosted the fourth biennial US-Africa business summit in Washington, bringing together key public and private representatives with a common goal of increasing business ties between the US and Africa.

The outcome of that meeting has no doubt stimulated business as per the AGOA initiative to the advantage of the concerned African countries.

Consequently, many African countries are set to benefit from AGOA, for instance Kenya estimates that AGOA will create 50,000 new jobs directly and more than 100,000 jobs indirectly.

South Africa anticipates about 100 million dollars in investment in its textile and apparel facilities creating 13,000 jobs. Lesotho, one of the smallest countries in sub-Saharan Africa, has become one of the biggest beneficiaries of AGOA, attracting over 120 million dollars in new investment.

Obviously, Africa's future should be closely tied to its potential to grow economically and provide education, health care, infrastructure and security. Increased trade will help Africa grow economically as AGOA is supposed to generate tangible results in terms of expanded trade, employment opportunities and technological improvement.

While it is agreed that AGOA is not a panacea for all Africa's economic woes, nevertheless it is believed that it is an important contribution, which aims at improving Africa's trade performance.

Ethiopia is one of the sub-Saharan African countries that should exploit the AGOA initiative. So far the country is placed among the least benefited from the opportunity by exporting only 0.01 percent of the total African export to the US under the AGOA initiative.

The reasons for this are many but quality-related problems are the major among others. Obviously, quality is a very important term in business and the only password for competitiveness.

The country's low performance is caused by factors such as lack of access to information, limited exposures, and lack of technical support.

Africa needs to appear on the world market with its produce in a way which would ensure a stable and persistent demand for their products thus making the continent's industry an integral part of the world economy and this could be done only through strengthened productive capacities able to produce competitive goods and services.

For Africa the challenge of penetrating the US and indeed the world market is primarily a matter of improving competitiveness.

Issues of standardization and quality assurance should be given utmost priority. External trade of most African countries has for too long depended on a marrow range of exports.

Given wide fluctuations in prices, the risks of depending on a narrow range of commodities are very real. Such dependence undermines Africa's capacity to adjust to external shocks, therefore, the issue of diversifying exports and markets becomes prime concern to Africa and in this respect attention needs to be given to the range of commodity in which African countries have a comparative cost advantage.

The AGOA initiative is said to be in operation for only a limited period of time. Let us take advantage of it while we can.

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