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Textile Sector: AGOA - Its Future in Africa

Published date:
Wednesday, 03 August 2005

Five years ago, AGOA was enacted. Its designed objective was to change the US-Sub Saharan trade and investment relationship. It grew out of recognition in both the US and Africa that trade, not just aid, could be a tool for Africa's development.

What has been accomplished so far? What lies in the future in this post Multi Fibre Agreement (MFA) environment for the textile sector? Why do all the countries ask for the extension of the third country fabric up to 2015? What about the Dakar forum? As many questions need to be addressed.

The statistics support trade gains and the growth in Africa Growth and Opportunity Act (Agoa) trade has been impressive. In the apparel sector, US imports from Africa has grown by 243% through 2004. But as from 2005, with the lifting of the MFA quotas, apparel from China shot up, growing by 65% during January - April, as compared to the same period last year. And the trend is continuing despite the introduction of safeguard measures. Africa's share of US market which is less than 2%, compared to China's 28%, has already dropped by 12% during the first semester 2005.

Now the long-term goal of Agoa is to develop an internationally competitive textile sector in Africa. To date 85% of the duty free apparel imports from Africa under Agoa has been made in less developed countries beneficiaries from third country origin. Only 10% of the apparel imported under Agoa has been made with African-origin yarns/fabric.

It has become clear that regional fabric/yarn sector had not expanded sufficiently to supply the input requirements of the growing apparel sector. With the loss of the duty free eligibility of apparel made from third country fabric in 2006, is it realistic to expect the African apparel industry to adapt?

Far from gaining, the textile industry in South Africa has actually declined since the introduction of Agoa, with a number of closures of textile mills and trim suppliers. Its clothing industry is seriously compromised in its ability to grow and create much needed job opportunities.

In Mauritius, as well as in Lesotho, the number of closures has impacted heavily on employment. It is becoming clear that without liberal and unfettered access to third-country fabric, Sub-Saharan Africa will never be able to develop an apparel manufacturing sector of sufficient critical mass to be a serious player on the global market nor support a viable textile industry in the future.

It is said that Agoa was crafted to decrease Africa's dependence for export revenue on one or two commodities, not to create a new dependence, for instance on mass-produced shirts and trousers. But the apparel sector is the only sector that Africa has taken advantage of and created employment. Sub-Saharan Africa needs to diversify and this implies that it must be given every possible means to first grow its apparel sector to a critical mass.

The new environment has compelled the cotton, textile and apparel industries of the Sub-Saharan countries to get together to share their concern. The two meetings held in Nairobi in April and in Johannesburg in June have led to the setting up of African Cotton & Textile Industries Federation.

This federation which groups 13 countries including Mauritius, has four sub-committees namely; Investment and Finance, Inter-Regional Trade & Supply Chain, Production, Ginning and Lint Trade and Global Trade Initiatives.

At the Agoa forum held from the 18th to the 20th July 2005 in Dakar, the federation has provided effective regional presentation and discussed with United States trade representatives the specific concerns of the industry. Clear recommendations were made and immediate actions decided upon. One being the submission of the position paper for the Review of the Agoa

It was an opportunity for the cotton, textile & apparel sector industries to act cohesively as a region. Consensus was reached as to the request for a new mechanism to accelerate the vertical integration of cotton-yarn-textile-apparel value chain and maintain facilities such as access to third-country fabric so as to retain the market share. With such an exercise being market driven rather than by regulations.

What next? The forum has also laid emphasis on the need to diversify. More efforts are required to expand the range of goods currently being exported under Agoa. There are more than 6 000 products beneficiaries which could be shipped to the US duty free, but only a fraction of these opportunities are being taken up. In this context it has become imperative that an Agoa council be set up at national level whereby strategies can be discussed and ensuring that maximum opportunities are seized.

Agoa can be a greater success. It requires energy and commitment from all the stakeholders to revisit the Agoa in the post MFA era. Mauritius can significantly contribute and benefit from a dynamic Agoa.

Regularly updated trade statistics on include (Click to follow the links):

  • All Countries’ AGOA and GSP Trade Overview

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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