TRALAC - Trade Law Centre

Uganda: President Flags Off Phenix Agoa Exports

Saturday, 24 February 2007

Source: The Monitor (Kampala)

The first consignment of Ugandan organic cotton garments left yesterday for the lucrative United States market.

The consignment of 50,000 units of assorted men 's , women 's and children 's wear worth $125,000 was flagged off by President Yoweri Museveni from the Phenix Logistics Ltd factory on 5th Street in Industrial Area. The organic cotton garments were the first exported from a sub-Saharan African country.

The shipment was expected to allay concerns surrounding the future of Ugandan exports to the US under the African Growth and Opportunity Act (AGOA) , a US initiative under which selected sub-Saharan African countries like Uganda are allowed to export to the US market duty and quota-free.

Unlike the collapsed Tri-Star Apparel firm, which imported non-African fabric that was turned into garments, Phenix, a manufacturer of superior organic cotton textile s and apparel in the country, is the first textile company in Uganda and Africa to export genuine organic cotton products.

"I am really grateful to the U nited States for opening their markets , and that is why I am getting friendly to the US. My friendship is conditional for furthering my interests. I can't be interested to somebody who is not interested in my interests," the President said to applause.

He said Uganda is losing $14 per kilogramme for exporting unprocessed cotton products but would now realize greater benefits th rough increased foreign exchange earnings because products with value added fetch higher prices on the market.

"When you hear that the European Union countries are aiding Africa, it is the other way round. In each kilogramme of cotton, we have been aiding their countries by $14. Therefore, to reverse the haemorrh age of money flowing out of Africa, this is a vital process," he said.

US Ambassador Steven Browning commended Uganda for the export effort saying it was an important step in building up the country's trade with the US under AGOA.

"Uganda has had some success in the past exporting clothing to the US made from third -country fabrics, but this shipment proves what we have believed all along that Uganda has the capacity to use its domestic resources to compete fully in the US market," Mr Browning said.

Finance Minister Dr Ezra Suruma told parliament on Thursday that the government had made huge losses in its investment in Tri- Star . Without giving a figure, he said said auditors were working on the accounts to determine the amount of the loss.

"Importing fabrics to turn into clothes and then export them was very costly. We had to integrate into spinning , but we didn't know this because we had not owned a company of that magnitude before," Dr Suruma said. Government had invested $9.4 million (about Shs16.4 billion) in Tri-Star. It is not clear whether Tri Star will re-open and bounce back.

I n order to raise production and meet growing demand, Phenix's Managing Director Yuichi Kashiwad said the company is planning to invest $5.5 million. He said this will be used to modernise its equipment and earn the company $4 million by the end of the year. "We therefore have potential to exploit this opportunity through exporting value added finished products," Mr Kashiwada said.

Mr Museveni cautioned government ministers against frustrating investors , saying Government is there to facilitate investors not to frustrate them. He also said he was unhappy with some radio a n d television stations, whose names he did not mention, which he said have not been emphasising the importance of Uganda's trade with the US.

"The fact that the big American market of $11 trillion has been opened for African products without tax and without quotas, should be headlines in the newspapers," he said. The booming American market worth $11 trillion has market for 6,500 industrial products.

Phenix Logistics is a consortium of Japanese, Ugandan, and Singaporean businessmen. It is owned by Mr Kashiwada, Gordon Wavamuno , Tan Hian Tsin and Crocodile International.

While it employs 260, Phenix, like any other manufacturing company, is faced with numerous challenges. They include high interest rates, fluctuating high power costs, and high taxes on imported inputs. Unfavourable policies for the textile and garments sector and competition from illegal imports have also undermined the growth of the manufacturing sector in Uganda.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Uganda’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • 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.