TRALAC - Trade Law Centre

Kenya urges US to help Africa to reap AGOA benefits

Wednesday, 05 August 2009

Source: Xinhuanet

Kenya on Wednesday called on the U.S. government to consider helping African countries to enable the continent reap maximum benefits from the trade.

Kenyan President Mwai Kibaki also urged development partners to consider further facilitation to African countries to stimulate economic growth so as to benefit more from the African Growth and Opportunity Act (AGOA).

Kibaki noted that African countries must strive to produce enough of the 6,400 eligible products for export to the U. S. large

"It is clear that the vast U.S. market is at the disposal of Africa. It is incumbent upon the African countries to grab the opportunity and produce the 6,400 exports envisaged under AGOA for the U.S. market," he told delegates attending the 8th AGOA Forum in Nairobi.

Kibaki also challenged African countries to formulate mechanisms of overcoming obstacles hindering full utilization of AGOA.

Trade under AGOA, President Kibaki said, faces several challenges among them inadequate financing for exporters, stringent standardization certification procedures, high transport costs and inefficient production procedures.

He, however, noted that the timing of the forum was a boon to the continent and that appropriate solutions shall be explored to tackle the current challenges that hinder full utilization of the AGOA by various African countries.

President Kibaki termed the free access of about 6,400 products to the large American market under a generalized system of preference a remarkable boost to African economies.

"It is encouraging to note that eight years after its launch, AGOA has stimulated a dramatic increase in Africa-U.S. trade. Thus, the total AGOA imports, including other products under the generalized system of preference, amounted to about 51 billion U.S. dollars in 2007, which is more than six times the amount in 2001,"he said.

He reaffirmed that the AGOA initiative was the most significant U.S. legislative initiative with an immense potential to dramatically transform the economic fortunes of Africa.

Kibaki called for diversification of products exported to the U.S. market to reverse the current trend where petroleum products account for the largest portion of AGOA exports.

Among the products that the president proposed to be included in the AGOA exports are apparel, prepared vegetables, cut flowers, fruits, leather products and prepared seafood among others.

In order to increase and widen the benefits of the AGOA initiative, he proposed that agriculture which accounts for about 40 percent of exports be promoted through targeted technical assistance while financial support should be accorded to small and medium enterprises to enable them expand and produce quality goods.

"It is also worth noting that only a small fraction of the 6,400 eligible products, are being exported into the U.S. market from Africa. As African countries, therefore, we seek to increase the volume of exports and also diversify the range of exports with more value added components," he said.

As part of efforts to overcome the challenges, he appealed to American investors to establish their business enterprises in Africa not only to support development in the continent but also mitigate the current challenges afflicting trade under AGOA.

The President assured the investors that despite the current global economic downturn their investments would reap enormous returns when the world economy picks up.

President Kibaki expressed confidence that the partnership between Africa and U.S. business community would hugely boost Africa's capability to export to America and urged the world superpower to go an extra mile in the achievement of AGOA objectives.

"Similarly, the U.S. will find it useful to support African business capacity building. This may involve arrangements for skills and technology transfer in production of goods of direct relevance to the U.S. market. It may also involve the provision of financial capital on easy terms. This will help start-up businesses for export," he said.

Other measures of maximizing the benefits of the AGOA initiative, the President noted, would be to conduct product inspection at the country of origin in order to lower the cost of the exercise as well as availing adequate technical training to Africa.

During the occasion he reaffirmed Africa's commitment to economic development and cited Kenya's development blue print, Vision 2030, as a point of reference towards making the country a middle income nation.

He said The Vision targets to achieve prosperity for all Kenyans and attaining a 10-percent economic growth rate.

Kibaki assured that Kenya had ushered a new leadership chapter particularly in the economic and socio-political spheres with the aim of reforming the trade and investment environment and thanked international community for their support.

Many other institutional reforms have been started and we are committed to complete them in the shortest time possible. This will significantly change our security, judicial and democratic processes and attain full accountability for all government actions. These and other reforms are genuinely Kenyan, and Kenyansare driving them forward in earnest for the good of all."

Kibaki invited the participants attending the international forum and other visitors to extend their stay in the country in order to sample the diverse culture and hospitality of the Kenyan people and tour the country's unique and scenic tourist attraction sites.

Prime Minister Raila Odinga urged America to address the challenge of subsidy of its products as a way of accommodating competition with Africa products in U.S. markets.

Odinga noted that while Africa was endowed with natural resources it continued to wallow in economic poverty due lack of ability to control prices of its agricultural products in the market.

He said Kenya and Africa welcomed partnerships with friendly countries but will not tolerate patronage on its internal affairs.

He lamented that Africa continued to suffer the consequences of omissions and commissions including carbon emissions from other continents.

The Prime Minister noted that Kenya suffered the twin jeopardy of drought and floods due to the effects of climate change.

The AGOA forum which brought together delegates from 38 countries focus on new strategies to transform national economies through diversification of source of growth, policy reforms and strengthening of governance as critical to reduce effects of global financial challenges.

Visiting U.S. Secretary of State Hillary Clinton noted with appreciation that textiles and apparels which constituted 76 percent of exports in 2007 dominated American markets since 2001.

"Kenya's export comprising lower priced goods and commodities to America increased from 41 million in 2001 to 326 million dollars while imports from the U.S. also rose to 516 million dollars," Clinton said.

Clinton challenged African countries to re-orient the trade strategies to focus strongly on inter-Africa trade even before venturing outside the continent.

Clinton noted that the continent was the only region with the least trade between the countries and stressed the need for removal of investment barriers that militated against inter-state trade.

The U.S. secretary of State said the Obama administration was committed to assisting the continent to exploit the opportunities created by the AGOA to improve on quality of their products to meet the quality criteria of the American Markets.

Clinton said Africa had the potential to benefit from partnerships between themselves and with U.S. in addressing the electricity crisis through promotion of renewable energy projects.