TRALAC - Trade Law Centre

Zambia: AGOA remains relevant to drive export growth

Friday, 08 April 2011

Source: Times of Zambia

For the African Growth and Opportunity Act (AGOA) to remain relevantand continue to drive export oriented growth, there should be a pushto promoting United States (US) private sector investment in Zambia.

AGOA is a key tool which creates tangible incentives for Africancountries to implement economic and commercial reform policies thatcontributes to better market opportunities and stronger ties betweenSub Saharan Africa and the United States.The forum will create an opportunity to promote a high level dialogueon trade and investment related issues between real businesses.

Currently 37 sub-Saharan countries meet AGOA's eligibility criteriaincluding Zambia and may take advantage of trade benefits the Actoffers.According to the Zambia Association of Chambers of Commerce andIndustry (ZACCI), 2010 report on AGOA, Zambian exporters facestringent standardisation measures and certification procedures.

The report further highlight that sanitary and phyto-sanitarymeasures are some of the key challenges hindering the Zambianexporters in fully accessing the U.S. market.

In addition, stiff competition from the Asia and other regionsespecially in the textile and apparel sectors that Zambia continues toface under strained competition following the elimination of theMulti-fibre Agreements (MFA) quotas in 2005 and the expiry ofsafeguard measures for china exports in 2008.

Commenting on the role of the private sector, trade policy researcherSajeev Nair noted that private sector development was nothing but aprocess whereby the business sector in Zambia is empowered to grow ina conducive environment in order to be competitive on the local andinternational markets.

International and regional trade opportunities are a vehicle forprivate sector development despite Zambia not performing well intaking advantage of AGOA in the last 10 years.

This is so because the domestic supply side constraints arecompetitiveness challenges which have made it difficult for thebusiness community in Zambia to penetrate the United States market.

Mr Nair pointed out that there should be targeted public interventionfor project diversification, branding, adverstising, quality valuechains and thereby enhancing value addition on export orientedproducts.

But for the ministry of Commerce, Trade and Industry, the ministry incharge of the AGOA forum noted that about 7,000 products are eligibleunder the AGOA preference.

Healey Mweemba senior economist at the ministry of Commerce, Trade andIndustry observed that Zambia was only exporting a handful of productsto the U.S. due to a number of factors.

However, the opportunities are immense under AGOA as the Act extendsquota and duty free entry opportunities to the United States market,one of the biggest markets in the world.

The AGOA is believed to provide growth of industries and investmentof businesses in Africa especially in the textile and apparel sectorand Mr Mweemba says exposure to international markets, improvedproduct quality and transfer of technology are the expected arisingfrom AGOA.

Besides textiles and apparels, new products such as cut flowers, otherhorticultural products, automotives and parts and specialty foodsamong others, exporters stand a chance to benefit from theseopportunities in their various sectors.

Mr Mweemba said despite the various difficulties by some eligiblecountries to penetrate the U.S markets, countries like Lesotho haveemployed about 10,000 in 1999 compared to 40,000 at the moment fromthe textile industry.

Remarkably, approximately 300,000 jobs have been created in Zambiasince 2000 arising from AGOA and most importantly exports have beengenerated from Nigeria, Angola, South Africa, Lesotho, Kenya,Mauritius, Swaziland and Madagascar now under suspension.

Bearing in mind the exports trends, imports amounted to US$33.7billion in 2009 representing 95 per cent of the U.S. imports fromeligible countries entered duty free under AGOA, GSP or zero dutyrates.

Mr Mweemba explains that AGOA is a centre piece of the U.Sgovernment's trade policy with Sub Saharan African Countries and assuch it offers the largest single market in the world.

The AGOA legislation provides market access to Zambia and othereligible countries on duty free basis, there by making exports fromSub Saharan African countries 'competitive.

'It is rather interesting to look at Zambia's performance with regardto the AGOA in the last 10 years.

Mr Mweemba said the value ofbilateral trade between Zambia and United States have continued toshrink in recent years.Figures indicate that from 2006, Zambia exported US$361,000 while in2008 the levels of export increased to $10,900,000 but dropped to$121,000 the following year and later went up in 2010 to $1,400,000.

With this major come back, it clearly shows that Zambia can maximiseits potential and utilise the opportunities from the African Growthand Opportunity Act forum to increase its exports.

According to CUTS International chairman Love Mtesa, Zambia shouldmove away from traditional exports of primary commodities anddiversify into value added products in order to benefit from AGOAMr Mtesa says Zambia must take a special interest on its markets bypromoting good governance, investing in people and implementingdifficult macroeconomic reforms for it to take advantage of theopportunities arising from AGOA.

Most importantly, there are several things Zambia can do to increaseinvestment and take better advantages of trade opportunities underAGOA and any other such initiatives.

"As Zambia prepares to host the forum, Zambia dialogue teams at theAGOA forum should be adequately supported by the private sectorrepresentatives and civil society for them to put the Zambian tradeagenda on the table to be discussed and negotiated with U.Srepresentatives.

"Such an inclusive approach will steer Zambia on the right path andcan make us use the AGOA route to enhance trade with the USA in amanner that will grow the domestic economy and provide opportunitiesto the Zambian private sector," Mr Mtesa said.

National and sub-national level AGOA strategies should be developedand should be inclusive of labour, private sector, civil society andthe media in order to determine where Zambia's competitive andcomparative advantages lie outside mining.

"Zambia should seriously work on the challenges which it faces andthese include high transportation cost, poor trade facilitationsystem, difficulties in accessing finance and credit facilities by themanufacturers and exporters especially the small and mediumentrepreneurs, lack of adequate training and modern equipment inprocessing value added agricultural products as well as weakinfrastructure among others," Mr Mtesa said.

To this end, it expected that Zambian exporters, producers repositionthemselves and utilise the opportunities that AGOA offers in line withthe theme 'Enhanced Trade through Increased Competitiveness, valueaddition and Deeper Regional Integration'.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Zambia'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.