TRALAC - Trade Law Centre

AGOA Forum 2011 - the next step

Tuesday, 09 August 2011

Source: Times of Zambia

During a trip to Lusaka for the 2011 (AGOA) African Growth and Opportunity Act Forum, which was held from June 8 - 10, 2011, US Trade Representative, Secretary of State Ambassador Ron Kirk described the Lusaka Forum as "one of the most productive forums ever held on the African continent in the recent past." The statement was also endorsed by Secretary of State Hillary Rodham Clinton during the official closing.

In separate interviews, the President of the Corporate Council on Africa Steve Hayes and his Vice President Tim McCoy described the recent AGOA Forum as the best ever organised.

Mr Hayes added, "The Corporate Council on Africa (CCA) has been involved with AGOA meetings since 2002 in four other countries in Africa. Nothing beats Zambia so far."

And the President of the Coca Cola Africa Foundation Wilson Asiko and Dr. Susan Mboya the Coca-Cola Group Director - EuroAsia and Africa Group responsible for Women's Economic Empowerment also echoed similar sentiments in a ZNBC television interview.

Mr Asiko said there is something magical about Zambia that had made Coca-Cola Company invest and expand its activities in the country in the spirit of AGOA.

He said the Coca-Cola Company's participation in the AGOA Forum 2011 this year had been more visible than ever before. Mr Asiko stated that his company would invest more than US$50 million in the Zambian economy in the coming years.

He also observed that Coca-Cola has been involved in the "war" against malaria in Zambia in recent years and referred to his company's shipment of about 12,000 mosquito nets to Sesheke in conjunction with actress Sharon Stone and Chris Flowers, a billionaire investor.

The Coca-Cola Group Director - EuroAsia and Africa responsible for Women Economic Empowerment Dr Mboya on the other hand stated that women play an important role in any economy in Africa and elsewhere. She said the fact that US Secretary of State Hillary Clinton attended the 2011 AGOA Forum was testimony of her commitment towards advancing women's empowerment in the world economy.

Dr Mboya is daughter of the late Mr Tom Mboya who was a prominent Kenyan politician assassinated in 1969 in Nairobi, Kenya.

At the official opening of the Meeting, President Rupiah Banda stressed the need for regional economic blocks like COMESA, SADC and EAC to work together in collaboration with the African Union to enhance the integration Agenda.

The President called for greater concerted efforts to diversify American imports away from Africa's raw materials and to engage in activities that facilitate the transfer of knowledge and skills.

He highlighted the fact that more than 90 per cent of American imports under the AGOA framework are related to energy such as oil, but there remains a huge opportunity for more agricultural crops, including processed goods, to make their way onto American supermarket shelves.

It was his hope that the Forum would have candid and frank deliberations around the key elements as highlighted in this year's theme.

And President Barack Obama in his letter to AGOA delegates, read by US Trade Representative Ambassador Kirk, sent positive signals that the Obama Administration looks forward to working with Congress to make AGOA sustainable and more predictable.

Obama also announced the Administration's intent to work with Congress to extend AGOA's 3rd Fabric provision through 2015.

This important provision allows eligible AGOA countries to export apparel products made from textiles from AGOA eligible countries duty-free access to the United States of America.

Mr Obama said the time is ripe for African economies to grow by taking advantage of the AGOA.

He also said with the extension of AGOA to 2025, he was optimistic that many of the African economies would grow stronger.

"The time of change for Africa is now and African economies must experience growth," he emphasised.

The US President said it is important that African countries support the new initiative entitled "Enterprise for Development: A New Policy Approach Towards Africa", whose objective was to extend AGOA to 2025. The fact that senior members in his administration were in attendance at the summit was evidence of the importance that he attached to AGOA.

Mr Obama said AGOA would as much as possible find ways and means of assisting African countries grow their economies and noted that Africa is America's partner and it would, therefore be wrong to see the continent's economies remain in doldrums

"I am certain that with the warm economic ties, we will soon be hearing of news that your economies are no longer small," President Obama said.

He concluded by remarking that AGOA is the cornerstone for Africa's economic growth and therefore, asked African leaders to be fully committed to AGOA.

And Ambassador Kirk announced that the Obama Administration had committed $30 million per year for the next four years to boost trade capacities in Africa under a new programme dubbed "African Competitiveness and Trade Expansion Initiative (ACTE)

"ACTE will provide $120 million over a period of four years to build on the success of Africa's regional trade hubs and help African nations realise AGOA's full potential," he said.

"President Obama and I see extraordinary promise and potential in Africa. AGOA has produced 11 years of positive results, but we understand that more should be done to tap into Africa's great potential. That is why I am pleased to announce this new investment today. ACTE is the next step in growing and expanding Africa's economic competitiveness."

AGOA eligible countries have argued that they would only benefit from AGOA preferences if trade preferences are accompanied by trade related capacity building support.

On the final day, President Rupiah Banda endorsed the "Enterprise for Development" a proposal calling for a number of important enhancements to AGOA that was introduced in Washington DC in 2010 by the AGOA Action Committee.

Among the proposed changes was a recommendation to increase tax incentives for US businesses operating in Africa. Other calls for creative approaches that benefit both the US and Africa were echoed by the Minister for Trade and Industry of Ghana, Hanna Tetteh.

All having been said and done, it was time for the US Secretary of State Mrs Clinton to close 10th African Growth and Opportunity Act (AGOA) Forum on June 10, 2011.

The Secretary of State pledged that the economies of Africa are well placed to benefit even more through AGOA in the coming years.

She observed that in the past decade, Africa's exports to the United States had quadrupled to $4 billion (outside oil).

She noted that the growth in trade over the past decade is an accomplishment worth celebrating, both because of what it had meant for the people of Africa, and because of what it says about the possibilities that lie ahead.

"Today Africa is in a strong position to build on this progress. Although it still faces many challenges in many areas, the region is undeniably more stable, more democratic and more prosperous than a decade ago.

"At the same time, we cannot ignore the signs that we have not made the most of AGOA. African countries export only a handful of the 6,500 products that are eligible for duty-free shipping. The most common export of all is still a barrel of oil," Mrs Clinton said.

She added,"As we look to renew this trade agreement, we must decide whether we are willing to do what is necessary to make the most of its benefits. We either move ahead or risk failing to live up to the hopes we all shared 11 years ago."

She appreciated the fact that the theme for the 10th AGOA Forum, "Enhanced Trade through Increased Competitiveness, Value Addition and Deeper Regional Integration" had indeed an element focusing on deepening regional integration.

She applauded the efforts being made by Africans, citing the Second Tripartite Heads of State summit that took place on June 12, 2011 in Johannesburg, South Africa as being an important step towards deepening regional integration.

At this summit, three pillars on which economic integration of the tripartite region would be anchored were agreed as Market Integration, Infrastructure Development and Industrial Development.

The Secretary of State hailed women for their significant contribution towards African economies and the rest of the world.

Evidence showed that small and medium sized enterprises run by women are major drivers of economic growth, adding that when a woman prosperes, she reinvents her earnings in her family and that the positive effects ripple throughout the entire community.

Therefore more women should be assisted to connect to the global economy adding that no country could survive when half of its people are left behind.

She, however, observed that cultural traditions continue to make it difficult for a woman to start a business as they discourage her from handling money or managing employees.

Having officially closed the 2011 Forum, that government officials, business leaders and Civil Society from African countries and the United States convened to promote trade, business and investment opportunities that sustain economic development in Africa, the countdown that begun in September 2010 finally came to a happy ending.

During the conference, sessions for the private sector and civil society as well as involvement of participants of the African Women's Entrepreneurship Programme (AWEP) and the Young Business Leaders were also held.

But from a Zambian point of view, what made the 10th AGOA Forum meeting in Lusaka so different from previous ones held in Kenya, Ghana, Senegal and Mauritius?

The considered view is that Zambia did not only put up a successful Forum but further arranged what many stakeholders from the US, AGOA eligible countries in Sub Saharan Africa and International Organisations dubbed "the best AGOA Forum ever so far."

From the beginning, the government committed itself to making the 10th AGOA Forum unique.

It was unique in many respects - Organisationally, many agree that it was excellent. More importantly however, was the attention paid to the commercial side of AGOA that resulted in many deals worth millions of dollars in investment on the continent being signed.

Said Zambia's Ambassador to the USA, "It was a deliverable Forum where I believe contracts and tangible results were arrived at. Our challenge now is to put all these pronouncements into action."

The American Ambassador to Zambia Mr Storella had earlier said the AGOA Forum was going to cast a spotlight on Zambia and would no doubt increase bilateral trade between the two countries.

In an exclusive interview with the author on Zambia ZNBC television Minister of Commerce, Trade and Industry Felix Mutati first stated that the 10th AGOA Forum should be viewed as a transition point for Sub Saharan Africa - US trade relations.

He said that the 10th AGOA and future Forums should focus on transforming the lives of the African people through job and wealth creation.

"The 10th AGOA Forum should result in American companies establishing partnerships in Africa that will translate in the movement of goods and cash between the two continents," he said.

Asked as to why the Government decided to host the AGOA Forum given that the level of bilateral trade between Zambia and the United States is "skewed" in favour of the United States, Minister Mutati explained that from the government's point of view the reason to host the Forum was to basically provide a platform for attracting Foreign Direct Investment to Zambia and that this dream had to be realised.

He stressed that at the end of the day the AGOA arrangement had moved from the "usual talk" to actual realities in terms of business deals signed between American and Zambian firms.

A good example of this fact is that of a US based company, Tagos Group whose Chairman Milton Scott signed an agreement to raise $500 million in private equity finance for a 254 km railway line in the North-Western Province of Zambia.

The project is anticipated to create about 4,000 jobs during the construction phase and is expected to connect Zambia to Angola and the Democratic Republic of Congo (DRC), part of the funding of which would come from the African Development Bank (AfDB)

Further, Tagos Group of Companies also signed a Memorandum of Understanding (MoU) with the National Housing Authority (NHA) for the construction of 1, 000 housing units to be built in Lusaka and the Copperbelt, first on a pilot project basis.

Construction of the units would go a long way in cushioning the housing deficit which stands at about two million according to NHA Chief Executive Officer Elias Mpondela

Freshpikt, an agro processing Zambian company also signed a letter of intent for a joint venture with PS International of the United States to invest $42 million as a start out of $100 worth of new investment in tomato processing between 2011 16.

At this ceremony, PS International Project Manager David Marrow said the joint venture investment would contribute to the growth of the agriculture sector in Zambia.

In turn Freshpikt Limited Chairperson Chance Kabaghe noted that the investment deal would assist Freshpikt increase its production of tomato paste by creating employment opportunities for the local people whose majority of the raw materials comes from small-scale farmers.

Meanwhile, the Zambia Development Agency (ZDA) later signed a letter of intent with Advanced African Solutions of the United States for a $250 million investment in the tourism and agricultural sector.

Another letter of intent was signed with Acrow Corporation of America. The deal is for the design and construction of steel bridges across the country.

ZDA Chief Executive Officer (CEO) Andrew Chipwende signed for the Agency while Advanced African Solutions Managing Director, Mr. Chris Helm and Acrow Corporation of America, Director of International Business Development, and Paul Sullivan signed on behalf of his firm.

Next was the Zambia Honey Council that signed an agreement with a US company, Mann Lake Limited for the provision of the state-of-the-art equipment for honey processing in Zambia.

Mann Lake is the largest manufacturer of honey processing and bee keeping in the United States of America.

Lastly, the United States African Development Foundation (USADF) alongside senior Zambian government officials and private sector participants signed a USADF commitment worth hundreds of dollars in the agricultural sector.

USADF President and CEO Llyod Pierson committed $300,000 in grants for two Zambian agricultural businesses, the Zambezi Organic Rice Growers Association (ZORGA) and the Chipepo Fisheries Company.

Both Chairmen of ZORGA and the Chipepo Fisheries Company respectively welcomed the investment saying this would bolster trade and business growth in rural Zambia.

To mark the conclusion of the Forum, stakeholders to the meeting in a Communiqué made available to journalists and read by Commerce, Trade and Industry Permanent Secretary Buleti Nsemukila , the Civil Society Forum called on African countries to expedite regulatory and policy reforms that foster private sector development, encourage domestic and foreign direct investment.

The stakeholders from the US and 37 AGOA eligible member countries also urged the US private sector to invest in Sub Saharan African countries and to help create demand in the US - African products.

They called on Sub Sahara African governments to reform their investment policies to encourage both domestic and foreign investment through public private partnerships and manufacturing plants in Africa.

The Communique said AGOA Countries called for the diversification of Imports under the initiative from eligible countries to include products by small and medium enterprises (SMEs) from various sectors.

The Civil Society Forum recommended to the United States of America to facilitate a framework under AGOA for empowerment of young African business professionals and entrepreneurs through entrepreneurship, skills development, knowledge exchange mentorship and internship programmes.

They called on Sub Saharan African governments to undertake assessment regarding trade and gender, specifically women and gender to provide support to women through skills enhancement and access to finance. This will ensure that opportunities for women in trade are maintained.

They called on the United States government to consider extending the 3rd Fabric provision from 2012 to 2015 and the AGOA provisions beyond the current deadline.

The Civil Society Forum applauded the US Administration's recent commitment to working with the US Congress on extending the 3rd Fabric provision to 2015 and urged the US to extend both AGOA deadline and the 3rd Fabric countries provision to 2025.

The 10th AGOA Forum hosted by Zambia is gone but not forgotten. It provided a platform for policy makers, business leaders and the civil society to join forces and plan for the economic revolution of Africa.

The Whitaker Group (TWG), a premier strategic US consulting firm specialised in creating sustainable prosperity in Africa also attended the Forum and observed that the Lusaka gathering gave ample opportunity for the US and Africa to reflect on how their relationship has changed over the last 11 years.

The opportunity served as a reminder that the annual AGOA Forum remains one of the few places where African and American stakeholders can exchange ideas on how trade can most effectively support development

Ms Rosa Whitaker, founder and Chief Executive Officer of the Whitaker Group observed, "The AGOA Forum reserves time each year to build consensus towards action and to set the tone for activities over the coming year.

The tone at this year's Forum increasingly emphasised finding intersections for deeper collaboration among AGOA's stakeholders.

In summary, the Zambian Government spent approximately $2million to host the AGOA Forum. During this period alone, government facilitated the signing of investment deals worth more than $100 million through the ZDA and the private sector associations.

One would conclude to observe that the focus areas achieved during this meeting include the following:

1. Political aspects of the AGOA trade preferences

2. Impending, Expiration of the 3rd Country Fabric

3. Deepening Regional Integration

4. Commercial aspects of the AGOA Preferences

5. And in the Case of Zambia - FDI flows into Zambia

Against this background, a question arises. What should be the next step in the case of Zambia? Perhaps the following:

Ministry of Commerce, Trade and Industry through its agencies to work to ensure that the pledged investment during the Forum comes to fruition.

Strengthen the US-Zambia Bilateral Working Group to ensure that a Bilateral Investment and Trade Agreement is signed between the two countries which will create the necessary framework for attracting future investments.

Work with the Corporate Council on Africa (CCA) in arranging a post AGOA Forum which will create another platform for attracting more Foreign FDIs from the U S to Zambia.

The Embassy of the Republic of Zambia in Washington DC through the Chair of AGOA Ambassador Sheila Siwela has already held a Post AGOA Forum meeting to agree on a number of follow-up issues with some AGOA Ambassadors and their experts.

The purpose of the meeting held on June 21, 2011 at the Zambian Embassy was to highlight the successes of the Main AGOA Forum, the Private Sector Forum, the AWEP meeting and among others the African Ministerial Consultative meeting and the Experts and Senior Officials meeting.

Ambassador Siwela highlighted comments made by the Americans on the success of the Forum, particularly those made by Secretary of State Hillary Clinton.

She stated that the Forum was not an end in itself and that AGOA countries should take advantage of the statements made by the Obama Administration particularly on the extension of AGOA beyond 2015 and the 3rd Fabric Provisions beyond 2012.

It was for this reason that AGOA countries needed to prod Congress to align the two issues so that they run concurrently.

She also noted the need to persuade congress to address issues of capacity building and restrictive rules of origin which she said were major impediments for most AGOA eligible countries.

"We also need to agree on a timetable and deadlines to meet Congress as well as goals to be achieved before the 2012 Forum to be held in the US," Ms Siwela added.

As Chair of AGOA, Ambassador Siwela suggested that a committee of AGOA Ambassadors should be appointed that will engage with Congress to follow up on the various recommendations made by the Trade Ministers in Lusaka.

The Committee of AGOA Ambassadors based in Washington DC to engage Congress comprises the African Union, Cameroon, Cape Verde, Ethiopia, Kenya, Mauritius, Nigeria, Senegal, South Africa and Zambia.

Having been on the ground in Lusaka to attend and observe the goings on at the 10th AGOA Forum where high level government officials, businessmen and non-governmental leaders from both Africa and the United States of America interacted and dedicated their time to discuss better approaches to trade and investment to both continents, one would say several new developments emerged from this year's meeting, but each requires some additional thought and attention to take advantage of the underlying opportunities.

The author is Press Secretary at the Embassy of the Republic of Zambia in Washington DC




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