TRALAC - Trade Law Centre

Swaziland: Economists predict doom and gloom over losing AGOA

Friday, 16 May 2014 Published: | Thembeka Dlamini

Source: Swazi Observer (Swaziland)

Economists are crying foul at the way government is handling the African Growth and Opportunity Act (AGOA).

AGOA is trade benefits that allow Swaziland to export a significant amount of its textile and clothing products to the US duty-free. 

Speaking anonymously, three economists concurred that the repercussions of losing these trade benefits will yield dire consequences for the country. 

*Nhlanhla Dlamini, an economist working in a government parastatal, said the loss of the benefit spells doom for a lot of the workers in Matsapha. He asked how over 10 000 people could be reabsorbed and employed while the employment rate of the country is so low. 

He said AGOA should have been a priority to the government a long time ago and not have these clandestine attempts at fixing the situation when it was too late in the day. 

The economist said it was a marvel the way government seemed to relax while the reports on the review of Swaziland’s status came to the fore in the February 23 edition of the Sunday Observer. 

He said losing these benefits would be a huge blow for an agri-based economy such as Swaziland and said the closure of all the firms would spell a socio-economic disaster in the short run and hinder the gains the country has made and strides towards attaining first world status which is His Majesty the King’s vision. 

He said it should be appreciated that the economic growth rate of the country would lag behind should it lose the benefit. 

The economist said whatever tax revenue to government that is generated from the textile factories directly or indirectly would also be lost.

*Muntu Kuhlase, a senior economist within government, said one of the effects of losing the AGOA benefits would be reductions of exports that the country makes. 

He said nearly E500 million ($50 million) worth of export value will be lost. 

He said these industries came to Swaziland due to the AGOA status and even though it might be argued that they gained more, they however have no obligation to stay in the country once the benefit is lost. 

He said it would  be easier for them to take their machinery elsewhere and restart where they will benefit from AGOA. 

He said the fact that most of the factory shells they operate from are government owned these factory owners have no real ties to try and produce apparel without the advantage of AGOA.

*Weziwe Bhembe, a private sector economist, the whole nation will be the biggest loser. He said since most of the employed factory workers are women, the whole nation should know that scales have tipped towards them being breadwinners. 

He said these women though they earn so little have a huge sphere of the financial support they offer since they look after their siblings, their own children and their parents. 

He said the social implications would be felt countrywide. Bhembe said looking at Matsapha, landlords will be affected since most of the houses were built with the assurance that workers will need accommodation. 

He said the numerous retail outlets would have to close from drastically reduced business. He said it is not just an issue for the textile industry but the every other industry that depended on the over 10 000 workers to support, directly or indirectly. 

Extract from the Sunday Observer, February 23, 2014.

In February when the Sunday Observer broke the story, the United States of America Ambassador to Swaziland Makila James was asked whether the benefits would be reinstated if Swaziland met some of the conditions, but not all of them. 

The ambassador responded that the conversation on the terms that Swaziland has to comply with for it to continue benefitting “...had not one, not two but several years going back, there is a great concern and great frustration that we have been extremely tolerant of the obstacles and challenges within Swaziland to meet some of these conditions. 

But it is important that Swaziland now understands that we are at a very critical point where they must meet all of the conditions and that is a very clear message that I hope the government will fully appreciate and will take on board.”

In the exclusive interview which took place on Friday, February 21, United States of America Ambassador to Swaziland Makila James said there was no longer any room for negotiations with the kingdom on the conditions that have to be met.

Listing the conditions, she said they include full passage of amendments to the Industrial Relations Act; full passage of amendments to the Suppression of Terrorism Act (STA); full passage of amendments to the Public Order Act; full passage of amendments to sections 40 and 97 of the Industrial Relations Act relating to civil and criminal liability to union leaders during protest actions; and establishing a code of conduct for the police during public protests.

Not some, but all of the conditions have to be met for Swaziland to continue enjoying the preferential trade agreement with the USA, the ambassador emphasised.

 

**In 2013, Swaziland exported E500million (US$ 49.749 million) worth of apparel to the US, showing a decline of 16.88 percent over exports of E600 million ($59.855 million) made in 2012, according to the Major Shippers Report released by the U.S. Department of Commerce.

*Not their real names.

**Info sourced: AGOA.info

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