AGOA, an opportunity going waste?
The opportunity for Ghanaian companies and artisans to export goods to the United States of American (USA) market is not being explored as expected.
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As a result, the United States Ambassador to Ghana, Mr Robert P. Jackson, has reiterated calls on businesses in Ghana to leverage the Africa Growth and Opportunity Act (AGOA) to expand their businesses and contribute more to the growth of the Ghanaian economy.
According to him the potentials under the Act was enormous and urged local business to ensure that they took advantage of it to their benefit.
Mr Jackson made the call at the Annual General Meeting of the American Chamber of Commerce (AMCHAM) Ghana, in Accra on November 17.
He also gave the assurance that there was not likely to be any changes to the Act under the administration of billionaire businessman, Donald Trump.
The world is presently sitting on tenterhooks awaiting to see what new policies Mr Trump will introduce and what he will review or scrap. During his political campaign for votes, the US President-elect made a number of comments regarding foreign policy and trade treaties, issues which many are not clear his next line of action should be assume the reins of government come next year.
AGOA inception
Ghana has enjoyed access to the U.S. market under the AGOA since its inception in 2000. AGOA presents a significant opportunity for Ghana to increase its manufacturing capacity and diversify its exports. However, after 11 years, it has become apparent that despite early success, Ghana has not been able to exploit the trading opportunities thereof. Ghana’s exports to the U.S. increased from $116 million in 2002 to $222 million by 2008.The majority of the country’s exports to the U.S. are raw materials, with cocoa and wood among other things being among the top export products. A lack of supply capacity, lack of financial resources and AGOA’s ad hoc implementation has led to its underutilisation.
AGOA is the US government’s signature trade initiative with sub-Saharan Africa, with 37 beneficiary countries enjoying duty-free status for exports into the United States. AGOA waives duties on more than 6,400 products exports from eligible African countries to the United States.
AGOA has recently been renewed for the next 10 years by the U.S. Congress. The U.S government enacted AGOA in May 2000 to give preferential market access for over 6,000 products from 39 sub-Saharan Africa nations with liberal access to the U.S. market.
As of June 2015, AGOA-eligible countries had exported nearly US$480billion worth of goods to the U.S.
By providing duty-free access to the U.S. market, AGOA has succeeded in helping eligible nations grow, diversify their exports to the United States, and create employment and inclusive economic growth although there is still much left to be desired.
Under AGOA, eligible countries can export products including value-added manufactured items such as textiles to the U.S duty-free.
Exports
Lately, it was reported that Ghana’s export of apparel and clothing under the AGOA has expanded from less than US$250,000 in 2001 to more than US$9million last year.
Quoting from Melinda Tabler-Stone - Charge d’ Affaires at the US Embassy at a sensitisation workshop in May this year on exporting to the US under AGOA, she said “With investment partnerships with US companies and technical assistance from USAID, we fully expect to see another large increase in exports in 2016 with the potential to provide employment opportunities for thousands of people,”
The question
But with all these progress the question still remains as to why much potential exists but not much is being explored to the optimum.
A woodcarver, Kojo Mensah Otchere told the Graphic Business that the size of his shop makes it unable to do much.
“My capital is soo small so I am unable to do much that is why I do not get a lot of money to expand although I wish I could”, he said.
His comment raises concerns about what level of support these artisans have from government and other sources.
“I can’t go for loans to expand because the interest is a no go area”, he said adding that “this is why we want the government to lend some support to us to enable us buy materials to export more”, he said.
Way forward
Sensitisation is not enough to get people to take advantage of that unique opportunity offered manufacturers and businesses in the country to explore AGOA. In a country where interest rates remain a hindrance and access to other sources of funds from the government is more about whom you know, it will be difficult for small scale artisdans and all to full take advantage of the Act.
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