Saturday, 23 January 2016

Substantial Increase Of Textile Export Expected From Africa To USA Due To Duty Free Trade Treaty

As per the statement of an official from the US, the textile and apparel exports from Africa to the USA might quadruple to a whopping $4 billion in the coming decade owing to the extension of the duty-free trade treaty. The African Growth and Opportunities Act (AGOA), is a trade program which avails certain sub-Saharan nations duty free access to USA, the world’s largest apparel market, thus giving Africa a great competitive edge over other nations Asian such as Bangladesh and Vietnam. The AGOA was established back in the year 2000, and was renewed past its stipulated expiration date in 2008.

The administration of USA placed in request, well ahead of time, to the congress for the renewal of this program which offers eligibility to almost 40 African nations. It is anticipated that the program will be extended for at least the next 10 years.  As per the statement of Mr. Gail Strickler, assistant U.S. trade representative for textiles and apparel, ten years could well prove to be a game changer for Africa. While it could quadruple its exports, Africa will also gave the opportunity for creating close to 500,000 new jobs.

In the year 2014, the clothing imports to US from the sub-Saharan nations was estimated around a whopping $986 million thereby registering a growth of close to 6% over the year 2013. The growth is attributed to the participation of nations such as Kenya, Lesotho, Ethiopia and Tanzania amongst others.

However, according to trade analysts, while Africa does ensure low labor costs, and a great supply of raw materials, especially the high-grade cotton from Uganda, the poor infrastructure with respect to its ports, road network, technology prove to be major hindrance. The lack of skilled labor, also contributes to the let-down of the markets. Even Mr. Joseph Nyagari, a participating official of the Nairobi-based African Cotton and Textile Industries Federation agreed that even if the overall costs of trade in Asia is on the rise, their competitive edge in terms of quality, productivity as well as product range is way above than Africa.

On the other hand, the extension of AGOA has been warmly welcomed by African officials, as well as Asian firms who have establishments in Africa, in anticipation of better investments. The Chief Executive of Lesotho National Development Corporation, Mr. Kelebone Leisanyane informed that the land-locked nation of Lesotho now plans to set up 2 new fabric mill, being the largest exporter under the AGOA program. He also added that the extension of the program is crucial and would lead to the welfare of as many as 35,000 workers across Lesotho, who are all employed in the textile and apparel industry. Needless to say, the benefits of the same would extend to the families of these workers.  Mr. Heman Booodia, the Vice President (Africa), of New Wide Garment a Taiwanese firm with six factories in Kenya, one in Lesotho and one in Ethiopia also plans to expand its operations following the extension of the program.

Now, that the duty free trade policy is offering immense benefits to the African nations, it is up to them to improve their infrastructural facilities as well as raise the quality and the range of the products offered to enjoy the maximum possible leverage from the treaty, failing which the Asian markets would start getting better business from USA owing to their skilled labor and high-quality output!

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