In tobacco production, curing the crop once it is harvested is an essential step towards making the harvested commodity ready for the market.

The most common methods for curing tobacco are by air, flue, sun and fire. In Malawi however, small-scale tobacco farmers commonly use fire, where open wood fires are kindled on the floor of a curing barn, and the curing process can either be continuous or intermittent, extending three to ten weeks before the leaf can be cured to the desired finish and be ready for the market.

But with wood fire curing of tobacco having the potential to increase deforestation levels and contribute to environmental degradation and consequently climate change, the tobacco company Philip Morris International (PMI) says it is working with small-scale tobacco farmers in Malawi, Argentina, China and Mozambique among other countries, in an integrated production system that ensures the wood used to cure the tobacco after harvesting is from sustainably managed forests.

For a long time, environmental organizations not only in Malawi but across the world have contended that the growing of tobacco has many serious environmental consequences which include loss of biodiversity, increase in atmospheric carbon dioxide and soil erosion among other effects, because cutting down trees for curing the crop after harvest directly causes deforestation.

PMI Sustainability, Activation and Support Director Miguel Coleta says forest sustainability is indeed paramount and the production of tobacco should not be allowed to cause degradation.

He says the company is working with local farmers in six countries including Malawi, where it offers both technical and financial support so that farmers use the forests where they get the wood to cure tobacco sustainably.

"As part of this relationship, we can have farm-by-farm monitoring of the tobacco production to ensure it is sustainably produced and the forests where wood to cure it comes from are sustainably managed. Today, we know where the wood is coming from on each farm, from among the farmers we are working with. We also do monitor to ensure that the investments we have made over the years, in this sustainability push is bearing the intended results," he said.

Mr. Coleta says in 2022 alone, PMI invested 6.6 million United States dollars in six countries including Malawi, on projects aimed at reforestation through awareness programs with farmers, which he says are key towards ensuring sustainability in environmental conservation. In the case of Malawi, Universal Leaf is the local partner in these activities.

"So we take a landscape approach. When we think about the environment, we think about the intersection between the impact of tobacco growing on the individual, the farmer, the community and the environment itself, and these impacts are addressed through this integrated production system," Mr. Coleta said.

Mr. Coleta explained that engaging directly with the farmer in this integrated production system is fundamental so that small-scale farmers can have predictability in terms of not only having a buyer for their produce or having a favorable price for their crop, but also having access to best practices that will improve their production capacity by taking care of the environment where they grow their crops.

"Sustainability is not just about managing the negatives but also looking for ways to create positives by using technology and innovation to drive value for society. In that sense, when it comes to tobacco growing, what is underpinning everything we are doing is the integrated production system," he explained.

In Malawi, Tobacco is considered green gold and the most profitable crop which can have over 20 times export value compared to tea, which is also an export from the country.

Mr. Coleta says through the integrated production system and to ensure sustainability in terms of the quality of tobacco, farmers have standard guidelines to follow which also include not using child labour, apart from using wood from sustainably managed forests in the curing of the harvested crop.

Meanwhile, the impacts of climate change on the farmer have also been an issue of concern, with tobacco production especially in Malawi being dependent on the rainy season, making access to water a subject that needs to be addressed so that farmers do not just rely on tobacco growing, but can grow other crops during the long dry season.

"Water is important for health, safety and hygiene, and having access to water without women having to walk for kilometers before getting the commodity is paramount. There is also a need for the farmer to have the ability to grow other things apart from tobacco since tobacco is one hundred percent rain-fed.

"So that's why in recent years, we have been working with communities and our business partners in local areas, digging hundreds of boreholes and hand pumps to provide access to water through what we call the wash program," Mr. Coleta explained.

Source: Nyasatimes

African governments are seeking an extension of the African Growth and Opportunity Act (Agoa) beyond 2025. The law was enacted in 2000 to "encourage increased trade and investment between the United States and sub-Saharan Africa". We asked David Luke, who specializes in African trade policy and trade negotiations, what benefits Agoa has brought for qualifying African countries and how it can be improved.


To what extent has the Agoa goal been achieved?

The duty- and quota-free access to the US market granted by Agoa has helped in boosting trade and investment between sub-Saharan Africa and the US. Many of the qualifying African countries have recorded specific successes in goods exported under Agoa to the US. These include textiles and apparel from Kenya, Ethiopia, Mauritius, Lesotho, Ghana and Madagascar. In Kenya, for instance, the apparel-dominated Agoa sales have grown from US$55 million in 2001 to US$603 million in 2022, accounting for 67.6% of the country's total exports to the US.

South Africa has sub-Saharan Africa's most diversified export list. The value of its automotive sales to the US has increased by 447.3% between 2001 and 2022 under Agoa. South Africa's vehicle exports to the US increased by 1,643.6% in the first year of Agoa, from 853 units in 2000 to 14,873 units in 2001.

Other country specific successes include Ghana where non-oil products like plant roots, textiles and travel goods are accessing the US market under Agoa. Ghana's exports to the US grew from US$206 million in 2000 to US$2.76 bilion in 2022, though only 26% of this trade was under Agoa.

The Agoa window has also lifted chocolate and basket-weaving materials from Mauritius; buckwheat, travel goods and musical instruments from Mali (suspended in 2022); Mozambique's sugar, nuts and tobacco; and Togo's wheat, legumes and fruit juices. Perhaps Ethiopia, which was suspended from Agoa in January 2022, best exemplifies the impact of the trade window on Africa's Industrialisation.

According to the World Bank, Ethiopia has attracted the world's attention with its ambitious Industrialisation plans, particularly through its industrial parks. The industrial parks, which mainly produce textiles and garments, have thrived on the duty-free and quota-free access to the US market.

In less than a decade, Ethiopia's industrial parks created 90,000 direct jobs, predominantly for women aged 18 to 25 years. Employment of this group is typically associated with a range of positive societal and economic spillovers.

Ethiopia's exports to the US increased from US$29 million to US$525 million in 2020, 45.3% of it under Agoa. Textile and garment exports that up to 2014 accounted for just 10% of the trade grew steadily to 69% over the period.

The industrial parks attracted 66 foreign firms investing about US$740 million since 2014/15, with Agoa as the major driver of the sector's investment and growth of its jobs and export earnings.

What's been the impact of Agoa on Africa's exports?

Between 2017 and 2020, the US became the third largest destination for Africa's industrial products after the European Union and intra-African trade. Agoa is part of the reason for this. That means Agoa has stimulated significant value addition in the region, traditionally known for exporting unprocessed items.

The positive impact on value chains explains why African countries such as Kenya, Lesotho and Mauritius have put so much diplomatic capital, and on occasion lobbying funding, into articulating a continuing case for Agoa's renewal.

The African countries have exploited the window to sell their manufactured goods to the US. This is the kind of trade that really matters for Africa's goal of economic transformation through "manufacturing, Industrialisation and value addition".

By comparison, during the 2017-2020 period, 87% of Africa's exports to China were fuels, ores and metals.

What kind of agreement are the US and Kenya negotiating?

The US and Kenya are not negotiating a bilateral free trade area agreement as is commonly misunderstood. What they are negotiating is a strategic trade and investment partnership which cannot be described as a free trade agreement as it does not include new market access arrangements.

The main goal of the partnership is to increase investment and to promote inclusive economic growth. It is meant to benefit workers, consumers and businesses (including small ones). Its other aim is to support African regional economic integration.

Given the prevailing global economic disparities, if African countries are to develop, they need trade concessions like Agoa, not bilateral reciprocal free trade agreements.


How can Agoa be made more beneficial to sub-Saharan Africa?

First, Agoa must be extended for at least 20 years. This will ensure predictability of the market access concession and boost confidence among investors of a sufficient time frame to recoup investments. Second, north African countries ought to be included in Agoa. This will extend Agoa to all African countries and support the trade integration of the continent through the Africa Continental Free Trade Agreement.

Thirdly, Agoa should stop punishing investors for mistakes of governments. It is unfortunate that countries that fail to meet the Agoa eligibility requirements, which include governance and human rights standards, are suspended from the scheme. This penalises private firms that invest and trade and the people who are dependent on these firms for jobs. But the US is not likely to change the eligibility requirements.

Minister of Agriculture Sam Kawale has disclosed that the Tobacco Bill will be tabled during the forthcoming sitting of parliament.

Kawale made the remarks during a press conference to update on the Grower Registration and Licensing exercise for 2023/2024 Tobacco Growing Season.

Government and its stakeholders have been reviewing the 2019 Tobacco Bill to align with the international Framework Convention on Tobacco Control (FCTC).

"We have reviewed Tobacco Bill after thorough consultations, and It is expected to come into parliament anytime sooner when members resume deliberations," he said.

Kawale further said the bill has incorporated issues of eliminating child labour, afforestation and other issues to meet international standards.

He however said government continues to engage international buyers to ensure competitions on the market with the latest being China.

According to him, the just ended Tobacco Marketing Season, the country sold 120. 5 million kgs and earned $282.618 million jumping with 55 per cent from 2022 which had 85 million kgs, making $182 million.

This year the leaf had an average price of $2.35 per kilogramme, which was much better than the $2.14 per the green gold attracted in 2022.

Source: Nyasatimes

Africa is often characterized as a continent poised for economic growth and development. Often, prosperity and development in Africa can be linked back to exports and the benefits that they generate.

This brings to the forefront the African Growth and Opportunity Act (AGOA) and its role in opening American markets to 35 African countries, as well as the African Continental Free Trade Area (AfCFTA), which aims to increase socio-economic development, reduce poverty, and make Africa more competitive in the global economy through the elimination of tariffs on most goods and the promotion of intra-African trade.

The roots of AGOA and AfCFTA explain it all. AGOA, enacted by the United States in 2000, gives African countries duty-free and quota-free access to the American market for a wide range of products ranging from agricultural goods to manufactured items. Its aims are to promote economic development in Africa through trade, enhance US–African economic relations, and diversify the African export base. However, access is not unconditional and remains subject to ongoing assessment and compliance hurdles put up by the Act’s eligibility criteria.

The AfCFTA trade agreement, launched by the African Union, aims to create a single African market for goods and services by eliminating tariffs and non-tariff barriers to trade. To date, 47 countries have ratified their instruments of the AfCFTA agreement, and 46 have ratified and deposited their instruments of ratification. Seven countries have yet to ratify and only one country has yet to sign.  

Progress in creating the world’s largest free trade area is, therefore, well underway towards achieving its objective of creating the world’s largest trading bloc by stimulating intra-African economic growth.

The synergy between these two initiatives is seen in the fact that AGOA offers significant opportunities for African countries to diversify their export markets whilst, AfCFTA enables African nations to reduce their dependence on traditional trade partners. To get the best of both worlds, African businesses should, therefore be simultaneously exploring both agreements and maximizing their export opportunities.

AGOA offers incentives to encourage Africans to develop outward-looking sectors while AfCFTA, through its larger African market, will enable businesses to hone and specialize their activities by aligning themselves with the competitive advantages that the two treaties offer. Moreover, both programmes foster export-oriented industries.

As they gear up and prepare to embark on global export adventures, African industries can effectively use the increased opportunities offered by AfCFTA to build supply chains, increase capacity, and grow production volumes as they prepare to move into global markets.

Crucial to success, and a topic of everyday business conversation, is that regardless of whether we target only continental markets or also American markets, opportunities need infrastructure. Africa is moving strongly to put transport, logistics and communications networks in place. There can be no greater incentive for this growth than booming export opportunities and associated benefits for participating countries.

With trade comes regulation. It is in this field that massive benefits lie. If AGOA and AfCFTA work together to promote regulatory harmonisation across Africa by aligning regulations and standards, unsurpassed opportunities could be opened for African businesses. Compliance costs would be reduced, competitiveness would increase, and African products would be more attractive to international buyers.

Besides infrastructure development, Africa requires significant investment. Foreign direct investment (FDI) plays a pivotal role in fostering economic growth and generating employment opportunities. The synergy and collaboration between AGOA and AfCFTA have the potential to stimulate FDI, thereby promoting technology transfer, and job creation across the continent.

Investment in one country could spur the opening of multiple continental markets, plus access to preferential markets to the consumer base in the US.

Naturally, these economic benefits will not come without challenges, which include addressing non-tariff barriers, ensuring compliance with rules of origin, and overcoming infrastructure deficits.

In implementing their AGOA benefits, African countries cannot rely solely on capacity-building support but must help themselves. Furthermore, being AGOA-eligible does not guarantee that they will fully exploit AGOA benefits and achieve their AfCFTA goals.

The potential impact of global economic conditions and changing US trade policies on AGOA should also be considered. Barring these constraints, all of which are resolvable, AGOA and AfCFTA offers two powerful, complementary instruments for promoting African exports and economic growth and propelling African nations towards becoming global trading powerhouses.

Source: CNBC Africa

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa.

"AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivizes African countries to develop and export value-added goods and services. This does and will continue to reduce Africa's dependence on primary commodities and enhance its ability to participate in global value chains.

"Another important element of AGOA is that it has a capacity-building and technical assistance component that supports African countries in meeting the requirements for accessing the US market. This assistance helps improve Africa's competitiveness by enhancing skills, knowledge and infrastructure, enabling African businesses to meet international standards," the President said in his weekly newsletter on Monday.

The newsletter was released on the back of South Africa hosting the 20th AGOA Forum in Johannesburg, which concluded on Saturday.

AGOA is an initiative of the United States of America aimed at giving duty-free market access for producers in eligible countries in sub-Saharan Africa.

President Ramaphosa further explained how some economies' development can be enhanced through AGOA.

"If extended beyond 2025 for a sufficiently long period, and if used more effectively, AGOA can contribute significantly to the further diversification of African economies. It could enable countries to produce a wider range of products using the abundant minerals, metals and agricultural produce. The extension of AGOA could also encourage the further development of value chains across different countries

"We have already seen this happening in South Africa's automotive industry, for example. Local automotive companies source leather car seats from Lesotho, wiring harnesses from Botswana, copper wiring from Zambia, steering wheel components from Tunisia and rubber from Côte d'Ivoire, Nigeria, Malawi, Ghana and Cameroon. The vehicles are finally fully manufactured in South Africa, then exported to the US duty-free under AGOA.

"This is a great example of the resources and industrial capabilities of different African countries being brought together to produce finished goods that can be sold beyond our shores. This is contributing to the creation of jobs both in South Africa and in other African countries, and raising foreign exchange earnings," he said.

Regional integration

President Ramaphosa said AGOA can be a catalyst for further economic integration between countries.

"Africa has been advocating for the integration of continental economies for a long time. AGOA encourages regional integration among African countries. To fully benefit from AGOA, countries are finding that it is far better to work together to increase production capacities, harmonize standards and develop regional value chains.

"This is demonstrated by the experience of 10 countries, including South Africa, in the production of motor vehicles exported to the US. This promotes cooperation, economic integration and the growth of larger regional markets within Africa," he said.

Local perspective

The President honed in on some of the benefits that South Africa already garners from AGOA.

"While [AGOA] may seem to many in our country to be a rather distant, even obscure topic, AGOA is an important instrument for growing and transforming our economy. The benefits of AGOA are felt in the lives of our people through increased economic activity and the jobs that such activity created.

"South Africa benefits a great deal from AGOA. Our country is the United States' largest trading partner in Africa. The US exports more goods to South Africa and imports more goods from South Africa than any other African country. According to US Census Bureau data from 2020, South Africa was the largest destination for US foreign direct investment among AGOA eligible countries," he said.

President Ramaphosa emphasized that South Africa attaches great significance to its relationship with its American counterpart.

"South Africa greatly values its bilateral relationship with the US, one of our largest trading partners, with whom we enjoy relations that extend well beyond trade.

"We look forward to further engagement around the reauthorization of AGOA at a time when its benefits continue to support our quest for economic growth, job creation and inclusive, sustainable development," President Ramaphosa said.

Source: (Tshwane)