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
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.
President Cyril Ramaphosa and his United States of America counterpart President Joe Biden will engage in discussions during the upcoming 20th African Growth and Opportunity Act (AGOA) Forum to be held in Johannesburg next week.
This according to Presidential Spokesperson Vincent Magwenya who on Thursday briefed the media on the President's upcoming engagements.
"The AGOA Forum serves as a vital platform for the United States to build on the success of the Africa Leaders' Summit and further enhance the economic partnership with African states, under the aegis of the United States' African Growth and Opportunity Act that was approved by the US Congress in May 2000.
"During the Forum, President Joe Biden and President Cyril Ramaphosa will engage in discussions on shared priorities, reaffirm the Administration's commitment to the continent, and explore opportunities to make AGOA more transformative as they deepen trade and investment relations with Sub-Saharan African countries," Magwenya said.
The event brings together the US government together with the governments of eligible African countries and economic organisations, business, labour and civil society.
"Over the course of the event, participants will delve into conversations about strengthening trade and investment ties between the United States and Sub-Saharan Africa, with a focus on promoting resilient, sustainable, and inclusive economic growth and development.
"AGOA...remains a key driver of economic growth and development. An extension of AGOA beyond 2025 is expected to promote inward investment in Africa and provide mutual benefits to the United States and African countries.
"This extension will further support the African Continental Free Trade Area, covering 54 countries and 1.4 billion people," Magwenya said.
South Africa has derived benefits from AGOA including the following:
"Since its inception in 2000, the African Growth and Opportunity Act (AGOA) has been pivotal in strengthening economic ties and promoting growth and development across the African continent.
"AGOA has opened up new market opportunities, facilitated economic growth, encouraged economic and political reform, and improved economic relations between the United States and Sub-Saharan Africa.
"It remains a cornerstone of United States economic policy and commercial engagement with Africa," Magwenya concluded.
Source: Allafrica.com
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: SAnews.gov.za (Tshwane)
Blantyre — Malawi has made its first successful large-scale harvest of wheat after years of attempts to find a variety of grain suitable for its soil. Wheat farming is seen as a solution to mitigate the impact of the Russia-Ukraine conflict on grain imports to the African continent.
Ronald Ngwira, chief executive officer of Malawi-registered U.S. company Pyxus Agriculture Limited, which operates a farm in central Malawi for the diversification of wheat seeds, said about four varieties of wheat have been found suitable for Malawian soil out of about 80 varieties which had been tried since 2019.
Speaking during the start of the first large-scale harvest over the weekend, Ngwira said the wheat farming will help Malawi save millions of dollars spent on wheat imports.
"Malawi imports 200,000 tons of wheat at $48 million. To get there, it could take us four years to produce enough wheat in Malawi to satisfy ourselves," Ngwira said. "Four years might be seen as a long time, but we are already there and will have the seed available."
Agriculture experts in Malawi say wheat farming is expected to produce about 90 metric tons, which is 50 percent of the country's wheat consumption.
Malawian President Lazarus Chakwera witnessed the harvest Friday at Mpale farm in Dowa district.
"Wheat farming can enable Malawi to be self-sustaining. But this will require each one of us to work hard to achieve the desired results. Let us all make a move toward that goal by even using modern technology," Chakwera said.
Malawi has long been heavily dependent on imported wheat, and the ongoing conflict between Russia and Ukraine has disrupted food supply chains. According to the United Nations, Africa takes up 12.26% of grain imported from Ukraine.
A U.N. report notes that the Russian invasion of Ukraine triggered a shortage of about 30 million tons of grain on the continent, along with a sharp increase in cost.
"If we can find markets, it can be another source of forex in the country," said Wisdom Mgomezulu, an agricultural economist and lecturer at Malawi University of Business and Applied Sciences. "Because, as you know, wheat is among those high-value cash crops that are highly demanded in the world."
Mgomezulu said to achieve this, Malawi needs to find more sustainable production technologies that can give a comparative advantage, considering that there are already big players in the market.
"We need more investment in research. Let's look for more funds and donor partners to finance agronomists and researchers who are trying their best to breed varieties that can be grown here in Malawi. But for that to be done, we need to research more investment and maybe get a share of the export market," Mgomezulu said.
In the meantime, Ngwira of Pyxus said they are planning to plant 15,000 hectares of seed in December to prepare farmers for mass wheat production next year.
Allafrica.com
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