The African Growth and Opportunity Act (AGOA), is an act signed into law in May ,2000 by the United States which allows Sub-Saharan African countries to export goods at duty free rates to the U.S.A upon meeting certain requirements and conditions. There are currently over 40 beneficiary countries and all goods qualify to be admitted free of duty under the scheme provided they are imported directly from the beneficiary country and meet the rule of origin requirements.
A similar scheme known as the Generalize System of Preference (GSP) also allows developing countries worldwide to export products to some developed countries at zero or preferential duty rates upon meeting laid down requirements. But unlike the GSP, the AGOA has been tailored specifically by the U.S for sub-Saharan African countries and allows about 6400 different items to be exported without restrictions on how much could enter or the need to pay tariffs on such exports.
The scheme since its inception has faced some criticisms and mixed reactions, while some school of thoughts feel it’s a good initiative to help African countries gain free access to the U.S markets, others feel the requirements and processes seem a bit complex with some voices criticizing the process and asserting that, the U.S. always knew that some countries would not be able to fully optimize the advantages of AGOA.
Nonetheless some countries in the Region have to some extent taken full advantage of this scheme whiles others are still yet to fully optimize the benefits of the scheme and one such country is Ghana. Even though the country has so many products falling under the over 6400 different products range under the scheme, the Nation is yet to fully take advantage of this scheme with all the benefits it brings.
Ghana in the initial stages seem to have taken advantage of the scheme recording impressive trade figures however on yearly basis, trade figures seem to be dwindling .Trade however reached a peak of over $400 million in 2011 (boosted by oil exports). these figures without oil exports however meant that the country was not doing enough with regards other eligible products under the scheme.
Several challenges have been noted to hinder the realization of the full benefits of the scheme one of which is the inability of local manufacturers and exporters to supply high quantities of products ordered and also to meet specifications. This particular challenge is prevalent in the textile and clothing sector accounting for dwindling figures in that particular trade (textile and clothing) .
Furthermore, one major challenge has been the uncompetitiveness of African manufacturers. It is very much important to note that products exported to the U.S. market would face competition from other sources and therefore for African products to be accepted and do well there, entrepreneurs and manufacturers would have to be very competitive with regards product quality, specification as well as packaging.
This challenge of product competitiveness have been attributed to the lack of intra-regional trade in Africa as this would to a greater extent expose local manufacturers to some level of competition affording local manufacturers the opportunity to learn the rudiments of competitions at the regional level before entering the highly competitive American markets.
In the nutshell, the effectiveness of this laudable initiative would very much depend on the availability of adequate information. Information not just about the existence and benefits of such a scheme but more importantly the exact steps a local producer can follow to make his products AGOA friendly. This information should not just be available but understandable in simple terms so the private business man and more importantly the potential exporter would be able to understand the requirements of this scheme.
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