The Government of the United States of America has renewed the Africa Growth Opportunity Act (AGOA) for 10 years from September, 2015 to September 30, 2025. The renewal has come after elapse of the previous legislation which lasted for 13 years, with a number of short term extensions.
During the previous AGOA, statistics from the US Department of Commerce indicate that Tanzania did not perform well, given its huge EAC's comparative potentials and advantages. Tanzania's exports under AGOA stagnated at 3 percent of the total EAC
members' exports of USD 356 million. It was Kenya which earned large share of 96 percent of the total exports, leaving Uganda with 0.4 percent, Rwanda 0.2 percent and Burundi zero (0) percent.
The renewal of AGOA poses a big challenge to the Tanzania manufacturing Industry to make sure it improves and enhances exports through AGOA. (centre) in a session with other leaders during the AGOA meeting. Tanzania was made eligible for AGOA benefits in 2000 and due to the comparative advantage in cotton production, it decided to focus on exporting fabric, textile, and leather products to the U.S. market.
The contribution of AGOA to the EAC exports increased from 57% in 2011 to 62% in 2013 with the major commodities being textile, apparel and agricultural products of Kenya. The renewed AGOA provides Tanzania with ample opportunities including long
term extension of the third-country fabric programme, thereby creating stability and predictability necessary for long investments and effective utilisation of AGOA.
The programme also enhances flexible and targeted eligibility reviews which in turn provides for advance warning for country whose eligibility is in question. The US president will request for public comment on whether a beneficiary country conforms to eligibility criteria and if the preferences to that country are to be withdrawn, the president must provide the country in
question with a 60-day warning.
It also provides for "withdrawal, suspension, or limitation" of duty-free treatment as a targeted way to penalise acts of violation of the opportunity contrary to its exclusion. The AGOA facilitation focuses, among other things, on the agriculture and
women through support in the form of technical assistance (American trade capacity building support) to businesses and sectors that engage women farmers and entrepreneurs.
The AGOA opportunity also eases the movement towards a comparable free trade agreement (FTA). The US Senate sees an opportunity of using the reauthorized AGOA to have a bilateral trade relationship between USA and Africa such as that between Africa and Europe (Economic Partnership Agreement - EPA).
The publication of AGOA utilisation strategies will provide designated sectors in which each country believes it will be competitive by taking advantages of the opportunity's potential. During its entire life time the utilisation of AGOA has been sub-optimal
with only 7 countries out of the eligible 39 taking full advantage of the scheme, with exports of crude oil dominating leaving the agricultural sector uncompetitive.
Taking the case of sub-Sahara Africa, only a few countries, notably Nigeria, Angola and South Africa have benefited, while Kenya leads in the EAC. For Tanzania to have meaningful benefits there is a need to develop targeted strategies towards prompting value chains and productivity in the agricultural sector while encourage private sector's participation in AGOA Forums and events.
Currently, the government is embarking on developing a National AGOA Strategy which will aim at addressing all the constraints facing Tanzanians in accessing the US market.