The 8th African Growth and Opportunity Act (AGOA) conference whose theme was “Realizing the Full Potential of AGOA through Expansion of Trade and Investment” came to a close recently.
This being the first forum since Barrack Obama became President of the United States of Ameriaca, there had been much anticipation but it is difficult to put a finger on its achievements.
Trade Minister Amos Kimunya in his summary of the conference had said that Africa’s share of global trade is only 2% and an increase by only 1% would generate more resources than all the overseas development assistance provided in any given year. However key presenters seem to have derailed from the theme of the forum by concentrating more on politics
US Ambassador to Kenya, Michael Ranneberger addressed the meeting saying sensible things but received little enthusiasm as most felt, this being a business forum, he was confusing issues by choosing to dress down Kenya on political issues. One un-amused person was Prime Minister Raila Odinga who registered his disapproval in his speech. He appealed that the AGOA meeting participants stick to its agenda. His request seems not have been heard.
The US Secretary of State Hillary Clinton, who was also the key speaker, though less forthright had a speech which was rather light on specific offers by the US
Clinton appeared in the forum looking rather subdued. She seemed to lack that energy she exuded when campaigning for the Presidency of the United States.
Vice President Kalonzo Musyoka, while closing the 3 day event said the extension of the agreement beyond 2015 (when the current one ends) would enhance and safeguard the benefits already accrued from the arrangement.
The VP also seemed unclear of the purpose of the AGOA treaty which is to enhance Africa’s trade with the USA; to increase African goods being sold in the US market. Instead his address dwelt on the need to implement ‘bold and effective strategies to promote increased US investment and capital flows to Africa’. He also brought in the issue of the intra Africa trade.
Kimunya emphasized the need for strong partnerships between the government and the private sector in order to enhance trade and investment. Overall the forum agreed on the importance of good governance and emphasized that implementing reforms was necessary to stimulate and attract private investment in Africa.
They noted barriers to achieving the full potential in the AGOA treaty such as lack of production capacity, tedious US procedures, high cost, low capacity in research and narrow product ranges.
The Trade Minister expressed the need to roll out financial support for vulnerable countries that are affected by the global economic crisis. The forum also urged the US to assist in the enhancement and strengthening of institutional capacity to enable the Sub-Saharan countries meet US standards.
The forum urged the US to reduce subsidies, support regional integration process and also work together with the Sub Saharan Africa countries on issues of peace and security particularly on the East Coast of Africa.
Kenya has around Ksh7 billion trade deficit with USA. Trade between the two countries is also low at just over Ksh20 billion. The signing of the AGOA was expected to boost trade between the two countries just as with other countries. But there are many barriers in the way, some in the US and others in Africa.
The most contentious of these is the US subsidies particularly on farm produce. The other is the punitive US import procedures. Where as it may be possible to increase capacity in dealing with the latter the market distortions created by subsidies act as non tariff barriers to the US market, blocking some of Africa’s products from the market.
Subsidies on agricultural produce are hot political issues in many developed countries including the EU and it is unlikely that the US will give in any time soon. The diversion of the theme of the conference to political issues may just have helped in watering down the attention these specific issues received.
In his presentation the deputy chair of the African Union Commission Erastus Mwencha highlighted Africa’s own challenges and said: “Africa faces challenges such as poor infrastructure, financing and technology which are necessary to facilitate its access into the US markets.
Mwencha attributed the failure of the AGOA member countries to increase their share of trade under this agreement to these challenges. He proposed the extension of financial support to the private sector so as to increase the sector’s capacity.
Mwencha however hailed the 8th AGOA forum saying that despite challenges facing the African continent the forum has been able to create necessary trade mechanisms.
Ambassador Demitrios Marantis, Deputy US Trade Representative emphasized the need for an African partnership with the US. He challenged Africa to be competitive in order to compete effectively with the rest of the world.
Other than the good words from the Ministers and the US Deputy Trade Representative it remains to be seen whether the treaty will increase trade for Kenya and other African countries, now that the Obama administration is in the white house. In the meantime both USA and Africa have a lot of ground to cover; US on non tariff barriers such as the tedious regulation and subsidies and Africa on competitiveness. Perhaps the next forum should concentrate on these three issues.