Wednesday, July 6, 2022

African Growth and Opportunity initiative not being fully utilised

Botswana manufacturing companies have failed to reap much through the African Growth and Opportunity Act (AGOA) initiative, which offers a huge market for African products – duty and quota free – into the US market.

Buzwani Manyepedza, the vice president at the Botswana Exporters and Manufactures Association (BEMA), said benefits have been derived from the AGOA initiative but not to satisfactory levels.

The number of companies participating in the scheme has pared down over the years.

“We started off with about 15 members participating, being in┬átextiles and apparel and furniture, but now we are left with one active member,” said Manyepedza.

Under AGOA in 2011, the export levels stood at US $15 million for the textiles and apparel, diminishing to US $10 million as at December 2012.

For Botswana, the AGOA comprises of 6,400 product lines, but the country’s textile and garment sector has become the biggest beneficiary of AGOA over the years.

Since inception of AGOA, Botswana managed to participate in about 8 sectors in agriculture, Machinery, Minerals Metals, Textiles apparel, Chemicals, Forestry, Transport equipment and Electronic products.
To date Botswana is only using one product line under the scheme.

Manyepedza attributed the poor performance to a number of issues, which include geographic trade-related barriers, like being land-locked, which requires the use of neighbouring boarders to access the market.

He also cited Infrastructure in Botswana, which still requires a lot of development. “We still have high utility costs and supply constraints, insufficient telecommunications infrastructure, and highly inconsistent transportation costs, augmented by distance to current or potential markets, and regional infrastructure constraints,” he said.

Manyepedza also noted the lack of skilled labour, which is necessary to diversify into more skill-intensive sectors steel manufacture as weighing down the country exports to USA.

“Even the existing manufacturers are struggling to get competent labour within the country,” he said.

Issues like the lack of harmonized customs between South Africa, Botswana and neighboring countries and delays due to the opening and searching of goods in transit have posed serious challenges to local manufacturers.

“We need to take up other product lines, like footwear, particularly┬á┬á that we have byproducts of cattle industry,” he said.

Manyepedza added that, as a result of these challenges, the furniture industry is not exporting to this market. He said these challenges, coupled with restrictive land lease agreements currently at play, manufacturing in Botswana remains operating under very unfavourable conditions.

“More could be done to participate in the market and grow the sales, in turn diversifying our income stream as a country,” he said.

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