Textile manufacturers in Botswana are concerned over the delay in the extension of the September 2012 deadline for Africa Growth and Opportunities Act (AGOA).
They contend that the delay will have serious impact on their business as the uncertainty over possible extension may lead to loss of thousands of jobs. Under AGOA, Botswana textile and apparel companies get free access to the US market for the designated goods.
However, the third country fabric provision under AGOA ends on September 30, 2012. After this date, Botswana textile and apparel companies would need to source raw materials, like cotton and yarn locally to avail the duty-free benefit to the US.
As such, garment manufacturers want the AGOA third-country provision to be extended till 2015 as the US market had become a ready market for most manufactures.
Meanwhile, the government has been carrying the textile industry after it had been hit hard by the 2008 global recession. The Ministry of Trade and Industry is also working with the US to get the deadline for third-country provision under AGOA extended.
But the US Government is yet to respond to the industry’s appeal to extend the deadline till September 2015. This has raised concern over textile manufacturers’ ability to guarantee continued supply of goods.
Textile producers say the orders to be placed in March for supply in December may get affected if there is further delay in announcing the extension of third country provision. “If they delay to announce their decision what will happen to our fabric,” said Lin, from Carapparel, a textile company.
Botswana lately has been exporting fewer products to the U.S than it did in 2007; the apparel industry in Botswana is still vibrant. The sector employs more than 3,000 people, and garments are being exported from Botswana every day, principally to South Africa.
“Legislation on renewing the third country fabric provision has been introduced in both chambers of Congress and has the support of key committee chairs, but at this point, I cannot convey more news,” said Michelle Garvin the US Ambassador to Botswana. Garvin commended AGOA saying the provision has fostered African growth and created African jobs.
Exporters have cited cost of compliance in terms of product quality, cost of export arrangement and ignorance of AGOA at US borders as some of their challenges. These challenges and the future of AGOA are expected to be mapped out at the forthcoming Washington meeting in June.
Under AGOA, local companies exported US$15.5 million (P115 million) to the US in goods last year. Local manufacturers exported goods worth US$11.6 million (P86 million) and US$12.4 (P92 million) to the US under AGOA in 2010 and 2009 respectively, securing thousands of jobs locally and contributing to Botswana’s non-mining Gross Domestic Product (GDP).