Orders cancelled amid uncertainty
ALAN PEAT
DELAYS IN the US authorities passing the latest version of the Africa Growth and Opportunity Act (AGOA) is causing quivers in African industries dependent on the act for duty-free imports to the massive US market.
While the various interest groups in Washington are debating the extension of AGOA under AGOA III, the September 2004 expiry deadline for textile provisions is getting closer, according to Standard Bank’s Africa researcher, Henry Flint.
“Each day that passes without clarity on the proposed extension threatens to undo the positive spin-offs AGOA I and II have had on many African economies,” he told FTW. “Many countries are experiencing either cancellation or a drop-off in textile orders as US importers await a final decision on AGOA III.”
This is unfortunate, Flint added, especially with the US economic recovery stimulating imports as companies rebuild inventories on the back of growing domestic demand.
“In the first quarter of 2004 the value of total US imports was almost 12% up on that recorded in the first quarter of 2003,” he said.
“Consequently, total US imports from sub-Saharan Africa were 25% higher in the first quarter of 2004 when compared to the corresponding quarter in 2003, and 17% up on that of the final quarter.”
The growth in US imports from sub-Saharan Africa outpaced overall growth in US imports - which resulted in sub-Saharan countries gaining market share in the US. Sub-Saharan Africa’s share in total US imports has risen significantly in recent months, according to Flint’s research.
“While the expansion in sub-Saharan Africa’s trade with the US can partly be explained by rising energy related imports due to higher global oil prices and increased sourcing of energy products from Africa,” he said,
“non-energy related imports also rose significantly in recent months.
“Rising US textile and apparel imports - the latter being the second largest overall AGOA beneficiary sector - contributed to the expansion in non-energy related product imports from qualifying countries.”
But, without AGOA III - which extends the textile provisions applicable to lesser developed countries (LDCs) beyond September 2004 - many textile industries in sub-Saharan Africa may falter.
According to Flint’s records, Lesotho, Kenya and Swaziland are amongst those most at risk - with textile exports to the US under AGOA having grown considerably.
The only good news is that SA textile exports to the US are not likely to suffer from the delay in AGOAIII.
“SA and Mauritius were not granted LDC status,” said Flint, “and will therefore not be as vulnerable.”
