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The African Growth and Opportunity Act (AGOA) was signed into US law in 2000, offering incentives to African countries to open up their economies and build free markets.
AGOA provides reforming African countries with the most liberal access to the U.S. market available to any country or region with which the United States does not have a Free Trade Agreement.
It supports US business by encouraging reform of Africa’s economic and commercial regimes, which will build stronger markets and more effective partners for US firms.
AGOA sets out a list of more than 6,000 items that African countries can export to the US subject to zero import duty.
In September, Addis Ababa will host the 12th annual AGOA forum, attended by the US and sub-Saharan African countries that benefit from the Act.
This year’s event will be closely watched because participants will make a decision on whether the existing duty-free scheme will be extended.
Capital’s Muluken Yewondwossen spoke to Yacob Yala, State Minister of Trade and Chair of the Inter-Agency, comprising the US Embassy, African Union (AU) and UN Economic Commission for Africa (UNECA) about Ethiopia’s preparations for the forum and the future of the Act.
Capital: How is the preparation for the AGOA Forum going?
Yacob Yala: In general, the value of the event is not only for Ethiopia; the promotion opportunity is also for other Sub Sahara countries and will have value for African countries too. Besides the promotion, we have been working towards the success of the event and the kind of arrangements that we will have to follow in the future.
One of the things we will be working on is the creation of market links with investors that come from the USA, which has one of the biggest market potentials in the world.
The event provides a good opportunity, not only for commodities that are allowed under AGOA, but also for the country to promote and create market linkages for commodities that are not included in the AGOA promotion.
On the other hand, it presents a good opportunity for Ethiopian investors to meet with US and other African investors and jointly invest in the country. It will also promote potential investment areas for interested US parties who are willing to directly invest or do so in partnership with local businesses. We expect that the event will create a situation where local investors and others will hold dialogues in regards to investment opportunities.
Furthermore the event will develop people-to-people relations and expand tourist flow into the country.
Capital: What events will be included in the forum?
Yacob: To begin with, there will be two types of forums. One is a government policy dialogue forum, which is also divided into two parts.
On the first forum, a dialogue between ministers from Sub Saharan countries will be conducted to evaluate the weaknesses and strengths of previous AGOA accomplishments and take a mutual stand on the future of the Act in discussions with their American counterparts, which will be the other part of the first forum.
The other forum, which is the main forum, is the policy dialogue forum to be held between government officials, ministers, stakeholders and other officials from Africa and the US. The second forum will include the private sector and civil society, especially the meeting that will be undertaken by African Women Entrepreneurs (AWEP).
Papers and documents from the US and other African countries will be presented at the private sector forum.
An Exhibition is also the other event that will be included on the second forum.
Capital: In regards to Ethiopia specifically, what have you planned during the Forum?
Yacob: As a country, we have prepared to promote the investment opportunities in Ethiopia and will be building the country’s image. We have arranged various panels that will focus on the government’s development strategy and will present different promotional events that shall put forward the advantages of local trade activities, investments and other economic opportunities here.
The exhibition will mainly comprise of detailed profiles of companies in the private sector to create market links with investors from the US and other African countries. It will also include displays of agricultural products like flowers, vegetables and fruit, plus manufactured textile and leather goods products. Currently, a temporary office has been set up under the Ministry of Trade that will organise the event and provide detailed information for participants on its website.
Preparations are more or less complete. Every Wednesday, we have been conducting a teleconference with representatives of the American Secretary of State in regards to the preparations.
Capital: Who have you mobilised for the Forum?
Yacob: We have mobilised a National coordination committee with six other committees under it, including the private sector and civil society forum committee.
Apart from this committee, we have formed an inter-agency committee that includes the US government, represented by the Ambassador, the African Union (AU) Trade and Investment Commissioner, the United Nations Economic Commission for Africa (ECA) Trade Policy, represented by its Director General and the Ministry of Foreign Affairs (MoFA) which can take significant decisions on major issues concerning the event.
African Ambassadors in Addis Ababa have also been working with MoFA to set up a common ground for African countries on the occasion, including the Exhibition and other parts of the event. Similarly, African Ambassadors based in Washington have organised a committee chaired by Ambassador Girma Birru, Ethiopian Ambassador in the US.
Comprehensive and detailed plans and budgets have been prepared by all six organising committees, and the government has approved 15 million birr for the event, with the first 13 million birr having been released. But the main event is advantageous for the private sector owing to that the government has also mobilised the private sector to take the advantage of sponsoring the event and they have come up with about three million birr.
Preparations are getting the final touch to carry out the Forum, including the Exhibition, at the AU headquarters. The AU has covered the expense for this, which is about six million birr for the event to take place at the hall.
Capital: What are the papers positions that will be presented from the Ethiopian side?
Yacob: The selected papers that will be presented from the Ethiopian side are on its historical trade activities, health package accomplishments (which is basic for successful change and development), investment opportunities from agriculture, services and manufacturing that include infrastructure development, and investment laws.
The potential of the manufacturing sector and market opportunities, specifically in textile sector development, will be presented at the panel from our side. Papers on the role of the agriculture sector in accelerating the transition to an industry-led economy and the Ethiopian Commodity Exchange activities that are boosting the agriculture market, all will be part of it. The Ministry of Urban Development and Construction will have a presentation on the activities of small and medium level industries which are creating huge employment in the towns and contribute to the transformation to high-level industry development.
The Ethiopian Electric Power Corporation, which has a key role in illustrating sustainable power development, especially for the development of the manufacturing sector, has also a big part in the presentation from the Ethiopian side.
We will share our experiences in applying a green economy development strategy in relation with the direction of the country’s overall development.
Capital: How are African countries taking advantage of the duty-free scheme?
Yacob: AGOA promotion may end after two years. During the past two years, AGOA events that were held in Lusaka, Zambia and Washington DC have raised the issue of extending the promotion period.
Similarly the question will also be raised during the coming event.
Preliminary studies has been drafted in collaboration with the AU and UNECA that will be evaluated by senior officials and is expected to be approved by African ministers. African countries have been using the AGOA opportunity more and more in the past four years, even though it had been around for the past 12 years. We have been using this opportunity effectively for the last few years after a long preparation period. For instance, Ethiopia’s export to the US has been growing by 80 percent in the past ten years, while the export items included under AGOA has grown by 65 percent. This shows that, at the beginning, utilization had been minimal compared to the past few years.
During the early years, most African countries were in the process of preparation to standardise and expand their export capacity to the US market. Due to that fact, we believe the American government should take this into consideration and extend the opportunity. But we also have to effectively use the rest two-year period, until 2015, to all possible extent with full capacity to boost our exports and take full advantage of this duty-free scheme.
We are developing a response strategy with UNECA after two African countries, including Ethiopia, were selected to study why African countries were unable to use the scheme properly.
We are also developing a plan to implement a response strategy that will include the formation of a regular institution that will accelerate proper utilisation of the opportunity, because the US market is not only one of the major markets in the world, it can also be of great investment potential for the continent as a whole.
Capital: The World Economic Forum was held in Addis Ababa without much involvement from the local business community last year. What do you expect this time from the Ethiopian private sector and how many representatives from private sector and others will take part?
Yacob: The private sector has a role to organise this conference and the current event is different from the World Economic Forum in terms of fee and organisation. Due to that fact, Ethiopian private sector participation will not be like it was during the World Economic Forum.
On the American side, the American company, CC, is mobilising the participants from the US and the number of registered participants from there is expected to be up to 400. Including African participants, those that are expected from abroad will be around 800.
At the private sector and civil society forums that will be organised by AWEP and the private sector, registration is free, owing to the fact that 1,500 participants are expected to attend the event.
Capital: As you indicated earlier, the AGOA promotion might end in 2015 if it is not extended. What do you expect will happen at the Forum?
Yacob: We are working not only for the extension of AGOA. We are also doing various things to improve the manufacturing sector and expand it, not only geared for the American market, but also for other markets. We are building the capacity to join other major markets in the world including the US, even if the AGOA promotion ends after two years.
We are developing industry zones by ourselves to include local and international companies in the manufacturing sector focused on the export market. We are working on leather, textile, metal engineering and agro processing to expand this market.
We are currently substantially involved in the footwear market in the US and the textile market is also showing growth. It is a good indication that our exports to the US market will increase. But we are optimistic that the promotion will continue for a few more years, but we have our work cut out for us convince American companies to invest in Ethiopia.