Once again, AGOA eluding us?

SHARE   |   Monday, 21 November 2016   |   By Staff Writer
Once again, AGOA eluding us?

Last week two poorly attended validation workshops of the draft AGOA national response strategy were held in Gaborone and Francistown. The absence of the business community from these gatherings is a cause for concern, as it casts doubt on the confidence they have on any benefit they stand to derive from this facility. It is even more worrisome considering that we are at the same position we were some 16 years ago when we first heard about AGOA. Yes, 16 years! We can only wish that the business community has not lost hope in government's ability to facilitate access to AGOA as was the case before the facility was extended last year by a further 10 years. A gleamer of hope is brought by the speed with which government has acted on advise to develop a domesticated national response strategy, to ensure that local businesses maximise benefit accruing from there. Despite a late start, we commend government.

For Botswana to achieve its broad objective for the AGOA strategy, it should establish an effective national AGOA response strategy, institutional structure and create adequate awareness on the AGOA facility and US market needs. There is an urgent need to capacitate local quality infrastructure to improve competitiveness, as well as facilitating an investment friendly environment. Government has to move fast and dispel growing suspicion that there is reluctance to support AGOA targetted industries because those close to the current administration are not deriving any benefit from there. Consultants enaged to develop such strategy advise that Botswana should set up an office to coordinate all AGOA activities in the country. This begs the question; What have we been doing in the last 16 years? The establishment of an AGOA office, headed by a coordinator and assisted by experts in export development, investment promotion, and information dissemination is more than welcome. Yes, we need that office like in the year 2000, to ensure effective implementation of the strategy. Without any institutional structure in place the hope for local businesses to exploit opportunities availed by AGOA, will forever remain a pipe dream.

As suggested, the institutional structure for the strategy should be led by the Botswana AGOA reference group, reporting to the Economic Development and Trade Council. The strategy planning and oversight process should be firmly integrated into and anchored by the annual and multi-year public investment planning and budgeting process. It is not rocket science to know that the private sector cannot afford to access AGOA opportunities without the support and facilitation of processes and creation of an enabling environment by government for business to thrive. The overarching challenges, identified by the consultants, are inadequate awareness of AGOA, insufficient investment from the United States (US), high cost of production and transport, poor competitiveness, and compliance with US regulations. The consultants have already pointed to the absence of stakeholder consultations, which in turn leads to AGOA being known only by its custodians at the Ministry of Investment, Trade and Industry (MITI). This has to change. There is need to create awareness on existing government incentive programmes and coordinate skills development to develop relevant industry skills that are public-private sector driven. Challenges aside-which are in any case not impossible to overcome-AGOA presents a real opportunity for Botswana to diversify the economy, grow our exports, create sustainable employment and alleviate poverty among the citizenry.

We support recommendations that the country should conduct investment missions to the US and other targeted countries to attract investment, and that priority sectors should be capacitated and associations supported to increase production capacity and to improve the quality of products. On way to achieve this is by facilitating regional integration in identified sectors to address production capacity issues and to develop markets for local products. US government agencies are, and have always pledged technical assistance to governments and industries/ businesses to access AGOA opportunities, by facilitating understanding of legislative framework and tax regimes as well as reduction of production costs. It is only right that stakeholders engage these agencies to improve the ease of doing business under this window of opportunties. To motivate and inspire budding industries to come on board, we support the suggestion of identification and implementation of essential industry incentives to improve export competitiveness, and that trade facilitation tools should be implemented to alleviate time and cost of doing business.

The implementation of the AGOA response strategy requires continuous efforts by all stakeholders driven by a high level body, coordinated by the ministry. But implementation is a foreign language at government enclave. The economy continues to haemorrhage billions of pula due to failure at implementation by those responsible for mega projects. It boggles the mind why even in the face of such glaring failure, heads never roll. We can bet our last coin that recommendations for the establishment of an institutional structure within 60 days of approval of the strategy, will take forever to be realised. Just as an example, The Textile & Clothing sector Strategy 2013-16 has long been approved after this sector was identified as one of the Economic Diversification Drive (EDD) priority sectors that can contribute to economic diversification. In particular, the sub-sector “Clothing or Apparel or Garment” within the textile industry, was found to have immense potential to be upgraded into a viable and competitive manufacturing sector because this is the area within the sector’s value chain where Botswana has comparative and competitive advantage. It was expected that once fully implemented, the textile amd clothing sector strategy will result in employment contribution ranging from the current 21% to 42% over the next 3-5 years, and manufacturing export earnings increasing from current 56% (based on comparison with other manufacturing sectors excluding mining) to double over the same period due to the envisaged FDI drive. To date, that strategy is gathering dust somewhere in the offices of the same ministry (MITI), while thousands roam the streets jobless.

The Textile and Clothing sector is currently given prominence in the SACU and SADC
Industrial Policies in view of its export and employment generation potential. The Clothing sub-sector is very important for Botswana as a source of export revenue as the country’s third commodity export; a source of employment more especially for women and youth; and has favourable export markets, more especially to South Africa (because of the SACU Common External Tarrif such as the 45% duty imposed on the goods from Asia (China in particular) ); The European Union (because of the favourable preferentail margins for the countries under the SADC-EC EPA) and the duty free-quota free market access to the United States under the the Africa Growth Opportunity Act (AGOA). Government handouts-through short term Special Financial Support Programme over the years-have repeatedly failed to improve competitiveness and sustainability in the textile and clothing sector because it was not performance-based. While pumping millions into military spending, the current administration will continue to tell citizens that there is no money to support businesses to access AGOA facility. In fact, the BDP government may once again choose to increase the budget for Ipelegeng and other ridiculous pet projects like backyard gardens where people are temporarily engaged to sweep streets and engage in menial jobs to satisfy the ego of the leadership of this country while distorting poverty ratings by international agencies.

It is profound to note that only countries that have developed a clear strategy on how to explore abundant opportunities are reaping immense benefits from the facility, while others watch from the sidelines. Botswana is not alone in this clossal failure. Many other African countries  are at various stages of developing this important strategic document. In the Southern Africa Development Community (SADC) region, only Lesotho, Madagascar and Malawi and far afield, Ethiopia, Ghana and Kenya, among others have already developed national AGOA strategies. When all is said and done our biggest fear is that once again the National AGOA Response Strategy will, after approval, gather dust at government enclave until 2025. The biggest problem at government enclave in all sectors is implementation implementation implementation! Even as it looks good on paper, the lukewarm response from the private sector-who are supposed to lead in tapping into this facility-is a telling sign that we are entering another cycle of failure.