FNB Acacia

AGOA: Another cycle of failure

SHARE   |   Wednesday, 18 March 2020   |   By Ditiro Motlhabane
Worker in a textile industry Worker in a textile industry

In 2015, the US Government extended the AGOA facility by a further 10 years to end in the year 2025 after it had been in operation for 15 years. STAFF WRITER DITIRO MOTLHABANE argues that Botswana has recorded colossal failure in her attempt to exploit such a grand opportunity to develop local industries. 

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A gleamer of hope was brought by the speed with which government acted on advise to develop a domesticated national response strategy, to ensure that local businesses exploit and maximise benefits accruing from opportunities therein. Despite a late start, the move was commendable!

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But lo, and behold! We are at the same position we were 20 years ago when we first heard about AGOA. Yes, 20 years! After numerous efforts to lobby for support, even the business community has long lost hope of getting government to facilitate access to AGOA. They were spurned the same as before the extension. Towards the end of 2016, Validation workshops of the draft AGOA national response strategy were held in Gaborone and Francistown. The absence of the business community from these gatherings was a telling sign that there was no buy-in from critical stakeholders. Government officials were just on a merry-making tour of the country to enjoy mouth-watering imprest from the sponsors at US Embassy.

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To date Botswana has failed to establish an effective national response strategy, institutional structure and create adequate awareness on the AGOA facility and US market needs, to achieve its broad objective for the AGOA strategy. Neither has government addressed the long identified urgent need to capacitate local quality infrastructure to improve competitiveness, nor has she facilitated an investment friendly environment as recommended back then. The reluctance to support AGOA targetted industries continues at Government enclave, today.

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Consultants engaged to develop such strategy advise that Botswana should set up an office to coordinate all AGOA activities in the country. This is begs the question; What have we been doing in the last 20 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.

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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 a no brainer 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.

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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.

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On way to achieve this is by facilitating regional integration in identi fied 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

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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 opportunities. 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 exports by all stakeholders driven by a high level body, coordinated by the ministry. But implementation is a foreign language at government enclave.   e 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 the 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 and 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 of graduates roam the streets jobless.

The Textile and Clothing sector is currently given prominence in the SACU and SADC

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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 preferential margins for the countries under the SADC-EC EPA) and the duty free-quota free market access to the United States under the Africa Growth Opportunity Act (AGOA).

Government handouts – through short term Special Financial Support Programme over the

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Years – have repeatedly failed to improve competitiveness and sustainability in the textile and clothing sector because it was not performance based. Continuing the legacy of previous administrations, the current administration is pumping millions into military spending, totally neglecting an opportunity to support businesses to access the AGOA facility. In fact, the BDP government has once again chosen to increase the budget for Ipelegeng 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.

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It is instructive 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 side-lines. Botswana is not alone in this colossal 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 a eld, Ethiopia, Ghana and Kenya, among others have already developed national AGOA strategies.

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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.



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