Business News of Tuesday, 14 July 2015

Source: Graphic.com.gh

AGOA renewed for another 10 years

The United States (US) government, through its congress, has agreed to renew the African Growth Opportunity Act (AGOA) for another 10 years.

The new agreement has, however, been amended to allow the US to withdraw, suspend or limit benefits if designated AGOA countries do not comply with its eligibility criteria.

This was disclosed by the Director for Multilateral, Regional and Bilateral Trade at the Ministry of Trade and Industry, Mr Anthony Nyame-Baafi, in an interview with the GRAPHIC BUSINESS on June 24.

Mr Nyame-Baafi said the ministry would introduce measures to ensure that the country reaped the full benefits of the agreement.

He said the government would be reviewing the previous AGOA strategy to ensure that companies and industries were better off in 10 years time even if the agreement was not renewed again.

He mentioned that it would take lots of support measures to be implemented under the new National Export Strategy (NES), the Industrial Support Program (ISP) and the second Private Sector Development Strategy (PSDSII).

“The underlying problem was the lack of ability to meet the demand. The companies were not able to meet the huge demand of the goods in the US market so we will look at enhancing their capacities,” he said.

“The orders are normally in large quantities from the US markets so before they give you an order, they enquire if you will be able to meet the demand regularly,” he added.

On the other hand, some analysts have argued that for Ghana to take full advantage of AGOA, it has to focus on a few carefully selected products and rapidly build its capacity to effectively produce, process and export such products.

They believe Ghana can also take advantage of the capability development programmes that will be promoted by the various US agencies.

AGOA is an initiative of the US government to provide market access to eligible sub-Saharan African countries to enter the US market.

It provides trade preferences for quota and duty-free entry into the United
States for certain goods, expanding the benefits under the Generalised System of Preferences (GSP) programme.

AGOA has helped to increase trade between Ghana and US but Mr Nyame Baafi said the country still failed to make maximum use of the agreement.

US imports from AGOA countries have grown from US$8.2 billion in 2001 to US$26.8 billion in 2013, a threefold increase, with non-oil AGOA trade increasing from US$1.4 billion to almost US$5 billion under the same period.

Also, US Foreign Direct Investment (FDI) stock in sub-Saharan Africa has also increased from approximately US$9 billion to US$35 billion, and according to the African Coalition on Trade, AGOA-related investment has resulted in the creation of some 300,000 jobs in sub-Saharan Africa and almost 120,000 jobs in the United States.