The New Times (Kigali)

20 June 2012

Africa: Transport Hurdles Limit Agoa Benefits

Photo: http://www.flckr.com/
Women at work in textile factory in Mauritius (file photo).

Lack of developed transportation network in the region is among the hurdles hindering landlocked countries from maximising the benefits from the African Growth and Opportunities Act (AGOA).

This was highlighted during the just concluded AGOA forum, where US and Sub-Saharan Africa governments and private sector discussed the trade opportunities and challenges among AGOA member countries.

The Minister of Trade and Industry, Francois Kanimba, led the Rwandan delegation to the meeting along with Ambassador James Kimonyo.

He called for a "stronger partnership" between the US and its trading partners in order to optimise trade.

Kanimba co-chaired a plenary section titled, "optimising Africa's transportation infrastructure to increase international trade" where he made the remarks.

"Most of the roads connected to the ports were congested which caused inefficiency at the said ports, and particularly prevented landlocked countries from taking advantage of AGOA," a statement read.

Rwanda is among the landlocked countries in the East African Community experiencing transportation bottlenecks. The meeting acknowledged the need to develop an integrated transportation network which links roads and rails to the ports.

East African countries such as Rwanda, Burundi and Uganda rely on Mombasa Port managed by Kenya Ports Authority and Dar port in Tanzania.

Due to poor infrastructure, the two giant ports have been blamed for delaying goods to their destinations. It takes 24 days for a container to travel from Mombasa to Kigali and on average it takes about 20 days for a container to go through the port to Nairobi.

AGOA is the cornerstone of U.S. economic engagement with the countries of Sub-Saharan Africa.

Under this arrangement, qualifying exports from African countries enter the US market duty and quota free.

The arrangement is more beneficial to the textile industry because of the Third-country fabric provision.

This provision allows countries to source raw material from third countries that is; countries which are not beneficiaries under AGOA.

In 2011, 40 AGOA countries exported $53.7 billion in products to the United States contributing to economic growth for African nations as well as creating new opportunities for American businesses to export U.S. goods and services.

Rwanda exported products worth USD 9,769,885 to the US under the AGOA arrangement, in the same year, according to a statement the Ministry of Trade sent to The New Times on Monday.

"AGOA is important to Rwanda in that it improves the value addition of Rwandan products as a result of access to the American market and the closer collaboration with important US partners. "The trade has been increasing especially in handcraft and pyrethrum,"

Rwanda, Tanzania, Uganda and Burundi recently reached a formal agreement to construct a mult-billion dollar railway network which will also serve South Sudan and tap into the bloc's growing trade.

The project, set to commence 2014, is expected to take three years and cost US$ 4.7 billion to complete and it will run alongside the US$3 billion Tanga-Arusha-Kampala railway line that is expected to be completed by 2015.

The AGOA meeting reviewed the idea of selling the opportunities that Sub Saharan Africa offered to U.S investors and consumers, while also acknowledging the challenges faced as well as the benefits of good quality competitive products from Africa under AGOA for U.S consumers and importers.

Participants resolved to engage the US corporations on a win-win basis in order to ensure that industrialisation benefits for US investors went along with development benefits for Africa.

It was also noted that the major challenge to trade is finance, which requires more of public private partnerships and long term commitment more than the humanitarian approach.

The session was on optimising Africa's transportation infrastructure to increase international trade.

The panel focused on national and regional transportation infrastructural development initiatives.

However, emphasis was placed on Africa's importance in the global economy, thereby necessitating AGOA's extension beyond 2015 and the Third Country Fabric provision beyond September 2012.

Participants expressed serious concerns on the delay in extending the Third Country Fabric Provision which is set to expire in September 2012.

There is, therefore, a need to intensify lobbying from all fronts in order to have the extension renewed without further delay, the participants urged.

Earlier, while opening the forum, the US Secretary of State Hillary Rodham Clinton applauded the "great success of the pivotal economic development program."

"AGOA has helped to increase trade and investment and opened new doors of opportunity.

"It's led to new jobs, the rise of new sectors and new business opportunities for people in every country represented here, as well as the United States," Mrs Clinton, said.

It was noted that over 90% of merchandise transportation is done through maritime means and there is need to address the efficiency of the ports as they affected competitiveness.

Meanwhile, after the AGOA forum, Minister Kanimba, and the EAC Secretary General Dr Richard Sezibera, were hosted at Bourbon Café in Washington DC to speak to the Diaspora community and the friends of Rwanda interested in investing in Rwanda and the East Africa region.

The platform discussed the current economic development activities in Rwanda and the East Africa region, calling on the Diaspora to be part of them.

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