Charles Brewer, the managing director of DHL Express for Sub Saharan Africa says that DHL has seen significant volume growth in the Sub Saharan Africa region, in terms of trade with the US since the introduction of the African Growth and Opportunity Act (AGOA) 14 years ago.
"Trade lanes in Africa have increased significantly as a result of relieved trade barriers, which have had a positive impact on many local businesses," Brewer said in a note, adding a key driver of this growth has been the AGOA, which has stimulated trade and investment between Africa and the United States.
He points to figures by AGOA, which indicate that the US imported $8.468 million worth of goods from the Southern Africa Development Community (SADC) region in 2000 compared to a higher $19.869 million in 2012.
Figures released by the U.S. Department of Commerce - International Trade Administration also indicate that in 2013, US imports from Sub Saharan, under AGOA, totaled $39.3 billion. The top three trade lanes to the US from the Sub Saharan Africa region originated from Nigeria, Angola and South Africa, who accounted for $11.72, $8.74 and $8.48 billion respectively.
Brewer explains that the Act offers tangible incentives to approximately 40 Sub Saharan African beneficiary countries, such as duty and quota free access to the US market for certain product lines. "AGOA has promoted the integration of Sub Saharan Africa into the global economy," Brewer said.
He adds that since the introduction of AGOA, DHL Africa has seen an increase in primary trading sectors like manufacturing, apparel and footwear - all directly supported by AGOA. In addition, they have also witnessed an increase in secondary sectors that are dependent on agriculture, petroleum and natural gases.
Due to expire in 2015, it is the decision of the US Congress on whether to extend or amend the AGOA agreement. Brewer says that Sub Saharan Africa's growth is still dependent on trade facilitation and enhancing both intra-regional trade and global trade through AGOA and other avenues is crucial.
DHL Ugandan boss tips SMEs:
Increased access to modern transportation services and increased internet penetration in the region offers fantastic global trade opportunities for Ugandan businesses especially small and medium enterprises, according to Asteway Desta, the country manager for DHL Express Uganda.
With thorough research and a well-defined strategy, coupled with trusted partners, Desta says, SMEs can successfully expand into new markets, compete with larger companies and thrive.
The opportunities are enormous. The International Monetary Fund (IMF) says economic growth in Sub-Saharan Africa in 2014 is expected to be slightly higher than that in 2013, at around 6%. This growth, coupled with the more than one billion consumers on the continent who spend over $600 billion annually, as well as having the fastest growing middle class in the world, provides Africa's SMEs with boundless opportunities.
Daniel Mukisa and Jalia Mukisa, the proprietors of African Style Art are a good example. The company which began trading in 2010, specializing in handmade jewelry has grown up to the extent of exporting their exquisite products to the USA through DHL Express, the proprietors said without revealing their financial performance figures. But they said, initially they were exporting 30 to 50kgs but currently they do over 300kgs a month. "We are grateful to DHL for being our business partner, recognizing our potential and encouraging us to grow as a business," Mukisa said.
Analysts say one of the biggest issues hindering SME growth is the lack of exposure to a global platform because they are too busy competing within a small, overcrowded local market. DHL officials say they have a huge footprint within the region as well as outside thus offering endless opportunities to grow business of any size.
Desta said SMEs need to know which markets to target, how to market their products, how to identify customers, how to get paid if they are to grow.
DHL transports goods for 25,000 SMEs across Africa.