Agoa 'has yet to benefit the private sector'

By Zephania Ubwani, Arusha

The private sector in East Africa is yet to fully benefit from trade with the US under the Africa Growth Opportunities Act (Agoa), almost ten years since it was endorsed.

The East African Business Council (EABC) executive director, Mr Charles Mbogori, said EA businesses have traditionally focussed on Europe and Asian markets"and are still not well informed of the US market, its nature and business environment."

Speaking at the just ended East African Community Preparatory Meeting for the 8th Sub-Saharan Agoa Forum in Nairobi later this year, he said the situation is further worsened by the distance between US and EAC apart from the high cost of doing business in the region.

"The East African region has some of the highest energy, and transport costs in the world�This makes it difficult for firms in East Africa to compete with those in Asia and
Latin America," he said.

The preparatory meeting, which took place in Kigali, Rwanda, is a precursor to the 8th Agoa Forum scheduled for between August 4 and 6, 2009 in Nairobi, Kenya.

Information on trade under Agoa in Sub-Saharan Africa shows that Mauritius, Botswana, Swaziland, Namibia, Nigeria and Kenya are just a few of the countries that have utilized the market better while Tanzania, Uganda, Rwanda and Burundi have performed poorly in comparison.

Mr Mbogori suggested that for East Africa to leverage itself as a region in the US, companies should stop competing against each other. They should instead start complementing each other�s efforts, especially in the area of specialisation and division of labour, he said, suggesting:

"Each country should concentrate on the area that gives them the most comparative advantage and regional competitive advantage. Industries that produce in smaller quantities can be merged into regional industries that can meet the demands of big external market."

He cited the East African Breweries that has been able to merge country subsidiaries to create a company that can meet the growing demand in the region.

"Establishing collaborative partnerships with competitors, supporting industries or producers of complementary goods increases capital, market share, spreads the risk and encourages sustainability of a larger market," he said.

He said activities and sectors such as development and improvement of ports and other infrastructure are better handled at regional level and should be developed at the regional level rather than in a specific country.

"The primary objective of deeper trade integration should therefore be improving competitiveness in the EAC region as a useful stepping-stone on the way to greater integration in the world economy," he said.

Mr Mbogori further said that Aid for Trade should be implemented as quickly as possible so that EAC countries improve their productive capacity and expand exports to the US market while the Agoa preferences last.

"The EAC member states cannot take full advantage of the trade opportunities created by the Agoa unless their productive capacities are improved and diversified
so that they are capable of producing goods and services competitively and addressing the needs of their external markets," he said, adding:

"Elimination of supply-side constraints- and the adjustment costs need to be financed."

EABC is an apex body of business associations in Kenya, Uganda, Tanzania, Rwanda and Burundi that aims to promote the private sector's regional and
global competitiveness in trade and investment.

The Citizen, Tanzania
http://thecitizen.co.tz/newe.php?id=13418