AGOA TRADING OPPORTUNITIES FOR WEST AFRICAN GRASSROOTS BUSINESSES
USAID / West Africa Trade Hub (WATH) Event at Pangea
August 2, 2006
Demba Ba, Sector Manager, AFTPS
Africa Region, the World Bank Group
- Talking Points -
1 - AGOA provides duty free access for thousands eligible products from thirty seven (37) countries until 2015. All West African countries are eligible to AGOA benefits except Mauritania, Liberia, Ivory Coast and Togo.
2 - AGOA countries’ exports[1] to the USA are largely dominated by petroleum products (92% of exports in 2005) from big enterprises. Outside the petroleum sector, AGOA opportunities are far from being tapped (example: the second largest export sector, textile and apparels exports represent only 3% of total exports in 2005, equivalent to US$1.4 billion. These exports are mainly from medium and large enterprises).
3 - Data on exports to the U.S. by grassroots businesses are not readily available, but there is reason to believe that their share in total exports is marginal.
4 - For grassroots businesses, subject to fulfillment of U.S requirements (phytosanitary, sanitary, quality, product content, etc), trading opportunities exists in:
Ø fishery products (Mauritania, Senegal, Gambia);
Ø agricultural products (fresh fruit and vegetables from Senegal[2], the Gambia[3] and Ghana[4]; mangoes from Mali, shea nut/butter[5] from Burkina Faso; gum Arabic from Chad; cocoa butter from the Gambia; cut flowers from Ghana);
Ø handmade and traditional/ethnic fabrics (Bogolon from Mali; Kente from Ghana);
Ø eligible folklore articles (Mali, Benin, Burkina, Senegal)
5 - Unfortunately, small African businesses face several challenges that hampered their ability to exploit the trading opportunities:
Ø Weak infrastructure platform (cost and access to transport, electricity, water, telecommunications, cold storage facility, etc);
Ø Lack of capacity to meet AGOA quality, environmental and other requirements (lack of access to finance and technology);
Ø Lack of business networks with US market mainly due to language barriers / weak distribution and marketing links
6 - Direct access to U.S. markets may be difficult for grassroots businesses but possibilities for linkages/partnerships with bigger, more experienced and connected local enterprises (with access to - or potential access to - the U.S) should be explored and developed.
[1] Total AGOA exports are estimated at US$38 billion in 2005 (Source: U.S. Department of Commerce)
[2] Beans, tomatoes, papaya, melons, mangoes, and asparagus.
[3] Mangoes, bananas, tomatoes, papayas, onions, cabbages.
[4] Pineapples, papayas, mangoes, etc
[5] Shea butter is used by the cosmetics and food industries.