In Agoa, traders chase elusive American dollar


Daily Nation (Kenya)
By Justus Ondari
August 10, 2009

Among the stands at the 8th Agoa forum was one with women dealing in African handcrafts under the Federation of Women Entrepreneurs. The Federation, which brings together associations like the National Association of Women Exporters (NAWE) and the Marginalised Women in Beadwork Association, feels it is time its members went after the US market.

“We have been exporting our products to Europe and other African countries,” said Ms Mary Engelmann, the NAWE chairperson.

“Why not America?” With woodcrafts accounting for a mere 0.52 per cent of Kenya’s exports to the US in 2008 and earning Sh107.9 million out of the total Sh20.6 billion, Ms Engelmann’s sentiment sums up local the exporters dilemma under the African Growth and Opportunity Act, an initiative aimed at giving selected African countries preferential access to US markets.

Innovation and quality

Yet a decade later, Kenyan exporters account for only 0.02 per cent of the total US market. Nothing offers insight better than the Sanabora Design and House Ltd’s stand, just a few metres from the women’s stand, showcasing designed leather products that they have been exporting to the US in the last three years.

“Exports must be competitive in terms of innovation, quality, price, quantity and delivery time. Most Kenyan entrepreneurs fail on this, especially when it comes to the US market,” says Ms Beatrice Mwasi, Sanabora’s managing director and a product development expert on international trade.

Ms Mwasi says Kenyan businesses must respond to market access barriers specific to their product lines to benefit from Agoa. “Our entrepreneurs lack awareness on what is expected of them in terms of product range and quality,” adds Ms Gloria Ndekei, who is also the national programme coordinator, ILO-Irish Partnership Programme WEDGE, in Kenya.

Agoa was expected to encourage new investments, trade and job creation in Africa by promoting sub-Saharan Africa’s integration into the multilateral trading system. Ms Ndekei, whose programme trains women entrepreneurs on improving the quality of their products and markets them internationally, says the government could help unleash their potential.

“The government of Rwanda, right from President Kagame, has gone out of its way to assist its businesspeople, including financing,” she says, citing Gahaya Links owner Janet Nkubana, one of Rwanda’s internationally acclaimed entrepreneurs.

Kenya has identified a few products — actually, less than 20 against over 6,000 eligible products. Most are exported raw or semi-processed and are poorly branded. “It is true we have been working hard. But the best message we are passing on to Kenyans is that it is time we start working smart by adding value to our products and branding them properly,” Trade Permanent Secretary Dr Cyrus Njiru said.

President Kibaki, who opened the meeting, proposed prepared vegetables, cut flowers, fruits, leather products and prepared seafood, among others, to be included in the Agoa exports basket. Apparel and clothing accounted for 78.25 per cent of Kenya’s exports to the US in 2008 with tea and coffee taking 14.76 per cent.

When the 2.02 per cent of vegetables and fruits is included, the volume of the three product classes — apparel and clothing, tea and coffee and vegetables and fruits — accounted for 95.03 per cent.

Mr Peter Kegode, a Nairobi-based agribusiness and international trade specialist, says the lone-ranger approach by African countries is harming their American cause. “Lack of a regional and continent-wide strategy to access the Agoa market by Comesa, EAC, SADC and ECOWAS has contributed to lack of capacity to harness logistical synergy from Agoa value chains,” Mr Kegode said.

He says the few businesses that have accessed the US market have been unable to meet demand, leaving oil-rich African countries, particularly Angola, Nigeria, Gabon and Congo, to take over 95 per cent of the of imports into the US under Agoa.

The coordinator of the Kenya Civil Society Alliance at the forum, Mr Peter Aoga, says Agoa would have a greater impact if more agricultural businesses accessed the US market. “If only the African countries solve the riddle that is preventing farmers, especially the small-scale ones, from accessing the export market, we could be talking differently about Agoa,” said Mr Aoga, who is also the executive director of Econews Africa, a regional non-governmental organisation.

This is critical for Kenya where agriculture contributes over a quarter of GDP and more than 60 per cent of the population relies on agriculture.

Trade experts say governments should assist entrepreneurs to build capacity to meet the market requirements, especially sanitary and phytosanitary conditions. “Many businesses in Africa have failed to gain access to the US and European markets due to non-conformance to stringent regulations and market requirements in terms of safety, health, quality, environment and social issues,” says Ms Mwasi.

Tough conditions

A message that was echoed by 40 Agoa-eligible Sun-Saharan African countries in a communiqué released at the closing ceremony of the Nairobi forum on Thursday.

“We urge the US to assist us in the enhancement and strengthening of institutional capacity to meet its sanitary and phytosanitary measures through training of our national competencies,” said Mr Amos Kimunya, Kenya’s Trade minister and chairman of ministers of trade of the Agoa-eligible African countries.

Through its international aid agency, USAID, the US has been assisting African entrepreneurs through its regional hubs in Accra, Botswana and Nairobi where it has posted technical advisers.

Some businesses have already benefited. For instance, the East and Central Africa Trade Hub sponsored Chandu EPZ Ltd, a Kenyan textile firm to attend a trade show in US, during which it secured orders worth Sh85.8 million ($1.1 million) of knit pants for JC Penney, one of America’s leading retailers.

At the end of the forum, opened by US Secretary of State Hillary Clinton, Kenyans appeared to have learnt one or tow things about Agoa. “Apart from interacting and getting contacts of potential clients from Africa and the US, we have gained tips on where we go wrong and how to correct the situation,” said Ms Engelmann, of the National Association of Women Exporters.

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