Rwandan exporters look to AGOA to enhance operations

Rwandan exporters hope to bargain for a fair deal at the African Growth Opportunity Act (AGOA) forum which opened on Monday in Libreville, Gabon, even when challenges to the export sector remain. An economic window of opportunity that was enacted way back in 2000, AGOA is a key trade framework between the US and Africa under which at least 98 per cent of all imports from eligible African countries enter the US market duty-free. The ongoing three-day summit comes after US President Barack Obama extended the AGOA deal for up to 10 more years, a chance that Rwanda seeks to grab to widen its export base. Local exporters are now appealing for more reliable freight agencies and increase in airline connections to take advantage of the free doorway trade facility benefitting other giant exporters like Nigeria, Angola and South Africa. But Rosine Urujeni, the country director of Indego Africa, one of the leading companies that so far trade directly with the US, said challenges remain rampant despite the extension of AGOA mandate. “Bigger challenges rotate around shipping costs which can be solved by improving RwandAir operations to have direct flights to US or attract more airlines in Rwanda so that the cost is reduced and other facilities are increased on ground,” Urujeni, who is attending the forum, said. “There is no such a thing as free meal; the US has done its part in creating this free-trade opportunity for us, we have to do something on our side to reap big from this window of opportunities,” she said. The national carrier, RwandAir, has an eight plane fleet operating in less than 18 destinations. Rwanda can benefit from the proposed deal between US and Kenya, which is expected to see direct flights to Nairobi, a move exporters believe would reduce transportation costs. Rwanda’s exports to the US amount to 5.8 per cent of the country’s total exports, with a value share that hovers around Rwf18 billion ($25m) according to the 2013 statistics. The country’s export commodities are mainly tea, coffee, spices and vegetables. Urujeni believes the Government is yet to fully support traders at the policy level. “To reduce the cost of transport, the Government ought to allow in other freight agencies like DHL, or invest in a similar national firm,” she added. The ongoing summit, according to a statement, seeks to remove supply constraints to the US market which have been characterised by issues of quality and standards on top of low volumes. The US trade representative, Michael Froman, said the Sub-Saharan African region GDP in the next five-year period is expected to grow 30 per cent faster than that of the rest of the world if the AGOA framework is fully utilised. “In the ten-year extension period, the US and its African partners will need to implore a comprehensive partnership to scale up the trade; that journey begins by acknowledging that tariffs are no longer the biggest constraint on trade in Africa,” he said. “Making the most of AGOA will also require improvement in the infrastructure – physical and institutional – necessary for promoting investment and facilitating trade,” Froman added. Other issues to be addressed include the lack of reliable and affordable electricity, high transportation costs and weak or inefficient trade-related facilities. Between 2001 and 2014, trade volume between Africa and the US quadrupled. The 39 African countries that are eligible under AGOA exported to the US goods worth $480 billion, according to figures. AGOA reportedly created 300,000 jobs in Africa against 120,000 in the US. The 14th edition of AGOA began with a closed-door meeting of experts, and launch of an exhibition of products to be sold in the US. The forum examined terms for the new AGOA accord signed by President Obama. The initial agreement was meant to last for 15 years. “All African countries did not benefit from AGOA,” Barthelemie Ngoulakia, the chairman of the scientific committee of the Libreville forum, told journalists after the first closed-door meeting. “Today, the new law enables us to have other opportunities and African countries must share their experiences to reap maximum benefits from this law,” he said. Rwanda, through its second Economic Development and Poverty Reduction Strategy (EDPRS 2), eyes a 28 per cent exports growth rate by 2018 from the current 10.2, with a total value of exports estimated at $101.90 million. editorial@newtimes.co.rw

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Rwandan exporters look to AGOA to enhance operations