US firms should make a bigger commitment to invest in Africa’s manufacturing sector, the second US-Sub-Saharan Trade and Economic Co-operation Forum (African Growth and Opportunities Act – AGOA) was told in Mauritius in January.

Since its implementation in 2000, AGOA has been responsible for increased trade and investment in the manufacturing sector between the US and Africa.

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Jayen Cuttaree, Mauritian minister of industry and international trade, told the forum that, while the trade provisions in AGOA had been successful at increasing African textile exports to the US, there was still some way to go in increasing investment flows. He called for more investment input from US firms in Africa’s manufacturing sector.

“Let us, for example, take the case of Lesotho, which has been a shining example of increased exports and job creation to the US as a result of the AGOA provisions,” he said. “Total employment reached 40,000 in 2002 compared with 17,000 in 1999 and exports increased by some 63% over the one-year period since 2001.

“However, the investment for this increase in production, exports and job creation came mainly from Taiwan. Mr Cuttaree said provisions for other sectors should also come under AGOA, including agribusiness, information technology, financial services and transport and logistics.

Robert Zoellick, US trade representative, responded by emphasising continued commitment to the AGOA agreement and highlighting that the US is sub-Saharan Africa’s leading foreign investor, with $16bn invested in the past two years.

He suggested that the deadline for tariff-free exports could be extended from 2005 to 2008. In 2005 a World Trade Organisation resolution will allow China and the rest of Asia access to the US, therefore flooding the market with cheap products. African textile manufacturers are understandably concerned that this will squeeze them out of the market.

The forum noted changes to the rules of origin for raw materials for textile manufacturing. In the original AGOA agreement, materials could be obtained outside the US and Africa, therefore allowing countries to purchase cheap materials from, for example, Asia. The new rules require raw materials either to come from the US or Africa.

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Mr Zoellick said: “For Africa to compete effectively in international markets it must develop vertically integrated industries that grow cotton, spin the yarn and manufacture finished products.”

A US Trade report, released at the forum, revealed that Kenyan textiles sales to the US rose from $189m in 1999 to $577m in 2001. Alec Erwin, South Africa’s secretary for trade and industry, was reported as saying that AGOA had led to the manufacturing sector in South Africa becoming increasingly advanced and competitive.

The rules-of-origin requirements have been criticised for adding costs to the textile sector in Africa (particularly as the cotton industry has largely collapsed in Uganda and Kenya) and making the continent more reliant on US imports. Other critics of AGOA say that it has not led to the diversification of the African economy as textiles only represent 5% of exports from Africa to the US, while oil and minerals, which are not in the agreement, constitute 80% of exports.

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