Africa: Countries Seek to Preserve Africa Growth Act Gains

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America.gov (Washington, DC)

15 July 2008
Posted to the web 16 July 2008

Charles W. Corey

African countries must be vigilant to ensure that gains made under the African Growth and Opportunity Act (AGOA) are not undone in face of record-high food and oil prices worldwide, says Daniel Neo Moroka, Botswana's minister of trade and industry.

Providing an African perspective at the July 15 ministerial session of the seventh annual African Growth and Opportunity Act Forum, Moroka said African countries have done much to attract investment under AGOA by implementing new democratic reforms, removing administrative and regulatory barriers, and increasing production capacity. All are major themes at this year's forum, whose overall theme is "Mobilizing Private Investment for Trade and Growth."

AGOA was signed into law May 18, 2000, as Title 1 of The Trade and Development Act of 2000. The act offers incentives for African countries to continue their efforts to open their economies and build free markets. Since its inception, AGOA has dramatically increased trade between the United States and Africa. In 2007, AGOA trade increased more than 13 percent to more than $80 billion annually.

While much progress is being made, Moroka said, challenges still exist. "A lot needs to be done" to enhance the investment climates in AGOA-eligible African countries, "which need to adopt appropriate macroeconomic policies to support investment and trade."

Those policies, he said, must focus on streamlining taxation, inflation, interest rates, exchange controls, wages and labor productivity.

Moroka called on African governments to ensure that both their macroeconomic and microeconomic policies complement each other. "Quite often we find that governments focus at the macro-level to the exclusion of the micro-level," he said.

"Laws relating to individual property rights, intellectual property rights and the enforcement of contracts underpinned by a functioning judicial system need particular attention," Moroka said.

Educational systems as well need to be "reformed and aligned" to meet the needs of business, he said. Africa's export stance must shift away from raw commodities to value-added products, which can create greater revenue and economic diversification.

Moroka called for greater infrastructure development across Africa to further spur regional economic development that can help African nations achieve greater economies of scale and higher levels of prosperity.

While the private sector is considered the engine of growth in many African countries, he said, that same private sector in many of those countries lacks the capacity to deliver the quality and quantity of goods demanded by the markets that have opened up as a direct result of AGOA.

Greater integration is also needed, he explained, so that intra-region and intra-Africa trade can be expanded. "Quite often, we ask for market access from developed countries, while our markets remain closed to one another and we trade as individual countries. Foreign investors and investors at-large prefer larger markets where economies of scale can be achieved," he said.

AGOA must be used to work for additional regional integration in Africa, he said.

Turning to the Doha round of international trade talks, Moroka called it "regrettable" that those talks have been stalled over agricultural production and subsidy issues.

"As developing countries," he said, "we should stay firm in our resolve to enjoy special and deferential treatment ... and insist on a level playing field, particularly in the agricultural sector.

"There is no way," he said, "that at a relative infancy stage, we can actually compete with the world where subsidies are enjoyed."

Moroka spoke following U.S. Secretary of State Condoleezza Rice's opening remarks at the ministerial.

The July 14-16 AGOA Forum -- which is being held this year in Washington -- is made up of three key forums: a civil-society component, a ministerial and a private-sector forum.

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