Uganda needs robust Agoa strategy - analysts

Workers at Fine Spinners Uganda, formerly Agoa factory, in Bugolobi, Kampala. The Agoa scheme has been extended for another 10 years. FILE Photo

What you need to know:

Extended. The Agoa scheme will run for another 10 years

Kampala.

For Uganda to benefit from the United States market, it must have a strategy to follow or else remain a spectator watching those countries that are organised seal lucrative deals, policy makers, trade analysts and civil society have said.

The concern comes after the extension of Africa Growth and Opportunity Act (Agoa), for a further 10 years starting this October.

Agoa is a preferential market access granted by the United States (US) to African countries. And as such, the US provides duty free (no tax) and quota free (unlimited) access for more than 6,400 products from eligible countries in Africa, among them Uganda.

Some of the products include textiles, fruits, crafts and primary commodities such as coffee, minerals and petroleum.
Among those calling for the development of a strategy so as to take full advantage of Agoa, is the chairman of National Planning Authority, Mr Kisamba Mugerwa.

According to him, it is time Uganda got a strategy before it ends up playing another cameo role as it has been in the last 15 years yet it has the potential to take up a leading role in the scheme.

“We need an Agoa strategy. It will ensure that things like standards, quality and supply market are met,” Mr Mugerwa told participants attending the National Stakeholder Consultative meeting on the Agoa Extension and Enhancement Act of 2015, in Kampala last week.

He added: “Supplying just one US supermarket is not a joke. That is why I will support an Agoa strategy because if we can meet the US standards, then we can export anywhere else.”
Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) country director Jane Nalunga was of the view that the Agoa strategy, if developed, should encompassed the national trade and investment policy, and in alignment with the country’s long term development vision—Vision 2040.

She warned against focusing just on the Agoa deal, saying the 10 years extension is too short and the planning should be beyond the deal.

The meeting organised by SEATINI Uganda also focused not only harnessing the opportunities involved (in Agoa deal) but also how to mitigate the challenges therein.

In his remarks, the chief executive officer SEATINI Uganda, Mr Nathan Irumba, warned that market access should not be confused with market penetration as the former is much harder to achieve especially for a country like Uganda where the cost of production is much higher.

According to him, Uganda must develop its competitive advantage, before thinking of supplying external markets.
In his presentation, Mr Emmanuel Atwine, the commercial officer ministry of Trade, revealed that Agoa strategy consultations are due to begin.

Mr Martin Mutu, a researcher and an international trade analyst, said Uganda’s performance has been least impressive in East Africa.

However, Agoa administrator Benson Byaruhanga said the scheme is doing well save for supply and quality related issues, which will be sorted out.

UGANDA - AGOA PERFORMANCE

Total earnings. Uganda made total earnings from exports to the US worth $25.8m (about Shs94b) in 2005, down from $34.8m (about Shs127b) in 2003.

Underperformance. In 2013, Uganda exported $56,000 (Shs140m) in Agoa products to the US - largely apparel and flowers - down from a peak of more than $4m (about Shs7b) of Agoa exports in 2004.

Tri-star performance. Tri-star, the face of Agoa underperformed as it exported goods worth $300,000 (Shs1b) in 2002, $2.8m (Shs10b) in 2003, $3.8m (Shs13b) in 2004, $4.8m (Shs17b) in 2005, and $0.6m (about Shsh2b) in 2006, making losses of Shs7b ($3.5m) in its first two years of operations alone.

Performance in EAC. From 2000, Uganda’s exports to the US were worth $29m (Shs105b). The figures increased, reaching $57m (Shs208b) in 2010 and declining to as low as S$34m (Shsh124b) in 2012.

Kenya registered $389m (Shs1.4 trillion) in exports to the US in 2012, up from $110m (Shs401b) in 2000.
Tanzania registered an increase in exports to the US of up to $198m (Shs722b) in 2011 from $32m (Shs117b) in 2000.

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