Origin Africa, the Trade Hub aims to change the perception of Africa. The Trade Hub recently conducted a seminar called ‘The African Growth and Opportunity Act (AGOA) and Doing Business with Africa – Sourcing from (and Selling to) African Apparel Exporters’ at the recently concluded Interstoff Asia Essential event in Hong Kong. The seminar explored the incentives available to Asia-based companies for supplying fabrics and accessories to African apparel companies under AGOA’s third-country fabric provision. This allows, African apparel manufacturers to import and use fabrics from outside in garments production and still benefit from AGOA’s duty-free treatment for shipments to the US.
An initiative to boost trade, change image
Origin Africa was incepted with the aim of changing the perception of Africa. “We try to help companies in Africa to sell primarily to the Americas. We conduct trade shows in the US that highlight the real situation in Africa and invite buyers to Africa. Africa is not just about basic products. It’s about creative fashion products and we encourage buyers to look at us as a sourcing destination,” says Finn Holm-Olsen, AGOA Trade Advisor, Origin Africa.
Revealing details about Origin Africa, J C Mazingue, Apparel Trade Advisor explains, “We are from Nairobi and are with a group called East Africa Trade, sponsored and funded by the US. We help companies in Africa sell and export primarily to the US. The majority of trade is in garments. We have a campaign called ‘Origin Africa’ and wish to put Africa on the map as a sourcing destination with the US buying community as our main target. In short, we want to change perceptions about doing business in Africa.”
The majority of items traded under AGOA are garments. AGOA also supplies fabrics, trims and accessories to factories in Africa that sell apparels to the US. African factories suffer a lack of vertical integration. “AGOA covers trade preferences. The act was signed in 2000 and allows duty free entry into the US for any good produced in Africa. It extended the previous Generalized System of Preferences program, which allowed 4,500 products to enter the US duty free. It brought apparel into the duty free regime. The AGOA program is in effect till 2015. It allows apparel headed for the US from Africa to contain fabric made anywhere in the world. In east Africa, Kenya, Mauritius and Ethiopia are powerhouses in textiles and apparels. US companies are looking to source from Africa and are setting up offices. We are confident of the long term extension of AGOA,” Mazingue adds.
The Trade Hub working continuously to improve African cotton and textile including production, supplies of textiles and accessories. Elaborating further Olsen says, “AGOA aims to improve economies in Africa. The objective is to increase the level of investment in Africa so that we have a better trading partner.”
However, the continent faces numerous challenges. For example, there are four different political entities: Economic Community of West African States (ECOWAS), Southern African Development Community (SADC), East Africa Community (EAC), Common Market for East and South Africa (COMESA). Each of these has their own policies and duties. Moreover road networks need to improve and regional trade needs to pick up.
Olsen points out that the buying power of South Africa is higher compared to others. “Five of the 10 fastest growing economies are in Africa and they include Ethiopia, Angola and Nigeria. The continent will soon be of a billion people, probably the second biggest market in terms of population globally. To cater to this vast population, FDI is needed.” He further adds, “Countries like India, China, and Turkey are interested in investing. China is a strong co-investor as it has taken lead in logistics and road networks, whereas India is interested in investing in manufacturing, the US is investing in energy and power plants.”
