originally published in The East African, Kenya
Despite progress in Africa Growth and Opportunity Act revenue receipts, traders in Rwanda say the global financial crisis could lead to a slump in exports. They are calling for urgent redress during this week’s Agoa meeting in Nairobi.
Various traders exporting to the US under Agoa who talked to The EastAfrican said US officials should revise certain conditions so that local goods can penetrate the US market deeper.
Statistics from the Office of the United States Representative indicate that the total trade between the US and Rwanda was valued at $34.2 million in 2008, a 19 per cent increase over 2007.
During the same period, Rwanda’s exports to the US, which were valued at $13.7 million, increased by eight per cent.
Neighbouring Burundi’s exports for 2008 totalled $47 million, ahead of only a scattering of South Pacific islands.
Nearly half of Burundi’s exports go to Europe; almost none to America.
The economy’s main attractions — coffee, tea and sugar — define the simplicity of industry here.
However, Monique Nsanzabaganwa, Commerce, Trade and Industry Minister, said the country experienced a slump in exports to the US last year.
The decline was attributed to the global financial crisis, she said, and to failure to measure up to Agoa’s strict quality standards and regulations.
Some traders say that because of these problems, they have been unable to satisfy the demand consistently.
All Rwandan exports entered the US duty and quota free during this period under US preference programmes like Agoa and the Generalised System of Preferences. Rwanda joined Agoa in 2000.
Agoa — set up to promote economic development in 37 African countries — has now expanded duty-free access to more than 6,400 African products.
“We want to first focus on how to increase trade under Agoa and exports to the US. Second, we want to see how we can increase the flow of investments between Rwanda and the US,” Ms Nsanzabaganwa said.
She added that there were still too few Rwandan enterprises exporting to the US despite a relatively stable market there.
By 2005, only handicraft and basket weaving companies in Rwanda — including Modis International, Gahaya Links and Avega Agahozo — were benefiting from exports to the US.
They were joined by Gallerie Beaux Arts, Sopyrwa (importers of Pyrethrum) and L’Usine Textile du Rwanda Utexrwa (importers of textile products). All these are still exporting to the US under Agoa.
In Rwanda, Gahaya Links is one of the biggest beneficiaries of Agoa. More than 35,000 of its “peace baskets” and woven trays have been sold at Macy’s.
The trays are created by women affiliated to Gahaya Links, the majority of whom are widows of the 1994 genocide.
Macy’s is a chain of mid-to-high range American department stores.
Its selection of merchandise can vary significantly from location to location, resulting in exclusive availability of certain brands in only higher-end stores.
Last week, the US-based coffee retailing giant Starbucks, announced that its stores will sell Rwandan-made textile products.
Raj Rajendran the managing director of Utexrwa said Fair Winds Trading, an artisan promotion company, will supply customised cotton bags and other textile products to Starbucks.
Statistics show that Utexrwa earned $0.5 million (Rwf284.2 million) in revenue during the first half of this year, compared with $0.4 million (Rwf227.3 million) registered the whole of last year, from Agoa exports.
However, one of the products that has been hit by the global financial crisis is pyrethrum.
Information from Minicom shows that export revenues fell from $3 million in 2007 to $382,000 in 2008.
This week’s Agoa meeting in Nairobi is, therefore, set to address the challenges faced by local enterprises that export to the US.
The challenges Rwandan traders are expected to table include the high cost of market entry for some products, low product awareness and lack of direct access to markets.
Burundi joined the Act in 2006. In its first year under the deal, Burundi failed to export anything to the United States. But as the civil war has quieted down, trade has risen to almost $10 million a year.
The Act was signed first in 2000 under then US president Bill Clinton to foster trade with Africa, and was extended last year to 2015.
It is yet another policy that highlights Africa’s subservient status in the global economic pecking order.
Burundi is a barely peeking into the global community.
It is a landlocked country, with its only large water source connecting it to other landlocked countries.
Its exports under Agoa were valued at just $2.3 million. As a destination for US goods, the amount traded is almost twice as much, mostly electronics and transport equipment.
These include radios and motorcycles. These are prized items.
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