For Rwanda to improve its performance under the African Growth Opportunity Act (AGOA), it will have to diversify its export base, an official has said.
Official figures from the Ministry of Trade and Industry indicate that in 2007, a year preceding the global financial crisis, Rwanda’s revenues resulting from trade related to AGOA stood at about $10 million (Rwf5.6 billions).
However, the figure fell significantly by 70 percent in 2008.
“There is no single recipe; rather, there are a number of actions that can be taken by a given country to improve its performance under AGOA: Diversify its export base.
AGOA is much more than apparel,” Jennifer Foltz, a political Officer at the US Embassy told Business Times.
Foltz also observed that AGOA provides duty-free entry for over 6,000 products.
However, she mentioned that from a trade statistics point of view, whereas apparel is outside of oil—the biggest single African export to the U.S. under AGOA, it follows that countries with vibrant apparel sectors perform well under the scheme.
“Supply-side challenges have certainly contributed to poor performance, including poor infrastructure, particularly roads and very inefficient/costly transport systems as well as lack of capacity at the firm-level to supply the U.S. market,” Foltz explained.
Rwanda’s major exports to the US under the AGOA scheme include agricultural products like tea, pyrethrum, minerals handcrafts and gift articles.
Trade statistics between Rwanda and the US suggest that coffee was affected the most affected by the global financial crisis as exports dropping from $2.5 million (Rwf1.4 billion) in value in 2007 to $800,000 (Rwf451.2 million) last year while ores and concentrates exports reduced from $4.61million (Rwf2.6 billion) in 2007 to $1.74 million (Rwf981.3 million) in 2008.
The export volumes also fell drastically from 1,124,829 kg to 329,195 kg in 2007 and 2008 respectively.
“Successfully exporting to the US requires three things; providing the right product (what is in demand in the market and at the proper levels of quality), at the right time (delivered within a reasonable time to meet US importer requirements) and at the right price,” Foltz advised.
According to Foltz, with the 2012 end of the third-country fabric provision approaching, investment along the critical cotton-textiles value chain is seen as essential to advancing AGOA’s impact on Africa’s development.
The provision allows apparel-eligible AGOA beneficiaries to import fabric outside of Africa.
According to the East African Business Council, within the EA Community Rwanda, Tanzania, Uganda and Burundi are still lagging behind in utilizing AGOA.
Countries have been able to trade under AGOA since 2000 and will be able to continue until the act expires in 2015.