Rwandan beneficiaries of the African Growth Opportunity Act (AGOA), a trade preference programme between the US and select African counties, have called for easier access to US visas saying the rigorous process has kept them out of the market.
The call was made when officials from the Trade and Industry ministry and US Ambassador to Rwanda Erica Barks-Ruggles launched the renewed AGOA action plan, a year after the US government decided to renew the free trade framework for sub-Saharan African countries by 10 more years beginning 2015.
Although the number of Rwandan exporters to the US remains relatively low compared to other countries such as Nigeria, Angola, Kenya and South Africa, the traders say there is need for more technical support from the Rwandan side and mitigation of the lengthy bureaucracy in acquisition of visas on the US side.
According to Gilbert Kubwimana, the country director of Songa Designs, a company that makes Rwandan-made jewelry for sale in the US, the cost of transactions and shipping has been a hurdle beside unreliable clearance freight agencies.
“Although our target market is in North America and we try our best to improve both the volumes and quality of our products, the cost of transactions can double the price of a single item once in the US,” he said, urging the US to treat all traders fairly since those from bigger trading blocs are normally given faster access.
“The process of acquiring visas remains lengthy even if we qualify through that trade window. This doesn’t look good for companies seeking to make use of that market,” said Joselyne Bazubagira, the head of products at Kaliza Fashion and Design, another Rwandan company specialising in clothing lines.
Established in 2000, AGOA is the flagship of US trade engagement with Africa whose mandate was renewed by the US executive despite calls by Congress to terminate it in the interest of the US economy.
However, according to Francois Kanimba, the Minister for Trade and Industry, the relaunched AGOA Rwanda chapter will help traders unlock the potential of the US market although the priority has always been to first supply the local and regional markets.
“How do we link potential exporters from Rwanda to potential buyers in the US? Once we have such a linkage, a lot of things can happen. A buyer will come to your factory and tell you the product you have doesn’t suit the standards and requirements of his clients.
“Thus, we have a plan that provides for technical guidelines and assistance to design products that can respond to the needs of the American market,” he said.
While at least 98 per cent of all imports from eligible African countries enter the US market duty-free, just recently President Barack Obama decided to expand the list by 27 other products that can be traded in the US.
Under the Generalised System of Preferences (GSP) programme, approximately 5,000 products from 122 developing countries and territories, including 43 least-developed countries, are eligible for duty-free treatment when exported to the US. Nearly 1,500 of these are reserved for duty-free treatment for only least-developed beneficiary developing countries.
Kanimba further added that facilitation and intervention from both governments and the traders are already ongoing, especially on SMEs seeking to access trade-shows.
“We recently got major US buyers who came to Rwanda to talk to the apparel industry players and negotiated how they can sell their products in the US markets, and as I am speaking now, one of these buyers has concluded a deal. Now the player is in process to see how he can feed that market,” he added.
According to ambassador Barks-Ruggles, much as there is need to harmonise a number of systems to allow smooth trade between the two countries, transportation of goods remains another challenge and needs collective effort to address.
“Transport is a global industry; it’s not a US industry or African industry or any one country’s industry. It is a real challenge to get the transport cost down when you are in a landlocked country.
“The cheapest form of transport is shipping containers and if you don’t have an ocean on your border it makes it more expensive. Thus figuring out ways to bring down the price of transport is very important,” she said.
The envoy further stated that the US government had been pushing for the EAC to create free trade areas and focusing on bringing down non-tariff barriers, and the time spent at the borders to get harmonised customs papers.
Barks-Ruggles also said the US was also trying to ease visa acquisition for AGOA traders as effectively as possible.
In 2013, the AGOA exports share was calculated at 5.8 per cent of the total exports translating to Rwf18bn (about $25 million).
By late 2015, the exports had risen to $46.8 million (Rwf37 billion) mainly through commodities like tea, coffee, spices and vegetables.