TRALAC - Trade Law Centre

Malawi Nets US$47m from AGOA

Thursday, 01 February 2007

Source: Nation Online (Malawi)

Malawi’s government says thorns and pebbles have been cleared on the African Growth and Opportunity Act (AGOA) path and the country’s economy reaped US$47.4 million last year from exports to the United States of America (USA) between January and October through the AGOA trade window.

Malawi seems to be stepping out from the past where the total value between Malawi and the United States fairly remained constant.

For some years, bilateral trade figures between the two countries—although skewed towards net exports from Malawi—the African state still lagged behind in utilising to the full the benefits of AGOA because of lack of capacity.

Secretary for Industry, Trade and Private Sector Development Newby Kumwembe told Business Review on Tuesday the country is slowly regaining its prowess on the export market.

“Malawi is still exporting its locally produced products through the AGOA initiative and we are doing fine in that area,” he said.

Malawi’s exports to the United States mostly consist of exclusively agricultural products followed by textiles and apparel.

Of the apparel exports, all are currently exported to the US under the AGOA initiative.

“In textile and apparel, we exported products worth US$14.9 million between January and October last year. In terms of agricultural exports which include nuts, coffee and tobacco US$32.5 million was realised during the same 10 months period,” said Kumwembe.

He also disclosed that Malawi has managed to negotiate an extension on the third country provision in the AGOA initiative which allows a country to source raw materials from another country to be used in the production of the AGOA’s beneficiary products.

A few months ago industry experts in African countries including Malawi were asking for a change on this out-sourcing policy under AGOA.

AGOA laws state that all beneficiaries of AGOA should produce textiles from locally-grown raw material for duty-free exports to United States of America from 2008. But countries want this changed in the Act because most of them produce textiles from imported raw materials.

According to Kantilal Desai, chairman of the Garments and Textile Manufacturers Association of Malawi and Knitwear Industries Limited, Malawi and other countries benefiting from AGOA cannot match with India and China hence the need for the US to soften its policy stand.

Malawi requires support from US because it is not self-reliant in garment manufacturing. Even Mozambique and Zambia pose a challenge for Malawi, as they are capable of producing most of the raw material.

But, while agreeing that Malawi lacks capacity to match strong forces such as China, Kumwembe says his ministry is working on plans to see how it can build capacity.

“Competition with countries such as China still remains a challenge. Restrictions on countries such as China exporting to America are no longer there, so we really need to build our capacity to improve quantity and quality because the American market demands high quality products,” he said.

The AGOA initiative has created 1.5 million jobs in several countries, allowing them to export goods worth US$448 million to US each year.

Malawi’s trade with the US between 2002 and 2004 netted US$46.9 million, US$59.3 million and US$64.42 million, respectively, according to data from the United States Department of Commerce.

Malawi over the years has not been able to export forest products, chemicals related, energy related, footwear, minerals and metals machinery and electronic equipment due to lack of capacity.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Malawi’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.