TRALAC - Trade Law Centre

Botswana's AGOA textile exports tumble

Saturday, 20 July 2013 Published: | STAFF WRITER

Source: Mmegi Online (Botswana)

Botswana exported textiles worth US$1.74 million (P14.9 million) under the United States' African Growth and Opportunities Act in the first three months of the year, representing a drop from US$4.1 million(P35 million) over the same period last year, official data shows.

The data, compiled by the US Department of Commerce and released recently by the Southern Africa Trade Hub, also pegs local AGOA textile exports for 2012 at US$10.4 million (P88.8 million). The figure is a 31 percent fall from the US$15 million (P128.1 million) recorded in 2011.

The first quarter and full year 2012 figures indicate that Botswana continues to fall significantly behind other African states in the total utilisation of AGOA's duty and quota free textile export provisions.

The data indicates that Lesotho continues to lead the continent with US$74.9 million (P640 million) in textile exports to the US in the first quarter of the year, followed by Kenya with US$71.4 million (P610 million) and Mauritius with US$43 million (P367.2 million).In terms of total AGOA textile exports in 2012, Botswana is ranked sixth in Africa after Lesotho, Kenya, Mauritius, Swaziland and Ethiopia.Observers said the generally lower local textile exports to the US were due to challenges local manufacturers faced last year, specifically the uncertainty and delays in the renewal of a key provision within AGOA.

 These delays were on top of the local textile sector's general malaise, which has seen AGOA exporters shrink from 13 in recent years, to just one in 2012. The drop was mainly due to the global recession and SACU policy changes, which eroded companies' export competitiveness. In addition, former AGOA exporters cited cost of compliance in terms of product quality, cost of export arrangement and ignorance of AGOA at US borders as some of their challenges. The Trade Hub's AGOA, Trade & Investment Specialist, Cos Mamhunze, said overall figures for African textile exports to the US still showed a "worrying low utilisation of AGOA preferences"."Low values recorded in 2012 compared to 2011 were partly as a result of the delays in extending the Third Country Fabric provision," he said in a commentary accompanying the latest data.

"Expiration of the provision as planned in September 2012 would have immediately required all fabric for apparel production in sub-Saharan Africa to be sourced directly from the region, an impossible scenario at present."Exporters lost business as buyers were reluctant to commit to a supplier relationship given the uncertainty surrounding the provision, which was extended to September 2015 at the eleventh hour."The country's sole AGOA textile exporter, Carapparel Botswana, shed 500 jobs last year citing the drying up of US orders as well as the expiry of a two-year government bail-out.  With the provision's renewal, the company's director, Sam Lin, told BusinessWeek that orders had picked up although capacity was likely to be an issue in 2013.

"This year will be much better than the last because buyers (in the US) understand the extension to the AGOA provision, Lin said in a recent interview. "We are getting more orders than before and the buyers are coming back to source from Africa. "This year, we are looking at recruiting between 100 and 200 more people to boost the capacity, but the problem we are having is actually getting the people. Many retail malls have sprung up and it appears people prefer working there, than in the factories."While Botswana is empowered to export 6,500 products under AGOA, textiles have benefited the most being easy to establish with a relatively low cost of labour.The sector for years has been a leading employer of young semi-skilled female citizens.

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