11th Session of the African Growth and Opportunity Act (AGOA) Forum

I attended the AGOA Forum last week in Washington, DC, to which I attended primarily out of curiosity and without any particular expectation or affiliation.

I mention the latter because “going down to Washington” in the context of attending a conference specific to a piece of legislation means being surrounded by lawmakers, lobbyists, and a substantial amount of less visible players whom are trying to make sense of the benefits and impact of the legislation.

At the forefront of the Forum was a focus on two (2) exigent issues.

1)  An extension of the 3rd Party Country Fabric Provision, and

2)  An extension of the AGOA itself which is set to expire in 2015

 AGOA usage is premised on a product being of either African or American origin.  If an article derives from either of these origins, then it is eligible for duty-free treatment under the AGOA.

The 3rd Party Provision is an exemption to this rule whereby countries recognized as a “Least Developed Country” can make products which contain components that neither derive from the US nor Africa, but are instead from other “third party” countries.

The ability to continue using Third Party components is set to expire in about 3 months and many believe the extension is necessary.

The AGOA itself expires in 2015.  Many proponents believe an extension must be implemented now.  They are right.

Or, business needs to know now that it will not be. 

What is needed now is an answer one way or the other.

Any businesswoman attempting to make reasonable financial projections cannot reasonably do so with this uncertainty of an AGOA Extension.  It’s risk enough to consider setting up in an emerging economy but to try and do so in a setting where your basic cost of doing business cannot be calculated due to shifts in landed duty costs of nearly 20%, if we take the case of the ubiquitous cotton t-shirt as an example, is nothing short of a waste of time.

Something business owners already have little of - time that is.

If Congress thinks AGOA is a mere “handout” type of reformative development tool that is a waste of taxpayer dollars then now is the time to inform the public that it will not be continued so that the private sector can made realistic business projections.

Growing an economy in the face of government caused uncertainty during a time of recession is counterproductive.  This is precisely what Congress is doing in its failure to vote one way or the other to extend the AGOA.

Make a decision so that those of us who want to do business in Africa can do so in a realistic commercial environment.

Questions/comments?  Post below or email me at clark.deanna@gmail.com.