MASERU — Thirteen sub-Saharan countries last week appealed to the United States to make urgent policy changes that would help protect and sustain their economies.
The call was made at a two-day Africa Growth and Opportunity Act (AGOA) forum held in Nairobi, Kenya.
AGOA is a preferential trade agreement signed between the US and 13 eligible African countries to continue their efforts to open their economies and build free markets.
The arrangement expires in September 2015.
Under the agreement, African countries can export textile and apparel goods to the US duty-free.
The acting chief executive officer of the Lesotho National Development Corporation (LNDC), Motebang Mokoaleli, said African countries want the US to support skills and technology transfer in the production of goods with direct relevance to American market.
Mokoaleli said it was important for the US to adopt policies that benefit African countries.
The LNDC boss said African countries want the US to relax trade conditions which hinder AGOA-eligible countries from competing effectively to boost investments and job creation in their countries.
Mokoaleli said the African states also proposed that the Multi Fibre Arrangement (MFA) which expired in 2004 be allowed to end together with AGOA in 2015. The termination of the MFA opened up competition as powerful countries competed with small nations in world markets.
“The third country Multi Fibre Arrangement which allowed least developed countries like Lesotho to source fabric anywhere in the world competitively, expired in 2004, so we proposed that the agreement end together with AGOA in 2015,” Mokoaleli said.
“The expiry of MFA means Lesotho now has to compete with countries like Pakistan and Bangladesh, and this puts our industries in a less competitive position against foreign competition.”
Mokoaleli said African states also proposed that the US government make AGOA an investment tool.
“Through performance evaluation, there was a realisation that trade with the US since the inception of AGOA has increased but the countries are not attracting investments from the US.
“So there is need to make AGOA permanent, and it should be supported by an incentive structure from the United States,” Mokoaleli said.
Mokoaleli said the forum had asked the US for help to integrate regional economies under AGOA.
He said the accreditation by US buyers of some input producers within countries, through policy advocacy, will make the investors benefit from economies of scale.
He said such an action will also save time because logistical frameworks will be easier for local manufacturers.
He said this will further increase opportunities offered under AGOA through intra-trade.
“We have made a proposal for assistance from the US government to relax their rules to help us gain access in respect to other products so as to help countries to diversify their exports,” he said.
“Their standards are very high, so relaxing their standards increase our product base diversification.
“Lastly there was a proposal to make an institutional arrangement to monitor and implement these policies to speed up our major interests.”
Mokoaleli said with regard to the current global recession it was agreed at the forum that the US has to speed up its financial reforms to deal with current challenges.
Mokoaleli said the LNDC had put in place strategies to help distressed local companies.
He said the LNDC will set up an equity fund which will see the parastatal buying equity in distressed firms.
He also said the LNDC will help firms seek capital through the assistance from the government.
“We assist local investors with entrepreneurial ideas, and build these concepts into profiles depending on the need for such individuals and sell their ideas to international investors,” he said.
Lesotho has a small industry involved in the manufacturing of shoes, electronic products and assembling of electrical gargets.
The government says it is planning to carry out feasibility studies on the country’s capacity to venture into the agro industry and the bottling of water on a large scale.
He said while Africa was endowed with huge natural resources it continues to wallow in poverty because it cannot control prices of its agricultural products on the market.
Lesotho is the biggest beneficiary of the AGOA agreement with 91 percent of its exports destined to the US.
Its textile sector is the biggest employer with at least 44 000 workers.