AGOA

Regional Integration is Key

Jun 10th, 2011 1:42 PM UTC
By Nealon DeVore

Earlier this week I stopped into the International Trade Exhibition to check in on some of the vendors and exhibitors. I was struck by one in particular—Fallsway Timbers Ltd—because of its beautiful displays of finished hardwood furniture, doors and flooring. I have to admit—I hadn’t thought much about African-made finished furniture and goods. I’ve always seen the hand-crafted kind, but Fallsway’s products were as modern-made and produced as any in the U.S. or Europe.

I chatted up Patience, who was manning the booth. She gave me a bit of background on the company, which is based in Livingstone here in Zambia. Fallsway has been profiting from a boom in tourism and construction activities during the past few years, as many of their products end up in new hotels going up here in Zambia and elsewhere. Fallsway is also able to export to Botswana and South Africa and is hoping to expand to the States by making contacts here at the AGOA Forum.

The one idea I took away was how important it will be for African countries to work towards regional integration in areas such customs and border crossings, which is a big part of this year’s AGOA Forum. I took a little video interview of Patience as she explains the challenges Fallsway’s drivers and transporters have in crossing the borders to Botswana and South Africa. It’s another reminder of why AGOA is encouraging African countries to integrate and trade more between themselves to build better economies and develop stronger markets.

Financing Africa’s Industrial Development

Jun 10th, 2011 8:54 AM UTC
By Dr. Sipho Moyo

My colleague Nealon DeVore and I are in Lusaka attending the 10th AGOA Forum. Yesterday I participated on two panel discussions: the first was a private sector session on Financing Africa Industrial Development and the second was a civil society session titled The Next Generation. Nealon has already blogged about my participation on the Next Generation Panel, so my focus in this blog is on the first panel to which I happened to be drafted just shortly before it started.

This session was oversubscribed with a lot of private sector people attending, particularly from the Small and Medium Enterprise (SME) sector. It was moderated by Justin Chinyanta, Chairman and CEO of Loita Capital Partners International in Johannesburg, a pan-African investment banking firm focused on Africa. Justin is also a former VP at Citibank’s and HSBC’s Africa regional offices. The other panel member was Lloyd Chingambo, who is CEO of Lloyds Financial and Chair of the Africa Carbon Credit Exchange. Lloyds Financial specializes in asset management, project finance, carbon finance, development of innovative investment instruments and debt restructuring.

The key issues that came out of this session were that most African SMEs have a very rudimentary understanding of business and commerce, illustrated by the failure to keep basic financial books, the tendency to run the business as a family affair, the co-mingling of company funds with family funds and the lack of proper corporate governance and oversight, among other challenges. Most questions from the audience revolved around the difficulty of sourcing startup capital and the lack of information about business incubation and advisory services. The irony, as pointed out by Lloyd, being that when people don’t feel well they seek the opinion of a doctor, when they have a legal problem they engage a lawyer but when they want to start a business, there is a misplaced perception that they can do it themselves and this is what leads to a high rate of failure.

I took a macro view to financing industrial development, in which I highlighted the key constraints as being the infrastructure gap that results in prohibitive costs of doing business and makes it difficult for African business to be competitive on a global scale. Specifically, poor roads, constant power cuts and inadequate water supply all of which have a negative impact on industrial development and hinder the ability to maximize the benefits of an initiative like AGOA. I also pointed out the important role of regional integration for economies of scale as being necessary to transform the economic structures of the continent. Also key, as I reminded the audience, is the underutilized potential of Africa’s natural resources in financing development . Hence, it is so important that citizens demand transparency with regard to the magnitude of revenues from natural resources as well as accountability in the use of such revenues.

This point led to a lot of exciting discussion from the audience about royalties being unfairly inadequate and generally secret. A former Ghanaian Minister of Commerce, Alan Kyerematen, highlighted the need for African governments to have the courage to borrow on the international bond market using the resources under the ground as collateral–which Ghana has done.

The Next Generation

Jun 9th, 2011 11:49 AM UTC
By ONE

My boss, Dr. Sipho Moyo, represented ONE earlier today on a panel here at the 2011 AGOA Forum. The panel, titled The Next Generation, looked at ways that young people could be better engaged to participate in and benefit from the opportunities presented by AGOA. The panel was moderated by Lena Zamchiya, a vice-president at SIFE International, which works to improve the business sense of university students all over the world. In addition, Modesta Mahiga, an expert in human resource development from Tanzania, and Humphrey Mulemba, Director of Corporate Strategy at United Machining Works in Zambia, joined Sipho to offer their thoughts. We also heard from several audience members, including a few student leaders from the University of Zambia.

The main idea that arose out of the back and forth conversation between the panelists and audience was that young people really have to take ownership of their situation and get involved. As Sipho noted, 70% of Africa’s population is under 35. Humphrey took it a notch further by adding that the “next generation” is in fact the current generation. In other words as Modesta later said, this continent isn’t going anywhere without youth involvement. And therein lies the challenge for upping AGOA’s potential for young people. Regardless of any interventions done by governments and outside groups, individuals have to take responsibility and hold themselves and others to account. Sipho eloquently tied ONE’s current efforts on extractives transparency, which will enable us to hold leaders to account for where funds from natural resources are spent, to enabling a wholesale change in societies that fosters mutual accountability between the people and their governments.

Other tidbits came out of the conversation I should pass on. Humphrey provided some real practical specifics that could better engage young people in business and trade. For example, there could be some trade preferences at the national government level to require a certain percentage of contracts are awarded to and services are provided by youth-owned, up-and-coming companies. Practical education is key. Each of the panelists and even the university students chimed in that oftentimes the higher level education in Zambia and other African countries is too academic and theoretical. There needs to be more practical education opportunities, linking students and new graduates to mentoring programs and apprenticeships to get them on their way into professional careers. There was even some talk on nurturing the entrepreneurial spirit amongst young people so they can start their own business and grow them.

All in all, it was a great conversation to hear some ideas on what to do to move the needle forward and create more opportunities for young people in the next generation of AGOA. The challenge, as always, is to hold our leaders to account–those in the US who will be crafting the next version of AGOA and those leaders in each African country that need to create the policies that foster opportunity for those ready to take it.

The 10th AGOA Forum in Lusaka, Zambia

Jun 8th, 2011 9:16 AM UTC
By Dr. Sipho Moyo

My colleague Nealon and I just arrived in Lusaka, Zambia this morning to attend the 10th African Growth and Opportunity Act (AGOA) Forum. This 4-day marathon of workshops and ministerial meetings marks an important milestone in the US and Africa’s commercial relationship. Enacted in 2000 to reduce tariffs on select products from qualifying sub-Saharan countries, AGOA has been responsible for an estimated $300 billion USD in export earnings to Africa and created more than 300,000 jobs. That kind of trade and job creation translates to stronger, broad based economies that are better placed to fight endemic poverty. And as the global economy recovers and competition increases for access to Africa’s markets, it’s important for the US to renew and deepen its commitment to trade and investment on the continent. Ultimately what’s good for Africa is good for America.

As we gather here in Lusaka and contemplate the tangible gains and successes of AGOA, we’re also mindful that as with any ten year old program, tremendous improvements can be made to fully exploit and realize AGOA’s potential. So look for our blog posts and Tweets (@NealonAtONE) over the next four days to learn more about how AGOA is working and what can be done to make it work better.