Malawi’s contribution to the African Growth and Opportunity Act (Agoa) in the past two years has remained static at 0.15 percent global share in the trade act, which has 164 members.
According to the 2019 Trade Policy Agenda and 2018 Annual Report of the President of the United States on the Trade Agreements Programme Office, this is also the trade act’s minimum contribution.
In monetary terms, during the period under review, the country’ contribution was worth $29 192 (about K21 million) both in 2017 and 2018 respectively.
Neighbours South Africa (0.524 percent), Tanzania (0.49 percent), Zambia (0.45 percent) and Mozambique (0.035 percent) are fairing much better than Malawi.
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira observed that a weak manufacturing base and continued overreliance on the domestic market continues to hamper local companies for utilising Agoa.
Data from the Malawi Investment and Trade Centre (Mitc) shows the country has only one firm exporting to the United States under the pact, Blantyre-based Win Win Garments Limited.
Kaferapanjira said the few companies which have ventured into manufacturing are either demovitated by the risks in the sector or produce for the domestic market.
“Our manufacturing base is weak because as it is now, one need to wait for at least five years to start realising returns on investments which is a long time for a business. Again, the few firms that are still left in manufacturing are producing for the domestic market which is also very vulnerable to internal shocks,” he said.
Ministry of Industry, Trade and Tourism targets to increase exports from Malawi to the United States (US) through the Africa Growth and Opportunity Act (Agoa) trade window by about 20 percent in the next five years through the National Agoa Response Strategy for Malawi.
The strategy provides a comprehensive plan for increasing exports from Malawi to the US market under the Agoa non-reciprocal unilateral trade preference programme.
As a beneficiary of Agoa since its inception in May 2000, Malawi has not significantly utilised the trade preference opportunities on offer.
The ministry’s deputy director of trade Charity Musonzo earlier said exports have been declining because the country’s production levels are below capacity, adding that the strategy is a response to the opportunity offered by the Agoa market, which has extended to 2025.
She said the proposed priority products for export under Agoa are categorised into short, medium and long-term to enable the allocation of resources and implementation of the strategy.
The proposed products and categories are macadamia nuts and handicrafts (arts and crafts) for the short-term, which is one to two years; honey for the medium-term or two to five years and mangoes and tea for the long-term, which covers up to five years.
Earlier, United States (US) Ambassador Virginia Palmer said Malawian firms are not fully benefiting from Agoa.
“Not as many products as I would like are being exported now. We would like to see more and more Malawian products exported to United States,” said Palmer.
Agoa allows sub-Saharan African countries, Malawi inclusive, to export goods to the US on a duty free basis with the aim of enhancing market access to the US for qualifying countries. n