Yes to Agoa trade window extension, but do more

It is not surprising that Malawi, alongside other Sub-Saharan African countries, are lobbying for an early 10-year extension for the African Growth and Opportunity Act (Agoa), a trade window that provides eligible beneficiaries duty-free access to the United States of America market.

From the time Agoa was conceived in 2000, Malawi has exported goods worth $1.55 billion (about K1.68 trillion) to the US with $1.15 billion (about K1.24 trillion) qualifying for Agoa preferences.

The country’s exports to the US have increased by 6.5 percent, from $15.9 million (about K17.23 billion) in June 2022 to $16.94 million (about K18.56 billion) as of June 2023.

Malawi and other beneficiaries’ push comes following a video message to a US-Africa Trade Summit held last Friday in Johannesburg, South Africa by US Secretary of State Antony Blinken who said the Joe Biden administration wants to work with Congress to improve a US-Africa trade pact, not just renew it without changes.

In terms of ranking, Malawi is 15 out of 35 countries in Africa that have most utilised the Agoa trade window over the past 23 years. Not as bad, I must say.

The idea behind Agoa was to deepen trade ties with Africa and help African economies improve their economies through adoption of market-based economies, support democracy and protect due process as well as the rule of law. The trade window is due to expire in September 2025 after being renewed twice during its lifespan.

It is refreshing to learn from Ministry of Trade and Industry spokesperson Mayeso Msokera that Agoa has contributed significantly towards enhancing exports between Malawi and the US since its inception in 2000.

Main exports to the USA market have been tobacco, macadamia nuts, cane sugar, tea and textiles and apparel.

Under Agoa, there are some 5 240 tariff items eligible as long as such products going to the US market were wholly obtained, in case of grown, fished or mined produce or indeed “sufficiently manufactured” in an Agoa country such as Malawi.

The initiative defines “sufficiently manufactured” to mean that where third-country materials are incorporated in a product, there should be at least 35 percent of the goods’ value added in the beneficiary country, with up to 15 percent of such value attributed to US inputs.

International trade is critical to economic growth of a country as it provides a platform for market expansion as well as access to goods and services that may otherwise not have been locally available. It also contributes to competition which gives consumers a wide choice and even better prices!

Trade opportunities abound out there and what is needed is getting organised. I feel that with commitment and some aggressiveness, Malawi can do better and earn more.

In the new Agoa trade window extension beyond 2025, Malawi should strategise on how to gain more and improve from its ranking of 15 out of 35.

To achieve meaningful recovery, Malawi needs to stimulate the business environment to improve competitiveness and attract foreign direct investment. Until Malawi starts manufacturing on a bigger scale and for exports to generate foreign exchange, the IMF will continue calling the shots.

Trade and investment, not aid, is what we need to develop. During the investment forums our officials attend, we should go beyond presentation of “a compendium of bankable projects” and attract real investors instead.