Unlocking Uganda’s AGOA Potential: Overcoming Information and Structural Challenges
Uganda has a remarkable opportunity to boost its exports to the United States under the African Growth Opportunity Act (AGOA). However, its full potential remains untapped due to a combination of information gaps and structural challenges. Addressing these issues could significantly increase Uganda’s earnings from AGOA, paving the way for economic growth and prosperity.
At a recent AGOA brainstorming and exhibition event in Kampala, stakeholders highlighted the critical need for information dissemination and diversification of export products. Ms. Anne Kalinzi, the Managing Director of Tooro Gallery, a consolidator of home décor and handcraft products destined for the U.S. market, expressed her eagerness to learn about AGOA. She mentioned that for years, she had been exporting to the United States under the General System of Preferences, unaware of the opportunities AGOA presented. This information shortfall is a hurdle that many Ugandan exporters face.
The history of AGOA is marked by significant success, with exports under the scheme reaching $8.2 billion in its first year (2001) and peaking at $66.3 billion in 2008. However, Uganda’s performance under AGOA has been varied, with annual earnings fluctuating between $30-82 million in the ten years leading up to 2017. In contrast, countries like Ethiopia and Kenya have achieved more consistent success, bagging between $113-330 million and $280-591 million, respectively, over the same period.
Uganda faces twin challenges in AGOA trade: production and policy support. One challenge is the ability to fulfill customer orders in terms of quantity and product consistency, which has sometimes led to delayed deliveries tied to seasonal cycles. Quality issues also stem from a negative attitude towards vocational education, resulting in a shortage of competencies required for non-automated production.
There is room for improvement in integrity when fulfilling orders, and many buyers are willing to pre-finance orders if Ugandan exporters can demonstrate reliability. Furthermore, government support in the form of participation in trade exhibitions and the placement of qualified commercial attaches in export markets could enhance Uganda’s AGOA trade prospects.
While Uganda has faced challenges, it has made strides in correcting course. A coordinated approach to market access and the development of a national strategy to identify focus areas with a comparative advantage have been pivotal. The strategy, developed with the support of the East Africa Trade and Investment Hub, identifies products such as cut flowers, freshwater fish, textiles and apparel, footwear, home decor, and specialty food products for development into flagship products.
Uganda’s initial difficulties were exacerbated by the short shelf life of the program and the nature of its exports. Longer-established production bases in other countries and a strong apparel industry have allowed them to reap greater rewards.
Uganda’s infrastructural deficits, including energy shortages and transportation challenges, posed additional hurdles. However, the recent emergence of large apparel manufacturers and initiatives like Nytil Southern Range and Fine Spinners converting Ugandan cotton into finished apparel for export provide hope for the future.
In conclusion, Uganda has tremendous potential under AGOA, but overcoming information gaps and structural challenges is paramount.
