|
Economic opportunities never knock twice
2005-06-08 06:29:17
By Editor
Economic opportunities are rare events . Every individual, and every nation would love tapping and enjoying to the maximum gainful economic opportunities as they arise until all that is potentially available is exploited.
However, opportunities are not always an endless phenomena. They come and vanish depending on global dynamics and the geopolitics of the day.
One of the obvious global economic opportunities to arise in this new millennium is the Africa Growth Opportunity Act (AGOA), an offer by the USA for about six thousand commodities from Africa to enter that market duty free.
Rules of origin and consumer standards have been set in line with World Trade Organisation’s (WTO’s) standards, with no limit on the amount of goods to be exported to the US market.
The deadline for the expiry of AGOA has been extended to 2015. This is indeed good news for those countries which have merchandise to sell to the US.
Over the last six years, African countries which have abundant oil and metals have been major beneficiaries, followed by those with world-class textile factories.
In East Africa, Kenya has been the major beneficiary under the AGOA scheme, largely because of its much acclaimed Economic Processing Zones (EPZs) and strong entrepreneurial base.
Tanzania’s export performance under AGOA has been dismal, with no chances of improvement in the near future given the current management of microeconomic affairs that was in the first place geared towards enhancing export volumes to the US market through the AGOA window.
Last year, textiles and apparels under AGOA increased by 73 percent, raking in USD 3.370 million up from USD 1.942 realised the year before. Kenya on its part had realized in excess of USD 80 million.
Though EPZ legislation was enacted three years ago, nothing noticeable has been done to boost the intended industrialization. Sadly enough, two textile factories established under the legislation have already closed shop.
A litany of reasons explains their sadden closure, including increasingly stiff competition on the global textile market, primarily induced by China`s massive, low-cost textile industry.
The more important factor relates to institutional arrangement. Analysts agree that the National Development Corporation (NDC) wasn`t well prepared to oversee the establishment of EPZs due to its multiplicity of roles and lack of experience in EPZs activities.
It seems government thinking is in congruence with analysts’ propositions, following an announcement last week that a new bill seeking to relieve the NDC of the responsibility to oversee EPZs developmen has been drafted ready for parliamentary endorsement.
It is fine to implement institutional re-organisation, but more importantly, all the necessary incentives provided by the EPZ legislation must be catered for.
It means putting in place the right infrastructure, critical supplies such as water and power as well as implementing all the legislated fiscal breaks.
We need to speed-up the pace towards establishing EPZs in preparation or even tougher competition coming soon.
In four years time, all goods from Kenya shall enter free of tariff to our market in accordance with East African Customs Union (EACU) protocol.
In addition, quotas placing limitations on the global textile industry for the last ten years were lifted in January, thus leaving leeway for China`s massive, low-cost textile industry to flood the entire world.
Well, every cloud has its silver lining. Opportunities come and vanish with their pluses and minuses.
Our economy has to be competitive and create the badly needed jobs. Maybe our failure to benefit from AGOA will turn into some kind of valuable lesson for both our industrialists, and our policy makers.
|
