Beef’d Up
What’s the Chop?
Namibia is about to cash out! They just became the first African country to export beef to the US market — the world’s largest meat consumer — after exporting 25 tonnes of beef last month.
What’s the big deal about this?
Most of Namibia’s income comes from agriculture, so progress in the industry is a solid win for their economy. But it’s even more major when you realise that Namibia and the US have been negotiating this trade deal for about twenty years; the US has some pretty strict guidelines, and Namibia had to jump through lots of hoops to meet their food safety and logistics standards. It’s also a big deal for the rest of the continent, because it opens up an opportunity for other African countries to take advantage of the African Growth and Opportunity Act (AGOA).
The what?
AGOA is an agreement between the US and about 40 African countries. It was set up by the US in 2000 to assist African economies, and improve economic relations between the US and Africa. It basically gives a leg up to African countries by allowing them duty-free access to import particular products into the US — stuff like agricultural products, textiles, horticultural products, oil and minerals, etc.
What’s the catch?
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We-ell. The US has a quota system within this agreement — basically, only a certain amount of what is imported (let’s say, up to X) is not taxed; everything above X is taxed (for beef, it’s 26.4% per kilo). And in Namibia’s case, they will enjoy non-taxed imports on 860 tonnes of meat this year. Still, the whole development brings AGOA to life in a brand new way, and for some, it may even signal that Trump’s America is opening new doors to African products, but we wouldn’t hold our breaths just yet; Namibia’s experience is not the norm.
How so?
So far, AGOA hasn’t really done what it’s supposed to do for US-Africa trade relations; only about 1% of America’s imports are from sub-Saharan Africa, and much of this is oil and gas. Then, there’s the fact that the US seems to use AGOA to wield their authority over African countries. Recently, East African countries were trying to reduce their importation of second hand clothes from the US, so that they could boost production of their own home-grown apparel. The US threatened them with an AGOA suspension, but Rwanda went ahead with it anyway. Trump being Trump, responded by suspending Rwandese apparel from the AGOA agreement for 60 days.
But don’t chalk all the bad behaviour up to Trump. Even ‘Saint’ Obama used AGOA as a tool for promoting America’s political agenda. In 2009, for example, he banned Guinea, Niger and Madagascar from AGOA eligibility, because the US believed that these countries didn’t have democratic processes.
Your Takeaway.
AGOA has had some gains, but African countries have not fully exploited the opportunities. For example, up to 70% of the SSA population is employed in agriculture, yet agricultural products account for less than 3% of total exports under AGOA. Still, ultimately, while these agreements can be somewhat beneficial, we must remember that the more we continue get into bed with other countries, the harder it will be to achieve the Africa-wide economic integration we’ve been striving for.
What can I do?
African countries are losing out more on trade deals because our industrial capacity is low. If you are considering an area to go into, think manufacturing, or upskilling manufacturers, or even helping to design efficient industrial processes. The world is your beef franchise. ;)
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