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AGOA and Swaziland

14/08/2013 23:28:00 The editor

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The 49 countries benefitting from the Africa Growth Opportunity Act (AGOA) are presently in Ethiopia holding talks with the United States of America. These talks are in connection with the extension of the AGOA which effectively comes to an end in 2015.

Should the extension not be further extended, Swaziland, the slowest growing country in sub Sahara Africa, will be adversely affected.
This is bearing in mind that the country is the fourth most exporting country after Malawi, Mauritius and Lesotho.

According to information sourced from the US International Trade Commission (USITC) based on the US Commerce Department, despite being one of the biggest exporters, Swaziland still does not export enough goods to the US because the country has only targeted the textile industry while other countries placed emphasis on other products as well.
Talks are to the effect that an extension of AGOA is possible but this will come at a price.

Exports

Since Swaziland exports to the US duty free it is envisaged that the country will no longer enjoy this benefit. A certain percentage in duty fees will be expected from companies which currently enjoy exporting duty free.
If this is implemented Swaziland’s Gross Domestic Product (GDP) is expected to shrink since the profits gained by the exporting companies will contract.

The extent to which the textile industry will be affected can be seen in the amount the country has been exporting.
According to USITC, the country’s textile and apparel industry exported about E590.16 million worth of commodities to the United States of America under AGOA in 2012. A certain percentage of this money meant for profit will no longer make it into the pockets of exporters.
The imposition of duties is also likely to discourage other investors from investing in the country, as we will no longer have the AGOA drawcard. And the already existing investors may decide that it is no longer worth their while to remain in the country if their profit share shrinks further.

Retrenchments

With fewer profits making their way into the coffers of the textile companies retrenchments are expected to be implemented since this is the only industry that benefits from the trade agreement.
Should this scenario play itself out imagine what will happen to our people who work in the factories in Matsapha and Nhlangano?

How many people will be affected? It is general knowledge that for every bread winner there are approximately seven mouths to feed.
Since the majority of the unskilled labour who is employed works in the textile industry it is very distressing that our brothers and sisters are likely to lose their jobs and thousands more mouths are expected to go hungry.

Should this outcome come to pass the incidence of crime is expected to escalate, as ‘a hungry man has nothing to lose’. The level of poverty which currently stands at about 69 per cent would rise sharply should the country fail to negotiate at the meeting.