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greens_to_fashion.jpgThe USAID East Africa Trade and Investment Hub (the Hub) boosts trade and investment with - and within - East Africa. It does this by promoting two-way trade with the United States (U.S.) under the African Growth and Opportunity Act (AGOA), facilitating investment, deepening regional integration and increasing the competitiveness of select agricultural value chains. The Hub is funded by the U.S. Agency for International Development (USAID). Read more under our ABOUT tab and subscribe to our newsletter.

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  • USAID Hub supports increased agricultural investments in East Africa through GroFin grant

    Published on August 16, 2018

    The Hub, through the grant issued to GroFin, has thus far facilitated the closure $3.3 million in new private sector investment in East Africa. The goal of the grant was to increase investments in the agribusiness sector in East Africa by screening agribusiness and offering tailor-made technical assistance to get them investment ready.

    The grant to GroFin is part of the Hub’s work to attract new investment in the perennially under-served areas of agriculture and agri-business. Agriculture is a major contributor to GDP growth and employment in East Africa. By supporting investment in the agriculture sector, the Hub is contributing the region’s economic development and food security.

    GroFin solves the access to finance challenge for missing middle companies by funding companies that are either startup level, have inadequate collateral and/or need more flexible repayment terms. GroFin’s business support is geared towards making potential clients investment-ready. It accomplishes this by supporting business plan development, revising financial scenarios and ensuring compliance with existing local requirements. The Hub interviewed clients who had this to say:

    “GroFin provided funding based on our business plan and growth strategy and not based on the collateral that we had,” said Betty Wandabula, director of Dejolisa, a Ugandan poultry business. Dejolisa had commercial funding from the bank, but the bank was not willing to provide additional expansion capital when Dejolisa could not meet its 120% collateral coverage requirement. GroFin refinanced the facility and provided the additional expansion capital for collateral coverage of about 60%. This allowed the company to construct additional poultry houses and purchase a truck, which increased Dejolisa’s chickens, eggs, and employees.

    GroFin’s monitoring and technical advice was appreciated among clients. Mediatrice Uwingabire, Yak Fair Trade’s director, accredited the system with helping the company instill financial discipline. “We value the technical support even more than the funding,” she said.

    “I wasn’t able to get funding from commercial banks. I am happy I met GroFin because they are funding us to get packaging machines. Our current packaging has been the greatest challenge in us growing our business,” said Isabelle Uzamukunda, Agasaro Organics’ managing director. Agasaro, a Rwandan agro-processing company, had raised funding from family and friends when the company could not acquire funding from a bank because of its startup nature. With the Hub’s-facilitated funding, Agasaro can move forward with its processing and packaging plans.

    “GroFin gave us flexible payment terms, they are helping us hire experts and their lending terms do not change or have hidden costs unlike commercial banks,” said Abuhbaker B. Luzinda, Bestever Paper’s director. Bestever Paper received initial startup funding from GroFin. After two years of implementing and growing, when commercial banks finally recognized the company as a viable investment opportunity, Bestever Paper chose to once again receive financing from GroFin because it valued GroFin’s technical support, which the banks didn’t offer.

    As these cases demonstrate, the Hub’s grant to GroFin is contributing to access to financing, food security, employment, strengthened value chains and intraregional trade.

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    New on our Knowledge Center: Global Economic Prospects June 2018

    Published on August 16, 2018

    GEP_JUNE_2018.JPGThe Global Economic Prospects June 2018 is a report by the World Bank Group. It asserts that the global economy seems to be leaving the legacy of the global financial crisis of the past decade behind. About half the world’s countries are experiencing an increase in growth. All the consensus forecasts for 2018 and 2019 reflect optimism. Yet, while current growth appears robust, potential growth will be lower. Underlying factors such as demographics (declining labor supply in many, large countries) and the legacy of low investment growth in the past contribute to this limited potential growth. These risks mean that actual growth may be even lower. 

    This edition of Global Economic Prospects includes sections on the role of the largest emerging markets in global commodity markets and the implications of high corporate debt for financial stability and investment.

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    USAID Hub aims to increase exports through Tanzania Chamber of Commerce Industry and Agriculture grant

    Published on August 16, 2018

    The Hub issued a grant to the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) to promote the capacity of Tanzanian exporters and SMEs to increase the volume and value of exports to East African countries and the U.S under AGOA. The grant will contribute to exports to the U.S. under AGOA by increasing Tanzania exporters and SMEs’ awareness of existing opportunities under AGOA and linking them with potential buyers in the U.S.

    “TCCIA partnership with the Hub is valuable as it will provide capacity to Tanzanian exporters and SMEs for production of commodities that meet the international standards and promote exports to AGOA, EAC and other international markets," said Mr. Gotfrid Muganda, Executive Director, TCCIA HQ.

    Although Tanzania’s exports have experienced an upward trend over the last decade, the country has not optimized its export potential at the international and intra-regional level. For instance, exports to the U.S. under AGOA increased by 46% over the 2015/2016 period with total AGOA exports (including GSP) standing at $37,476,000. While the growth may look impressive, the value of Tanzania’s AGOA exports falls far below those of regional partners, such as Kenya (Tanzania’s AGOA/GSP exports were valued at less than 10% of Kenya’s exports).

    To accelerate Tanzania’s export growth under AGOA as outlined in the National AGOA Strategy 2016, continuous technical support across priority sectors is required. This includes improving access to information on AGOA opportunities and export trends, which will boost Tanzanian exporters’ competitiveness. However, the availability of reliable data on firm-level exports remains a challenge in both the public and private sector. Investments in improving data management systems for exporters are therefore needed to expand and diversify export opportunities.

    Despite recognizing the importance of accurate export data, TCCIA has experienced difficulties keeping export data records due to lack of staff capacity. TCCIA has a limited number of staff and appropriate equipment for data recording and maintenance.

    The Hub’s grant to TCCIA will support the creation of an automated system that captures relevant export data. It will serve as a one-stop information center on exports to guide exporters and other stakeholders in their daily operations and help to create new enterprises in export sectors. Export-related information can identify new markets, the products/services needed in the market and the value of those exports, Moreover, this data will guide the private sector in the formulation of various dialogue and advocacy campaigns for the removal of unfavorable policies, regulations, laws and procedures that inhibit trade.

     

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    USAID works with EAGC to improve cross-border trade in staple foods in East Africa

    Published on August 16, 2018

    1507305789-2580.jpgOn August 14, the Hub signed a grant with the Eastern Africa Grain Council (EAGC) to facilitate the review and revision of existing East African Community (EAC) standards for sorghum grains, finger millet, green grams, composite flour and soy flour. This grant will also support the development of an EAC Guideline for sampling and testing aflatoxin levels. The adoption of the revised standards and guidelines are expected to reduce trade failures and ease the movement of grains from surplus to deficit regions in the EAC.

    In 2016, the Hub partnered with the EAGC and the EAC Secretariat on the revision of the nine staple grain standards (wheat flour, maize flour, milled maize, dry beans, wheat grains, millet flour, sorghum flour, milled rice and dry soybean). This process was completed in December 2017 with the gazettement of the nine revised standards under EAC Legal Notice Number EAC/149/2017. Two sampling and testing standards and guidelines were also developed as part of the previous grant. 

    Despite attempts to improve the enabling environment for cross-border trade, challenges persist, making continued efforts to improve grain standards and food safety testing protocols necessary. One area ripe for improvement is the sampling and testing process for aflatoxin levels in staple grains. Inefficient aflatoxin testing delays border crossing times and increases transaction costs. Harmonizing aflatoxin sampling and testing protocols in the EAC will simplify the issuance of Certificates of Conformity (CoC) requirements and make it easier to trade staple grains across the EAC.

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