The USAID East Africa Trade and Investment Hub (the Hub) is a regional mechanism for innovation that enables the private sector to increase trade, attract investment, create jobs and reduce food insecurity. The Hub accomplishes this by promoting two-way trade with the United States (U.S.) under the African Growth and Opportunity Act (AGOA), providing targeted investment facilitation, supporting adherence to intra-regional and international trade agreements and standards and removing barriers to regional trade in staple foods. A stable, business-friendly Africa provides economic opportunities for U.S. companies and workers and reduces irregular migration and violent extremism.Subscribe to our newsletter
July 29, 2019
After five years, the East Africa Trade and Investment Hub (the Hub), a USAID project, is coming to a close. This is an expected end as USAID projects typically run for five years.
Since the USAID Hub began in 2014, we have been fortunate to work with dedicated entrepreneurs, private sector organizations, governments and development partners. Together, we have supported eastern Africa’s private sector to access and leverage economic opportunities in this dynamic region. These efforts have provided businesses with the enabling environment and tools they need to take their businesses to the next level – and the results speak for themselves.
To date, the USAID Hub facilitated 75 financial transactions, mobilizing $173.6 million in new private sector investment and finance to eastern African firms. These funds allow businesses to expand their operations and improve services.
USAID Hub-supported countries’ exports under the African Growth and Opportunity Act (AGOA) expanded by 38 percent during the project and are projected to top $1 billion in FY19 (October 2018-September 2019). These exports drive economic growth, providing people with jobs and incomes that build resiliency. USAID Hub-supported firms achieved $599.9 million in exports under AGOA, which contributed to the creation of 46,769 new jobs.
In addition to supporting international trade, the USAID Hub also encouraged intra-regional trade, specifically in staple foods. The USAID Hub facilitated trade commitments for 1.95 million MT of staple foods valued at $675.5 million and 27,957 livestock valued at $7.2 million. With the private sector moving grain from surplus to deficit regions, traders are contributing to the region’s food security and building its capacity to address food insecurity without relying on international assistance.
Finally, East African governments achieved 36 reforms with USAID Hub technical support that strengthen trade and investment-enabling environments and provide a foundation for continued economic development. The Hub also supported governments to develop or update eight AGOA strategies and actions plans which can be found on AGOA.info.
With technical activities ending, this will be the USAID Hub’s final newsletter. We encourage you to visit our website, www.eatradehub.org, to read about our past activities and lessons learned. We will also be available to put you in touch with USAID and our partners.
We are pleased to have served as a resource for public and private sector actors supporting eastern Africa's journey to self-reliance and hope that our project’s lessons will continue to contribute to the region’s development.July 17, 2019
To date, the USAID East Africa Trade and Investment Hub has directly supported nearly $600 million in exports to the U.S. under AGOA, facilitated $171.4 million in new private sector investment and contributed to the creation of over 46,700 jobs. The USAID Hub accomplished this by promoting two-way trade with the U.S., providing targeted investment facilitation, supporting adherence to intra-regional and international trade agreements and standards, and removing barriers to regional trade in staple foods. To see more of the USAID Hub's highlights, read the project's factsheet here.July 17, 2019
Earlier this month, stakeholders recommended that the East African Standards Committee (EASC) approve the ICT monitoring tool developed by the USAID Hub to measure EAC Partner States’ compliance with commitments under different technical barriers to trade (TBT) legal instruments. The regional validation workshop, held in collaboration with EAC Secretariat, took place in Arusha, Tanzania from July 3-5, 2019. The 18 participants also agreed that National Enquiry Points and National Notification Authority officials from the EAC Partner States should further test the tool and provide feedback for the tool’s finalization.
The USAID Hub and the EAC Secretariat are working together to create an ICT monitoring tool that will measure EAC Partner States’ implementation of regional and international legal agreements. During the experts meeting to draft the 3rd Regional TBT Workplan 2017/18 in October 2017, it was observed that EAC Partner States varied in their level of implementing and administrating the TBT Agreement and other regional legal instruments. There were also differences in the countries’ responses to notifications and trade concerns raised by other members. It was against this background that the Partner States agreed to develop an ICT tool to monitor the development, notification and implementation of standards, technical regulations and conformity assessment procedures. The tool will identify compliance gaps, allowing stakeholders to pinpoint areas for improvement and focused efforts.
The tool’s development was originally approved at an EASC meeting in April 2018. Following the EASC’s approval of the tool, as recommended during the meeting held this month, it will be handed over to the EAC Secretariat. While it does not include sanitary and phytosanitary (SPS) measures, it is intended to serve as a model for the SPS Agreement as well which will enhance the EAC’s compliance with the U.S.-EAC Cooperation Agreement, WTO TBT Agreement and EAC Standardization, Quality Assurance, Metrology and Testing (SQMT) Protocol/Act.July 11, 2019
Regional stakeholders discussed harmonized de minimis thresholds for EAC Partner States at a regional validation workshop for a USAID Hub report on July 8 in Nairobi, Kenya. The report is intended to facilitate the determination of appropriate de minimis threshold across the EAC Partner States that balances the need for expanded e-commerce and business efficiencies versus government revenue generation and risk management. The 19 participants, drawn from Kenya, Uganda, Tanzania and Rwanda, made several recommendations which will be incorporated into the final draft.
De minimis thresholds denote the minimum value for imported goods at which no duties and taxes are applied. Parcels that fall below the threshold can travel across borders without duty or taxes being collected and they have simpler customs declarations. While EAC Partner States had previously agreed to a de minimis threshold of $150 in principle, only Uganda has agreed to use this threshold at the national level and is working on the legal reforms to support it.
Varying thresholds in the region adversely affect cross border trade. Traders, particularly those dealing with low-value shipments, experience high customs duties, hidden costs and long transit times. The different thresholds also inhibit the potential of e-commerce where low-value parcels feature prominently. Consumers and U.S. businesses are deterred from making online purchases when they are compelled to absorb extra customs costs.
McKinsey predicts that by 2025 retail e-commerce in Africa could account for 10 percent of all retail sales, or $75 billion in annual revenue. Removing complex and costly customs procedures while increasing the de minimis threshold for import duty exemptions could help East Africa attract global e-commerce players to the region. This would give East African consumers access to a greater range of products and allow U.S. businesses to operate in a dynamic, growing market. EAC Partner States could also benefit from greater and more efficient trade and the resources saved through simplified customs procedures. Customs officials could redirect their efforts to enforce duties on higher value imports.
The Hub’s report incorporates international best practices, data analysis and stakeholder feedback to provide balanced recommendations. Once finalized, its findings are expected to inform discussions on de minimis at the next EAC Committee on Customs meeting in November 2019.