The 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 please subscribe to our newsletter by clicking below.Subscribe to our newsletter
February 14, 2019
Over 300 entrepreneurs enhanced their skills in financial prudence, business operations and leveraging technology like social media for successful sales and marketing through "Ignite My SME" seminars in Kenya, Uganda and Tanzania. The Hub and grantee Financial Access Commerce & Trade Services (FACTS) Africa held the series between late 2018 and January 2019. They created a good networking platform for the SMEs to learn from each other and receive advice from successful entrepreneurs. The entrepreneurs also interacted with SME solution providers who presented their products and services. Attendees at the Uganda seminar on February 1, learned how to access global grain markets from the Uganda Grain Council, while attendees at the Tanzania seminar on February 6 appreciated information on alternatives to accessing financing.
Under this grant, the Hub and FACTS Africa are working together to increase the volume of staple foods trade across EAC by providing grain traders and those in allied services with access to short-term working capital. These seminars were an avenue for FACTS Africa to build a pipeline of small and medium-sized agribusinesses that are eligible to receive working capital financing. Through this grant, FACTS aims to extend $2 million of working capital financing to at least 20 agribusinesses across Kenya, Uganda and Tanzania. The grant to FACTS is a risk share arrangement that is expected to expand the risk appetite of FACTS and other financial institutions to lend more to underserved sectors. It also forges a drive to new markets; as a result of this grant, FACTS is now willing to enter the Tanzanian market.
Intra-regional trade in Africa is the lowest globally, accounting for only 15 percent of the continent’s trade value. This is also true for grains and other food staples, which have limited movement from surplus to deficit areas. In addition to systemic issues such as logistics, standards harmonization and trade export bans, the biggest issue affecting cross border grain trade is the lack of working capital finance. Traders, millers and warehouses struggle with the documentation required to access the working capital from banks. Many do not have high-quality business plans, financial models, accounting records or evidence of corporate governance structures. Without this supporting documentation, even legitimately successful businesses cannot access financing.
This grant activity furthers the Hub’s project goal of increasing intra-regional and international trade that contributes to increased regional economic growth, resilience and integration. It will also contribute to the Hub’s intermediate objective of increasing regional value chain competitiveness and further contribute to the intermediate results of increasing intra-regional trade of staple foods to drive food security in the EAC.February 14, 2019
“Location is great, position is great, traffic is great,” said Frank Leung from Amazestep, one of the ten Eastern African companies that participated in the Sourcing at MAGIC and FN Platform trade shows in Las Vegas, Nevada, USA. The USAID Hub provided firms from Ethiopia, Kenya and Madagascar with greater visibility at the shows and helped connect them with U.S. buyers to discuss their production capabilities and products. The firms, in turn, made 191 business linkages for orders valued at $10,275,000.
Why does visibility matter? As Tigist Seife Haile of Root in Style, a high-end leather products producer, explains, “Participating in MAGIC exposed our brand to international buyers which we couldn’t have access to. It gives buyers an opportunity to try new African brands and we have shown them what we are capable of relating [to] the product design and quality.” When buyers see products firsthand and learn about companies from their owners, it can open the door for new business.
This was the first year that the Hub supported a contingency of shoe and handbag manufacturers from East Africa to showcase their products at the FN Platform. “It’s an eye-opener for retailers and manufacturers,” said Jordan Saliman, a Hub footwear expert. He added, “With the industry always looking for new opportunities for sourcing, and the uncertainty of some countries because of tariffs and quotas, the AGOA duty-free program represents an opportunity for consideration.”
The Hub trains firms on how to leverage these opportunities. Sector specialists provide firms with feedback on their product display, samples construction, design components and quality. They also offer guidance on how to access the U.S. market by discussing minutes per garment price costing, market segmentation, lead times, fabric and vertical operations, pricing and customer service. The specialists help market the firms to buyers using this information, noting their respective competitive advantages and their ability to export to the U.S. duty-free under AGOA.
“Having an expert from the industry is the biggest asset,” said Varsheeni Raghupathy of Ikwetta, a Kenyan sandals and accessories producer. She added, “Without these shows, we would not be able to grow at this rate!”
This year, Andres Saldias of the USAID Hub and Eugene Havemann of Madagascar Garments, a circular knit specialist company, were featured in a MAGIC workshop where they presented Eastern Africa’s value proposition as a sourcing destination. The countries’ AGOA-eligibility, among other factors, remains a strong selling point. Between the presentation and the firms’ conversations with attendees, more buyers are beginning to recognize Eastern Africa’s potential as a sourcing option. Since the project began over four years ago, Hub-supported firms have exported $547.8 million under AGOA. After the firms’ participation in Sourcing MAGIC and FN Platform, this figure will likely grow.February 14, 2019
World Economic Situation and Prospects 2019 is a joint publication by the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions. The report offers timely warnings about a range of macroeconomic challenges facing policymakers as they aim to deliver on the 2030 Agenda for Sustainable Development. Last year’s report noted that after a long period of stagnation, the world economy was strengthening, creating opportunities to reorient policy towards the longer-term pursuit of sustainable development. The intervening year has been punctuated by escalating global trade disputes and episodes of financial stress and volatility, amid an undercurrent of geopolitical tensions. While global economic indicators remain largely favourable, they do not tell the whole story. The World Economic Situation and Prospects 2019 underscores that behind these numbers, one can discern a build-up in short-term risks that are threatening global growth prospects. More fundamentally, the report raises concerns over the sustainability of global economic growth in the face of rising financial, social and environmental challenges.February 14, 2019
Spotlight on the agriculture sector is an infographic by the Trade Law Centre. It highlights the status of the trade of agricultural products between Africa and the U.S. under the African Growth and Opportunity Act (AGOA). AGOA countries’ agricultural exports have experienced a steep rise overall since 2000, driven largely by exports of cocoa (IvoryCoast), vanilla (Madagascar), coffee (Kenya, Uganda, Ethiopia), nuts (Kenya, South Africa) and citrus (South Africa). Between 2000 and 2017, agricultural products under AGOA/GSP have increased five-fold from $115 million to $556 million.
For the sub-Saharan African agricultural sector, AGOA has been a valuable source of competitive advantage in categories that were previously subject to U.S. import duties.These include macadamia nuts, cane sugar, wine, citrus fruit, canned tuna, ethyl alcohol and various other agricultural products.The largest export products (by value) shipped to the U.S. from AGOA beneficiaries are cocoa beans and paste, vanilla, coffee, nuts (especially macadamia and cashew), vegetable extracts, tobacco, oil seeds, tea, fish and fish products, raisins etc.