HUB FACT SHEETS, INFOGRAPHICS & SUCCESS STORIES KNOWLEDGE CENTER Trade & Investment News Read Our Blog Newsletters

Blog

Hub and FACTS Africa seminars facilitate access to working capital across East Africa

Published on 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.

 

U.S. buyers connect with East African companies at Sourcing at MAGIC

Published on 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.

Check out the the trade show catalog to see the Hub supported companies. 

New on our Knowledge Center: World Economic Situation and Prospects 2019

Published on February 14, 2019

WESP_2019.JPGWorld 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. 

New on our Knowledge Center: Spotlight on the Agricultural Sector

Published on February 14, 2019

Ag_Sector_infographic.JPGSpotlight 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.

Looking to source footwear from Ethiopia? Check out our latest footwear catalog

Published on February 07, 2019

fOOTWEAR_CATALOG.JPG

Ethiopia is the top African exporter of shoes to the U.S. under AGOA. Ethiopia offers a unique opportunity for footwear production thanks to its tradition of shoe making and tanning coupled with new foreign direct investments and duty-free access to the U.S. market under AGOA. The USAID Hub is helping Ethiopia make the most of these advantages. The Hub supports Ethiopian companies to attend trade shows and participate in buyer missions where they can engage with U.S. buyers. The Hub is also providing technical assistance as the country updates its National AGOA Strategy in which footwear is a focus sector.

Check out the latest Ethiopian footwear catalog to see some of the companies looking to export to the U.S.

Ethiopia has several competitive advantages, including the largest number of cattle in Africa and the 10th largest cattle population in the world with an estimated 54 million heads. This ensures leather’s availability as a raw material for footwear and accessories production. Government policies and incentives, such as tax-free importation of materials and zero export taxes, support price competitive exports. Huge infrastructure projects in the last few years have also boosted competitiveness on the logistics front. Train services to port, new roads, foreign logistics service providers’ engagement and discounted rates offered by Ethiopian Airlines for outbound cargo have generated interest among international buyers. Ethiopia follows a green economy, generating hydroelectricity at the low rate of $0.03 per KWH, and the country recently developed industrial parks that exceed industry compliance requirements.

As a country with more than 100 million people, with 60 percent of the population under 25 years, a readily available labor pool exists in Ethiopia. The country has taken steps and made investments toward its vision of becoming the footwear manufacturing hub in Africa, creating employment and opportunities for its young population. To learn more about some of the companies contributing to Ethiopian footwear’s rise, view our catalog here.

The USAID East Africa Trade and Investment Hub is committed to boosting trade and investment in East Africa and is a one-stop shop for businesses and national governments in East Africa seeking to take advantage of AGOA.

Rwandan coffee and tourism sectors unite to boost exports

Published on February 07, 2019

Steve Aronson flew from Costa Rica to Rwanda on January 27 with a goal: to advise Rwandan stakeholders on how to leverage the country’s tourism industry for increased coffee exports. After leading a Rwandan delegation to Costa Rica in April 2018, the USAID Hub managed and sponsored Mr. Aronson’s trip so that he could see Rwanda’s coffee production firsthand and provide guidance on how agri-tourism can boost production and export revenues.

Steve Aronson is an expert on integrating coffee and tourism. He founded Café Britt, a coffee and chocolate manufacturer and retailer in Costa Rica, which now operates over 130 retail outlets in 11 countries. His company was the first in Costa Rica to launch a coffee tour that included a theatrical play and dance about the cultural impact of coffee on Costa Rica. It also employed professional baristas and maximized the selling of its products on site. These activities blended tourism and coffee for maximum economic gain.

Between January 27 and February 1, Mr. Aronson traveled around Rwanda to share insights from his business. He met with the top leadership of the National Agriculture Board (NAEB), tourism marketing officials from the Rwanda Development Board and officials from USAID/Rwanda. He also visited coffee plantations, mills and roasting plants, such as Huye Mountain Coffee, COPAKAMA, Rwanda Coffee Farmers’ Cooperative and Sustainable Harvest’s initiative to support women in coffee.

After engaging with stakeholders, Mr. Aronson advised them on how to double Rwanda’s coffee volume and export value. "From the reality on the ground, it is clear that more cooperatives can adopt with ease required practices and access organic certification. This is one of the initiatives that can help to boost revenues from exports as organic coffee sells at premium," he explained. Overall, his suggestions focused on practices to increase yield per hectare, to institute the best industrial roasting and milling practices and to target marketing and distribution. He agreed to provide more technical support to NAEB to roll out some of the interventions.

"Thank you, Steve, for the visit and your guidance. We look forward to more strategic initiatives together. We thank the Trade Hub for the great collaboration with NAEB which paved way to the visit of Steve Aronson to Rwanda," said Amb. George Kayonga, CEO, National Agriculture Export Development Board.

 

 

 

 

New on Our Knowledge Center: Spotlight on the Textile and Apparel Sector

Published on February 06, 2019

US-AFRICA_TRADE.JPGSpotlight on the textile and apparel sector is an infographic by the Trade Law Centre. It highlights the status of the trade of textiles and apparels between Africa and the U.S. under the African Growth and Opportunity Act (AGOA).

For the sub-Saharan Africa apparel manufacturing sector, AGOA has been the single most successful factor that has driven export-led growth. The substantial preference margin over competing exports from other countries, stemming from removal of U.S. import duties on qualifying African exports combined with favorable Rules of Origin provisions, has been a critical pillar of support for manufacturers. By 2017, Kenya has become the largest exporter to the U.S., followed by Lesotho (most apparel exports from an AGOA beneficiary since 2001) and Madagascar. Ethiopia, Madagascar and Ghana (albeit off a low base) have shown the strongest year-on-year growth over the most recent period.

New on our Knowledge Center: Where to Invest in Africa 2019

Published on February 06, 2019

Where to Invest in Africa 2019 is a report by Rand Merchant Bank (RMB) that provides easily digestible data and analysis to firms considering investing in Africa, and points out new opportunities to those already invested in the continent. The report begins by assessing each African economy’s investment potential. RMB’s Investment Attractiveness Index does this by overlaying macroeconomic fundamentals with the practicalities of doing business on the continent. This includes economic activity, expressed as a weighted average of market size and forecasted levels of GDP growth, and the operating environment, depicted as a weighted average of four international surveys measuring the ease of doing business. The 2019 report focuses on Africa's infrastructure development potential.

New on Our Knowledge Center: USAID Hub Livestock Trade Facilitation Brief

Published on January 31, 2019

Factsheet.JPGUSAID Hub Livestock Trade Facilitation Brief outlines how the Hub facilitated $7,182,023 in trade commitments for 27,957 animals by partnering with the International Livestock Research Institute (ILRI) and Partnership for Resilience and Economic Growth (PREG) partners to hold livestock trade facilitation (business-to-business) forums in four Kenyan counties. The forums promoted more efficient trade between livestock buyers and sellers, positioning the sector for greater contributions to economic growth and resiliency in northern Kenya and the surrounding regions.

New on Our Knowledge Center: Survey of the Kenyan Private Equity and Venture Capital Landscape

Published on January 31, 2019

KENYA_PRIVATE_EQUITY.JPGSurvey of the Kenyan Private Equity and Venture Capital Landscape discusses the landscape for private equity and venture capital financing in Kenya. It provides an overview of the private equity and venture capital market in the country, describing key players, including funds, fund managers, investors, and public sector entities. The paper provides an analysis of key market drivers and impediments, as well as legal/regulatory/taxation drivers and impediments that affect Kenya’s private equity and venture capital industry.

connect

get updates