The African Growth and Opportunity Act (AGOA) provides eligible sub-Saharan African countries with duty-free access to the U.S. market for a wide range of products. To find out more about the potential for West African companies to export products to the U.S. under AGOA, Betsy Henderson spoke to Michael Clements, Chief of Party of the West Africa Trade & Investment Hub, a USAID-funded initiative that aims to catalyse economic growth in the region. Clements also highlighted untapped opportunities in West Africa’s agribusiness sector.
Discuss the potential for West African companies to export to the U.S. under AGOA. Can you highlight some products for which there is high demand in the U.S.?
AGOA is an extremely useful instrument for West African exporters to gain preferential entry for their products into the U.S. on a quota-free, tariff-free basis, but still subject to particular terms and conditions. Exporting through AGOA means West African producers and exporters can land products in the U.S. at a cheaper price, which will make their products more competitive in their chosen U.S. sales markets.
When Covid-19 struck and we couldn’t move around the region early last year, we decided to pursue our AGOA promotion activities through an ongoing series of webinars. Within a few months, we realised that teaching West African producers and exporters how to use AGOA was merely step one. The second step was helping them get customers in the U.S. We are developing a business linkages programme with one of our major connection points in the U.S, which is the West African diaspora.
We are currently focusing on two particular product types for this export strategy. The first is niche fast-moving consumer goods products, like dried mango, various fruit jams, sugar-free chocolate, and canned catfish. West Africans living in the U.S. love canned catfish and it is flying off the shelves; there are not many American companies producing this product. We have about a dozen products in this category and hope to add others once we can verify the product production is done sustainably. The last thing you want is delivery of a 40-foot container today and then never to be able to do it again.
The second product stream is high-end fashion products manufactured in Senegal. We’re not talking about mass-market products, but rather one-of-a-kind dresses made from local West African materials. This year, some of the designers we work with will participate in MAGIC, a large fashion event in the U.S., to showcase their products to American customers.
The world has changed so much, you don’t need mass production in order to survive. Companies like Amazon and Alibaba have facilitated this shift; it means a fashion designer in West Africa – for example, a one-person business in Senegal making 10 units a month – can easily sell products one at a time on Amazon. It’s an incredible opportunity; exporting doesn’t only entail filling a large container, it is possible to export goods one package at a time by selling custom items online and shipping products through DHL.
Do you have any advice for West African companies that want to export to the U.S. under AGOA?
Our best advice is: now is the time for any West African companies that want to increase exports or enter the U.S. market. There is currently an increased level of awareness and demand for products that appeal to the social consciousness of American consumers. The current demand-side hot buttons for which U.S. consumers are prepared to pay premium prices include organic production and Fairtrade certification (or similar) that can attest to no-child-labour, gender equality, social inclusion and do-no-harm environmentally. That’s why products outside the mainstream commodity products, such as beeswax (a natural wax produced by honey bees) and sesame seeds, are doing so well. Discerning consumers with a social conscience are prepared to pay higher prices for these products.
When considering which products to export to the U.S., I would also encourage producers to consider the competitiveness of their products. It is pointless trying to export a small volume of a commodity product from West Africa into the U.S. as you won’t be able to compete. You’ve got to pick a niche product; ideally, something that isn’t easily manufactured or produced in volume in the U.S.
The Trade Hub is very active in Nigeria’s agriculture sector. What are some of the top farming-related opportunities for the private sector in Nigeria?
We see opportunities in response to food security challenges, particularly in terms of scaling up production and the processing of staple food crops both for local consumption and regional exports. Primarily, this would mean scaled up or new maize and rice production.
In my own experience working with agriculture projects in Nigeria over the past decade, I’ve been impressed with the changes in the government’s focus on increased food self-sufficiency. The Buhari administration has enacted many good, common-sense policies relating to local food production from a food security sustainability and import substitution point of view, not only for rice but also for maize, soya beans, and cowpeas, all of which are staple crops in Nigeria. I have watched Nigeria take one step at a time and move away from an oil dependency to a more diversified economy over the past 10 years, and the change has been profound. The country has magnificent, fertile soil, available arable land and ideal climatic conditions for many types of agriculture.
In Nigeria, we are mandated by USAID to work in five value chains in seven states under the Feed the Future programme. We are now considering additional value chains such as dairy, cassava and peanuts. Besides staple commodities like rice and maize, there are opportunities in several niche and specialist crops like ginger and sesame seed.
The Trade Hub recently made co-investments in beeswax (West Africa) and rice (Nigeria). Can you explain the potential in these two industries?
The West African beeswax industry is a niche producer of exportable products (including waxes for the cosmetic, pharmaceutical, candle and food industries) that are in high demand in the U.S. It is actually more labour intensive than capital intensive. Barriers to entry in this industry are relatively low; knowledge and experience are much bigger challenges than the size of land required or the initial construction cost of hives and processing facilities. Well-funded start-ups and new greenfield operations will do well commercially because the demand in the U.S. for the finished products will always exceed the supply from West Africa in the short term.
Rice in Nigeria is a well-known conundrum. The demand for local consumption is much greater than the local supply. Ramping up local production to replace imported rice is a perennial challenge for the government. The Trade Hub strongly supports the drive for self-reliance and food security in every sense, both in rice and all other food types. Our investment in WACOT Rice is a prime example, where we are investing $1.5 million and the company is co-investing $8.6 million into a project in Kebbi State that will benefit over 5,000 farmers by providing access to finance, extension services and high-quality inputs of seeds and fertiliser that will enhance yields and product quality and produce an additional 20,000 tonnes of rice per annum.