Analysts: AGOA extension crucial

THE request by President Samia Suluhu Hassan to the US government to extend the African Growth and Opportunity Act (AGOA) will be instrumental in increasing the balance of trade and market availability.

Commenting on the request on Saturday, Economic Society of Tanzania Acting Chief executive Officer Professor Samuel Wangwe said the extension is necessary as it will prompt Tanzania industries to increase supply capacity.

“If the US government agrees to the extension it will give us time to take a good advantage of that market,” said Prof Wangwe.

Nevertheless, he argued that it is crucial for more US investors to invest in Tanzania to assist the nation to produce quality products that can sell more in their country. “In this way, AGOA will bring us more benefits,” he said.

His sentiments were echoed by President of Tanzania Association of Accountants (TAA), Mr Godvictor Lyimo, who described the extension as an opportunity for Tanzania to be certain of the market in the US.

“By continuing to access the US market, it means that our traders will be able to sell more products, which will improve the balance of trade between our countries,” he told the ‘Daily News’ on Saturday over the phone.

Mr Lyimo further said as young startups whose challenge is the market for their products, by requesting the extension, it is also an opportunity for them to be able to exploit the opportunities in that market.

President Samia on Thursday hosted US Vice President Kamala Harris who was in the country for a three-day official visit. During a press briefing at State House she requested an extension for at least 10 years so that the investors who are now investing in Tanzania can be able to take advantage of the wealthy market.

“We are aware that this programme is going to end in 2025. But African countries — Tanzania, one of them — we’re requesting for an extension for investors to be sure of the availability of the market. So if we go up to 2030, that would be great for us,” she said.

AGOA is a preferential trade programme that gives countries in sub-Saharan Africa preferential access to US markets, allowing them to export products tariff-free. It was created in 2000 and renewed in 2015.

According to Mr Lyimo, the extension will also assist Tanzanians in further improve the quality of their goods, enabling them to reach other foreign markets.

“Tanzanians did not take advantage of the AGOA opportunity; hopefully, the extension will bring about changes now that several industries have been established in the country,” he said.

He urged businesspeople to maintain a high level of professionalism while adhering to standards in order to build trust and reliability.

“Let us strive to invest more in the production and development of skills and professions so that the benefits sought by this market are great for individuals as well as the entire nation,” Mr Lyimo said.

An Economist-cum-banker Dr Hildebrand Shayo said USA extension of AGOA will greatly enable Tanzania through the emerging private sector to continue enjoying access to their market.

“It is undeniable fact that Tanzania has not been able to exploit the trading opportunities afforded by AGOA. Hence, this extension presents a significant opportunity for Tanzania to increase its manufacturing capacity and diversify its exports,” he said.

Dr Shayo said lack of supply capacity, consistent quality, financial resources and AGOA’s ad hoc implementation have led to its underutilization.

“But with a request to extend for another ten years, if well supported with an intelligence business-led approach, the window of opportunity if accepted will have a huge multiplier effect on the Tanzanian economy,” he noted

He further said AGOA indirectly will have the positive effect of encouraging the different sectors of the Tanzanian economy to cooperate, it will trigger industrialization as domestic firms expand and diversify to add value to local products for export into the American market.

Dr Shayo said that will increase employment by absorbing surplus labour which is a challenge as the economy adjusts to having in place more opportunities for accurate people, especially young ones.

As a country takes advantage of the outstanding leadership of Dr Samia, he said, what needs to be done is to strategically identify products that will give us a comparative advantage for preferential access under AGOA and have in place structures that will not only support but enhance private sector export capacity for the selected products.

He said public institutions will also need to realign themselves to support every opportunity that will enable Tanzania to benefit from AGOA.

However, he cautioned that the combination of a productivity disadvantage can appear for local manufacturers especially when it makes the industry’s survival totally dependent on preferential treatment.

“Each time the cessation of the special rule draws near, studies have issued credible and dire warnings about the industry’s ability to survive without such preferential treatment,” said Dr Shayo.

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