Despite the American government extending the African Growth Opportunity Act (Agoa) to 2025, local manufacturers have described the extension as meaningless claiming that only foreign owned businesses are benefiting from the initiative.
The manufacturers have asked government to work on the shortfalls if the Agoa arrangement is to be meaningful to the local investors.
Agoa is a trade export facility which allows eligible countries from Sub-Saharan Africa to export some goods to the United States without paying duty and the American congress met last year and agreed to extend Agoa to 2025 after its expiration in September 2015.
However, the leading textile manufacturer in the country, Mapeto DWS, formerly known as David Whitehead and Sons, says in all the time that Agoa has been open to Malawian firms, the manufacturing industry has not benefited from it.
“Some investors from the far east have deliberately come to open up textile processing companies in Malawi with the aim of promoting their own companies from the middle east but take advantage of Malawi’s quota free status with America to process those garments here in Malawi and pose as if the garments have originated from Malawi when being exported to the Unites States under the Agoa arrangement.”
“As long as the garment manufacturers are ready to work with us, we are 100 percent ready to work with them,” we approached these companies to give us a sample of what they are producing, so that we can come up with a sample but it did not work, these people came to establish their companies just to benefiting from Agoa but in actual sense it is not the typical local companies benefiting,” He said.
This is against a background of dwindled export quantities by the Malawi trade industry mainly attributed to supplier side challenges such as high transport costs, standards and quality, as well as trade logistics.
“The best will be when negotiating, government must tell the people who are coming to manufacture garments in Malawi to work with the local manufacturers, instead of them bringing fabric here, they should work with us,” Said Mapata
Latest government statistics show that the textile and garment trade under Agoa from Malawi to the United States has declined significantly regardless of the tax break, from US$19.4 million in December 2007 to US$4million in 2014.
The statistics further show that only one textile company currently exports to the United States under Agoa compared to seven companies in 2006.