AfDB President Urges Enhanced Value Chain Development at the 12th AGOA Ministerial Forum in Addis Ababa

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“What will it take for African exports to move up the global value chain?” This is the question that African Development Bank President Donald Kaberuka posed to delegates and African Trade Ministers attending a session that he chaired on regional integration through trade facilitation during the Trade Ministerial meeting at the 12th Africa Growth and Opportunity Act (AGOA) Forum. Thousands of delegates converged on the Ethiopian capital of Addis Ababa for the AGOA Forum from August 9-13, 2013, including a high-level U.S. delegation led by the recently appointed United States Trade Representative (USTR), Ambassador Michael Froman. The high-level session participants included Xavier Carim, Deputy Director General Department of Trade and Industry, South Africa; Sindiso Ngwenya, Secretary General, COMESA; Ahmed Hamid, Commissioner of Trade, ECOWAS; and Joshua Setipa, CEO, Lesotho National Development Corporation.

Kaberuka used the example of the footwear industry in Ethiopia which comprises over a dozen large mechanized shoe factories producing roughly 10,000 pairs of shoes per day. However, apart from the local leather, most inputs are imported from outside Africa despite the potential for developing Africa as a key player in the global leather goods value-chain based on the continent’s sizeable raw materials. Kaberuka called for the development of industrial clusters coupled with the necessary skills to enhance Africa’s manufacturing sector in order to better connect with global value chains.  

African Trade Ministers attending the Forum reaffirmed their call for the continuation of AGOA beyond its 2015 expiry date and further called for the inclusion of provisions aimed at enhancing intra-Africa and US-Africa trade and investment. AGOA provides non-reciprocal duty-free access to the U.S market on almost 6,800 product lines from 39 eligible African countries. The program’s renewal beyond 2015 has not been without controversy in Washington partly due to the graduation of some beneficiary countries into middle-income status. On the African side, the exclusion of various agriculture products such as sugar, peanuts, dairy and tobacco, which are competitively produced on the continent, has led to calls for enhanced product coverage. Moreover, some critics contend that loss of AGOA beneficiary status has severely disrupted promising value chains in countries like Madagascar.

On the margins of the AGOA Forum, Kaberuka held bilateral discussions with Ambassador Froman on the Bank’s future collaboration with the U.S. Government across areas such as energy infrastructure and access to power, trade facilitation and logistics development. The President was accompanied to the Forum by Lamin Barrow, AfDB Resident Representative to Ethiopia, and Moono Mupotola, Manager of the Bank’s Regional Integration and Trade Division (ONRI2). Mupotola confirmed that the two sides “will work jointly to address the trade bottlenecks that African countries face, as ultimately AGOA can be a powerful tool for bringing U.S. investment and technology into Africa, as well as, the enhancement of value chains”. Barrow concurred noting that commendable progress had been achieved in developing the Ethiopian leather industry, which held potential to give rise to a regional value chain incorporating neighbouring countries.

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