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Obama renews Agoa that failed in Uganda



US President, Barack Obama, yesterday host a ceremony at White House to celebrate renewal of AGOA for 10 years ahead of visit to Kenya and Ethiopia.

Rosa M. Whitaker, president and CEO of The Whitaker Group, also one of the world’s foremost experts on Africa trade, investment and business issues in a statement quotes Obama reiterating his belief that Africa is the world’s next major economic success story and his commitment to seeing that the United States is a partner in that success.

“This was a historic moment for all of us who are committed to making sure that today’s Africa Rising narrative is not a passing meme but a solid and lasting reality – and one in which the United States will continue to play a substantial, constructive and expanding role,” reads the statement.

“Reaching this moment was not easy. There were times it seemed AGOA’s reauthorization might get lost in the press of other priorities and debates. But what was true when the Act first passed in 2000 remains as true, if not truer, than ever. The support for this cornerstone of our relationship with Africa and its people is as close to unanimous as it is possible to get in Washington.”

Rosa says Obama goes to Kenya armed with proof that Americans are united in the desire to see the nations of Africa thrive as fully integrated members of the global economy.

What happened to Agoa in Uganda

According to theguardian, in their article titled: ““UGANDA HAS LITTLE TO SHOW FOR AFRICAN TRADE AGREEMENT WITH THE US”, write: “When Uganda recruited more than 1,400 women from rural villages and took them to the country’s capital, Kampala, in 2002, the east African state dreamed big.

The women were told that they would work in a textile firm, which would export clothes made in Uganda to the US under the African Growth and Opportunity Act(Agoa), generating a lot of revenue for the country. They were promised good pay, better working conditions and a “bright future”.

They were employed by Tri-Star Apparel from Sri Lanka, which had set up in Uganda to take advantage of the Agoa initiative. But relations between the company and its workers soon turned sour.

A year later, in 2003, the women went on strike, citing mistreatment by their employer and pitiful pay. Each woman earned just $40 (£26; about 75,000 Ugandan shillings at that time) a month. As a result of their protest, roughly 300 women were fired.

Despite huge subsidies, including tax waivers and loan guarantees to boost its production, Tri-Star Apparel went bust in 2006.

Their dreams shattered, most of the Agoa women went back to their villages; others sought petty employment in the city. The episode was perhaps the first sign that Uganda would benefit little from Agoa.”

The Agoa scandal

The Daily Monitor on November 1, 2006, published a story titled: “Govt Loses Shs20b in Tri-Star Scandal”, a company run by Velupillai Kananathan.

The company incorporated in Uganda in 2002 to export textiles to the United States under the African Growth and Opportunities Act (AGOA), took loans from the Uganda Development Bank (UDB) and dfcu Bank guaranteed by Bank of Uganda.

Government had guaranteed Tri-Star a loan of $5 million (about Shs 9.2 billion) from UDB with a $7.5m (Shs13.8b) BoU guarantee and another $3.5 million (about Shs6.2 billion) later obtained from dfcu Bank in 2003, with a $4 million BoU guarantee.

The loan from dfcu also had the government plant at Bugolobi put as additional security.

After the company failed to service the loans, the two banks seized the BoU securities meaning that the government had lost the money to the company principally run by Kananathan and Kumar Dewapura.

While defending the government’s heavy subsidies for the factory, President Yoweri Museveni argued that Agoa had the potential to earn Uganda billions of shillings from garment exports to the US, offer jobs to thousands and invigorate Uganda’s cotton production.

Now with the closure, none of these seem to have happened.

Kyambadde probes Suzan Muhwezi

Ms Susan Muhwezi, was the presidential adviser on African Growth and Opportunity Act (AGOA) and Trade.

In 2012, Susan clashed with Amelia Kyambadde in front of Public Accounts Committee in Parliament after failing to give AGOA accountability to the committee, saying she was only accountable to President Yoweri Museveni.

The minister demanded that all the AGOA accountability should be sent to the ministry of Trade and Industry because it’s where the institution falls but not in State House.

It was reported Suzan received Shs 600m as funds for the first quarter of 2011/12 but instead of accounting for it, only hide behind the president.

Susan was expected to attend the AGOA forum In Accra, Ghana but she later diverted to London, aboard the British Airways, and did massive shopping.

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000.

The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

In 2011, AGOA exports from Uganda to the U.S. amounted to just US$1.4 million.

In 2009, the exports were worth just US$222,000.

Agao failure blamed on private sector

In July 2014, Susan Muhwezi, blamed Ugandan traders’ failure to exploit the huge American market under AGOA agreement on the private sector’s failure to produce enough and good quality products, an official has said.

“The well-intended programme was messed up by its initiators who failed to provide production and transport linkages that would enable the country sustain production to feed the readily available market,” Suzan said.

“This programme was very good but there are no backward linkages. How many farmers are adding value to products, what is the transport like and the budget to this office (AGOA)? Do you want traders to transport in briefcases?” Ms Muhwezi was speaking at the launch of the African Women Entrepreneurship Programme (AWEP) meant to provide mentorship, business linkages, encourage intra-Africa trade and also bring on board Uganda National Bureau of Standard for quality assurance in Kampala.

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