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Opportunities for Botswana’s Manufacturing Sector

The African Growth and Opportunity Act (AGOA) is a market access arrangement between United States of America (USA) and Africa with broad objective of boosting exports from Sub-Saharan Africa to USA by eliminating tariff barriers on a large number of their exports.

The current 10-year extension of AGOA is set to expire in September 2025. This unilateral trade agreement provides duty free access to the US market to over 6,400 product lines and 1,800 new tariff line items in addition to the 4,600 The renewal through the AGOA Extension and Enhancement Act of 2015 covers the third country fabric (TCF) provision, which is a special rule that allows lesser-developed beneficiary countries duty-free/quota-free access into the U.S. for apparel made from fabric imported from non-AGOA beneficiary countries.

Although not considered to be a lesser developed country (LDC), Botswana qualifies for the TCF provision following the granting of the lesser-developed beneficiary countries status under AGOA.  For a country to be eligible, the US President determines that it has met or is making continual progress toward establishing a market-based economy; rule of law, political pluralism, and right to due process; elimination of barriers to U.S. trade and investment; economic policies to reduce poverty; a system to combat bribery and corruption; and protection of internationally recognized worker rights items enjoying duty-free status on the U.S. Generalized System of Preferences (GSP) program.

The US as an Export Market

The United States is one the world’s largest importing countries. US importers are always looking for new products to import and resell. According to US Department of Commerce, US Imports were $2,895.3 billion in 2017, up $182.5 billion from 2016. Imports of goods increased $153.2 billion to $2,361.5 billion while those of services increased $29.2 billion to $533.9 billion in 2017. The top US imports include motor vehicles, crude oil, cellphones, computer chips, gasoline, motor vehicle parts, medicines and commercial vehicles.

Since 2010, textiles/apparel has been Botswana’s main AGOA beneficiary sector, constituting between 90-100% of total AGOA exports. During its peak, Botswana had over 10 textiles/apparel firms exporting under AGOA. In 2017 Botswana total exports to USA were P775.6 million, of which AGOA exports accounted for P9.9 million. Diamonds account for over 95% of total exports to the US. Currently Botswana does not have a single company that is benefitting from the AGOA preference.

Of the over 10 textiles/apparel firms that operated from Botswana, some companies have shifted focus towards South Africa while some have relocated with others having closed down.  The National AGOA response strategy is an effort by government to ramp up exports into the US market.

Potential Benefits of AGOA For Botswana

Potential benefits for Botswana from the AGOA unilateral trade preference program include:
Tariff advantage: Exports from Botswana have a significant tariff advantage over those from non-AGOA eligible countries, making Botswana products more competitive, e.g. some tariffs exemptions in the textiles/apparel sector under AGOA are as high as 30%. Wide range of eligible products: The AGOA Extension offers an increased range of eligible products (over 6,400 products lines) which allows a more diversified exports to U.S. by Botswana.

Opportunity for regional integration: AGOA facility provides an opportunity to create regional integration through the development of value chains, production sharing and collaboration to meet volumes required by the U.S. market and for pitching the region as one big market.
Capacity building of associations and institutions: Local institutions will build their capacity and strengthen their process through technical assistance and technical capacity building provided by the various U.S. support agencies such as the regional trade and investment hubs and others whose mandate is to provide technical assistance in AGOA beneficiary countries to facilitate increased utilization of the program.  

Promotion of women in social and economic development: The AGOA Extension and Enhancement Act, encourages the promotion of women in social and economic development. Increased participation of women in labour will help increase the quantity and quality of available labour for industries involved in international trade.   Job creation: AGOA has been credited with the creation of over 300,000 jobs in Sub Saharan Africa since its inception hence increased utilization of AGOA by Botswana will result in more job opportunities for Batswana. 

Long term relationships: Local companies that utilize AGOA will be exposed to the U.S. market and create strategic alliances and other relationships with their U.S. counterparts, which might continue after the expiry of the AGOA facility. Giving local companies international exposure: Participation in the U.S. market under AGOA gives companies the much-needed experience for entering other international markets.

What Can Botswana Companies Export Under AGOA?

The AGOA agreement provides export opportunities to over 6400 product lines as long as they meet the AGOA rules of origin requirements and are exported directly from a beneficiary country to the United States. Botswana has developed a National AGOA Response Strategy to guide implementation of the trade agreement. The specific objectives of this strategy are to advise the Government of Botswana on how to systematically take advantage of AGOA, to identify policy responses in targeted sectors to capacitate current and potential exporters in Botswana to increase exports under AGOA, to develop an ongoing consultative mechanism between the public and private sector players and to attract investment into identified sectors that can benefit from international trade.

The National AGOA Response Strategy for Botswana has identified a number of sectors that could be developed in order to increase exports to the US. These include the Handicrafts, Meat & Meat Products, Textile/ Apparel, Natural/ Indigenous Products, Jewelry and Semi-Precious Stones and Horticulture & Agro-processing Products. Companies can check whether their products are eligible for AGOA preferences on  HYPERLINK "http://agoa.info/about-agoa/products.html" http://agoa.info/about-agoa/products.html

How Can Companies Register for AGOA?

Prior to exportation, traders are required to register with the nearest BURS – Regional Office (Customs and Excise Division). In order for the goods to enjoy this trade concession, they must be processed or manufactured in Botswana as prescribed under the AGOA Rules of Origin (RoO). RoO are the requirements which set out the working and processing that must be undertaken locally in order for a product to be considered the “economic origin” of the exporting country. The salient features of AGOA's general (non-textiles and apparel) Rules of Origin are as follows:

The product must be imported directly from the AGOA-beneficiary country into the United States;

Items must be "growth, product or manufacture" of one or more AGOA-beneficiary countries (these requirements can be met jointly by more than one AGOA beneficiary – this concept is called ‘cumulation of origin’);

Products may incorporate materials sourced from outside countries (i.e. non AGOA-beneficiaries) provided that the sum of the direct cost or value of the materials produced in one or more designated AGOA-beneficiary countrie(s), plus the "direct costs of processing" undertaken in the AGOA-beneficiary countrie(s), equal at least 35% of the product's appraised value at the US port of entry;

Cost of local materials + direct cost of processing must >= 35%

In addition, a total of up to 15% of the 35% local content value (as appraised at the US port of entry) may consist of US-originating parts and materials. This concept is called “bilateral cumulation of origin”). In addition to compliance with RoO It would be worthwhile to have a clearing agent on the U.S. side. All shipments should include commercial invoice and Certificate of Origin, which specifies the Harmonized Tariff Schedule (HTS) code(s) for the product(s) being shipped. For textiles/apparel products only, an AGOA visa stamp is required, which is obtained from the Botswana Unified Revenue Services (BURS)

What Support is Available for Botswana Companies?

The Ministry of Investment, Trade and Industry has appointed Botswana Investment and Trade Centre to coordinate implementation of the National AGOA Response Strategy for Botswana. Various stakeholders such as government ministries, sector associations, business support institutions and the private sector all have specific roles in the implementation of the strategy. BITC supports the industry through its export development and promotion programs.

It promotes Botswana products in international markets by participating in outward and reverse trade missions. The outward trade missions include general and sector specific trade fairs, and contact promotion missions. BITC also capacitates exporters through the Botswana Exporter Development Programme (BEDP) which assist companies to reach export readiness status by providing technical and non-technical assistance. Other business support can be obtained from other institutions like Local Enterprise Authority, Botswana Development Corporation, Citizen Entrepreneurial Development Agency, Botswana Bureau of Standards and Botswana Unified Revenue Services. 

Temo Ntapu is Director Research at Botswana Investment and Trade Cent

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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