Malawi has sustained an increase in exports to the United States (US) through the African Growth and Opportunity Act (Agoa), latest statistics by the US government show.
The figures contained in the Trade Law Centre update shows that Malawi’s exports to the Agoa trade window rose by 45 percent to $20.87million (about K17.13 billion) as at August 2021 from $14.41 million (about K11.83 billion) in August 2020.
Overall, the data shows that imports entering the US under Agoa preference increased by 70 percent in the year to end August 2021, compared to the equivalent period in 2020.
In an interview on Tuesday, Ministry of Trade spokesperson Mayeso Msokera confirmed the increase and attributed it to increased exports for tea, tobacco, macadamia nuts and sugar.
He said: “As the global economy is recovering from the Covid-19 pandemic demand is also picking up.
“The ministry, therefore, would like to implore the private sector to take full advantage of preferential markets such as the Agoa.”
Msokera said the Agoa market access window still offers a lot of products originating from Malawi, duty-free and quota-free access to the US market.
“Thus, our producers and exporters stand a chance to gain a competitive advantage over exporters in other countries who may need to pay standard US import duties when they export their products to the USA,” he said.
Malawi is one of the 39 African beneficiaries of Agoa though businesses in Malawi have historically not been able to take full advantage of the provision which aims to enhance market access to the US for qualifying sub-Saharan African (SSA) countries.
Malawi’s contribution to the Agoa has been falling steadily for the past five years. In 2017 exports amounted to $43.3 million (about K35.54 billion) before they fell to $40.2 (about K33 billion) in 2018.
Although the figures show that Malawi’s exports have improved when compared to the 2019 data where the country’s exports under the agreement stood at $13 million (about K10.67 billion) from $33.55 million (about K27.54 billion) in 2020, the country remains in the bottom five of the leading exporters to US through the Agoa window.
University of Malawi economics lecturer Ben Kaluwa said in an interview on Tuesday this development calls for diversification of the country’s exports to address supply side constraints.
“Malawi has a low exports base where the country produces a few products that are exported outside the country with most of them not processed which in the end attracts low returns in value,” he said.
Kaluwa said Malawi has other constraints other than the low export base, including the increase in cost of production which has made our exports become expensive compared to their exports from other countries targeting the same market.
According to the Agoa data, oil and gas, appareal and accessories and transportation equipment remain the top leading exports to the US through the Agoa window.
The Agoa window gives Malawi and other SSA nation’s duty-free access to US markets for certain goods such as leather, chemicals and agricultural products.