Agoa market closure in EA won’t affect business: firm

Morogoro. The Mazava Fabrics and Production, a factory that enjoys 100 per cent of the fruits of the African Growth and Opportunity Act (Agoa) and has 2,400 workers, says it won’t be affected much by the closure of the Agoa in East Africa if that happens.

This month the office of the US trade representative said they were reviewing trade benefits with Rwanda, Tanzania and Uganda under the Agoa after complaints on US interests following a ban on second hand imports into the East Africa.

The move follows a decision by six East African Community member states – Burundi, Kenya, Rwanda, Tanzania, South Sudan and Uganda – to fully ban imported second hand clothes and shoes by 2019, arguing it will help member countries boost domestic clothes manufacturing. Speaking to The Citizen on Thursday afternoon, Mazava factory assistant manager Nelson Mchukya said although the move would affect workers, who would lose their jobs and the government, which would also lose revenue, the company won’t be affected much because it operated under the Export Processing Zones Authority (EPZA). “So, the investor won’t be affected much.” The EPZA provides a conducive environment for profitable operations.

“Once the Agoa market is closed for sure production will stop and workers will lose their jobs. But also the government will lose some revenue because we have been paying tax,” he noted.

Mr Mchukya explained that the investor won’t be affected because he had many business options. “The products we produce still have a market. We can send them to one of the countries, which has factories and are enjoying Agoa opportunities just like in Tanzania,” he said.

“The investor has other factories - two in Madagascar, one in Haiti and one in China. So, he can decide to shift his business to one of the countries or expand production in those countries as well as send ready made products to those countries, which will still enjoy opportunities of the Agoa market,” he explained.

The senior official said further that the investor could also decide to transfer his investments to any country, which had Agoa opportunities or decide to change his business within the country by producing products outside the Agoa agreement. “At this level he will be ready to accept the country’s conditions of paying all taxes by producing and selling products within the country instead of exporting them,” he clarified.

However, he declined to disclose the value of investments to be affected. “It is difficult to say how many investments will be affected. It is the investor himself, who can tell how much he has invested and whether he will be affected or not by calculating everything for all the years he has been operating in the country. So, it is not easy to tell,” said Mr Mchukya.

He also declined to say if the government would be directly affected except revenue and the laying off of workers, saying once the government didn’t agree with Agoa it meant it had other alternatives of running its business.

Mr Mchukya pleaded, however, with EAC countries to sit down and rethink about losing the Agoa market to continue Agoa opportunities.

So far, the factory has 2,400 workers and expects to add 6,000 others by 2020. It has been producing between 1,000,000 and 1,200,000 pieces of fabrics a month, exporting between 60,000 and 65,000 containers of fabrics a month.

According to the US trade representative, the “out-of-cycle” review is in response to a petition filed by the Secondary Materials and Recycled Textiles Association (Smart), which complained that the ban “imposed significant hardship” on the US used-clothing industry and violated Agoa rules.

“Through the out-of-cycle review, the US Ttrade representative and trade-related agencies will assess allegations contained within the Smart petition and review whether Rwanda, Tanzania and Uganda adhere to Agoa’s eligibility requirements,” the US trade representative was quoted in a statement.

US Agoa imports from Rwanda, Tanzania and Uganda totalled $43 million in 2016, up from $33 million in 2015, according to the US trade representative. US exports to Rwanda, Tanzania, and Uganda also reached $281 million in 2016, up from $257 million the year before, it said.