Expert urges US to revisit strategy over revoking Ethiopia from AGOA

Zemedeneh Nigatu, Global Chairman, Fairfax Africa Fund urged that the United States needs to revisit its strategy over revoking Ethiopia from the African Growth and Opportunity Act (AGOA), a quota and duty free trade privilege to African countries.

“Whatever policies and strategies the US is trying to achieve by imposing this kinds of sanctions, I think it should rethink its policies because its impacts Ethiopians who are gaining jobs, whose primary and sole source of earning is factories exporting their products to the US,” Zemedeneh argues in his interview with BBC Money Daily show.

The United States has said recently that it will revoke Ethiopia’s AGOA privilege, which is “misguided and it’s counterproductive,” he commented.

Today, approximately 200 thousand Ethiopians, 99 percent of whom are women who work on production facilities in industrial parks across Ethiopia exporting to the US market.

Also, another one million Ethiopians have been indirectly benefiting because of the AGOA trade privileges.

“So, we are talking about 1.2 million Ethiopians who are at the low end of the earning scale can be affected by the US policy to revoke AGOA’s privileges,” said Zemedeneh.

He went on saying that, “This I think is counterproductive because on the one hand is the US said it’s giving a billion dollars aid to Ethiopia to alleviate poverty and to help people get back on their feet but at the same time it’s revoking people from their jobs—essentially making them permanently unemployed”.

That’s what’s going to be happened because these manufacturing facilities will now pack their bags and go somewhere else, he said.

The impact at the moment is that the export to the US is relatively small. “But if you look fast-forward a look at two or three years now, as part of Ethiopia’s industrialization strategy, we were expecting a large number of manufacturing facilities in the clothing the retail manufacturing business to set up shop in Ethiopia.

“Even though relatively small exports today, over the next several years this could be hundreds of millions of dollars and eventually top a billion dollar mark,” he predicts.