By Eudes Ssekyondwa
It's another hectic day at the Simons Uga factory in Central Uganda's Entebbe. Workers in bright yellow T-shirts and shorts go about their work, washing, blanching, sweating, drying, refining, sorting and measuring vanilla beans.
Simon Musisi supervises the entire process until the beans turn brownish-black from green. He has been doing this since setting up the factory in 2016.
A closer look reveals that the customary spring in the step of the sprightly managing director is missing.
Forehead furrowed, Musisi, a prominent exporter of vanilla to the US, ponders the future even as his workers weigh and pack the commodity in ready-to-ship cartons.
"This may well be my last shipment to the US," he tells TRT Afrika, almost choking on his words.
Change brewing
The US announced recently it would remove Uganda from the Africa Growth Opportunity Act (AGOA) with effect from January 2024.
Launched in 2000, the Act grants exports from African countries duty-free access to the US market.
This is a matter of concern for Ugandan entrepreneurs like Musisi, who exports 80 metric tonnes of vanilla annually to the US, earning about US $2 million.
"With the duty-free waiver off in another couple of months, our clients will be forced to buy vanilla at a higher rate," says Musisi. "Naturally, they will opt to import the commodity from Madagascar, which is still under AGOA. We will be badly hit."
The East African nation is the second-largest exporter of vanilla in the continent after Madagascar.
Although many African countries have been able to export their materials to the US duty-free, some experts say the US benefits from the AGOA initiative using it as a foreign policy tool and taking its economic advantage as well.
‘’It is trade between US that reaps more and Africa that supplies more but benefits less than it should,’’ Edward Wanyonyi, an international affairs researcher based in Kenya tells TRT Afrika.
‘’The US benefits more because much of what Africa is sending to their market is raw materials which is then converted to used products by the US and sent back to us to buy expensively, AGOA is not an equal footing type of trade,’’ Wanyonyi adds.
Punitive tool
Uganda has been quick to criticise the move by the US to oust it from the AGOA bracket, saying this was meant to "punish" it for passing an anti-gay law this May, referring to the letter to US Congress by President Joe Biden about Uganda.
Ugandan President Yoweri Museveni hit back, asking his people not to be "too concerned" at the impending ouster. "These pressures from outside are 'joogo' (looking down upon somebody) – towards the Africans and must be rejected,” he said.
Apart from vanilla, Uganda exports coffee, cotton and textiles to the US under the trade pact.
According to US data, the country imported Ugandan goods worth $174 million under AGOA in 2022 while exporting $167 million worth of commodities to the African country.
"The US ban will hurt our economy because a market is a market," Jane Nalunga, a trade expert at SEATINI (Southern and Eastern Africa Trade Information and Negotiations Institute), tells TRT Afrika. "We need all big markets for our goods."
Message to Africa
Odrek Rwabwogo, special presidential adviser to President Museveni, says the American decision "sends a message to all Ugandans – indeed all Africans – that their prospects of economic prosperity are contingent on whether they vote in line with the values of whoever happens to hold high office in the US".
"They (the Africans) will not find this acceptable. Neither should they."
Rwabwogo says the AGOA programme was established as "a policy of great generosity and foresight" by those who created it to bind Africa and the US in a bond of partnership and respect. "Yet, it's now being used as a stick to beat the Africans," he tells TRT Afrika.
The trade ban comes on the heels of a decision by the World Bank in August 2023 to withhold public financing to Uganda because the country's new anti-homosexuality act "fundamentally contradicts the World Bank Group's values".
In 2017, the heads of Rwanda, Burundi, Kenya, Tanzania and Uganda decided to stop importing second-hand clothes and footwear from the US to support local industries. The US argued this was "inconsistent with the AGOA beneficiary criteria" and suspended Rwanda from the deal for 60 days in 2018.
In January 2022, the US excluded Mali, Ethiopia and Guinea from the AGOA trade preference program. Ethiopia was suspended on grounds of internal unrest, and the other two due to "unconstitutional change of governments".
The Central African Republic, Gabon and Niger will no longer trade with the US on a duty-free basis from next January, with Washington accusing them of not conforming to the requirements of the deal.
Trade reset
Africa is now refocusing its attention on intra-continental deals, with 54 countries prioritising trading with each other. The African Continental Free Trade Area (ACFTA) aims to eliminate trade barriers, boost intra-Africa trade and focus on trade of value-added production across the continent.
Forty-seven nations have ratified the ACFTA, which seeks to establish trade terms on an equal footing with the West.
"The continent has made progress in developing an internal market, thus establishing the rules for economic integration," the ACFTA executive secretary told the 2023 AGOA Forum recently.
"That means we have to re-think AGOA in the context of ACFTA."
President Cyril Ramaphosa of South Africa summed up the sentiment at the forum, “Gone are the days when Africa was seen merely as the source of rock, soil, dust…We now want to earn full value for our products."
