Tuesday, January 17, 2023
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BusinessEfforts to substitute AGOA fetch 32 mln in exports

Efforts to substitute AGOA fetch 32 mln in exports

Hawassa Industrial Park (HIP) generates USD 32 million in exports during the first five months of the current fiscal year, despite the shutdown of four companies due to security concerns stemming from the civil war in North Ethiopia and Ethiopia’s suspension from the African Growth Opportunity Act (AGOA).

Ethiopia’s inclusion in the African Growth and Opportunity Act (AGOA) was suspended in January 2021 as a result of the conflict between the federal government and the Tigray People’s Liberation Front (TPLF). 

The park, which created a job opportunities for 28,000 employees, saw the withdrawal of Epic Apparel and PVH because of the security concern resulted from the war. AGOA suspension forced another two factories – Hela Indochine Apparel PLC and Submarine garment- to leave the park. The withdrawal of the four companies cost over 5,000 jobs inside the park.

Authorities worried that additional companies would depart, but officials say that the attempt to replace AGOA is bearing fruit as factories with sheds within the park started exporting items to the European and African markets.

“To compensate for the AGOA market loss, factories in the park relocated their export markets to Europe, Asia, and Africa,” Matiwos Ashenafi, general manager of Hawassa Industrial Park. “Some even exported products to the US, despite not enjoying the privilege.

Following the AGOA ban, manufacturers in industrial parks were permitted to sell items locally for a limited period to offset the market loss. Developers at the park amassed USD 1.5 million from the local market in the last five months.

The industrial parks also cut costs to remain more competitive.

“It cannot be denied that AGOA market loss has consequences inside the industrial parks, but its impact is not significant,” Matiewos said.

The park, a government flagship initiative and the largest of all parks, was inaugurated in 2017 with the intention of boosting Ethiopian industrial export revenues by USD one billion annually.

The US has already informed the Ethiopian government “to permit international human rights experts’access to Ethiopia as a precondition before reinstating Ethiopia’s benefit under AGOA.

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