Does AGOA benefit Ethiopia?

Sertse Desta

This is my question to Ethiopian economists. I am not an economist or anywhere related to this subject. But what I see from the reports of the so-called African Growth Opportunity Act (AGOA) is an apparent huge deficit for Ethiopia all through. I would rather say Ethiopia should have canceled this trade long ago. See the trade balance between US and Ethiopia since AGOA was launched. In some years like 2014, the deficit was nearly US$1.5 billion. Imagine, this is a net loss to Ethiopia in just one year.

I keep on asking how such a trade can benefit Ethiopia? How come a country of over 100M lacks a market for the amount it is exporting to the US? The maximum income from export to US is only ~$500M. How come the cancellation of the so-called AGOA in this kind of market negatively affects Ethiopia? Assume, even if there is no alternative market anywhere else, can’t Ethiopian living in US alone consume all the products that have been traded via the so-called AGOA? I think most of these products are clothing (textile and leather, including shoes). Any individual may need these products. Anyone who travels to Ethiopia can shop this product in Addis as a duty-free specialty item in foreign currency. If most Ethiopians traveling to Ethiopia are coming back to the US or wherever they live abroad are buying these products, there won’t be enough supply. So this may even invite the producers to produce more. Although I am not an expert here, with my intuitive knowledge, I think this is one of the simplest ways we can bypass dependency and truly help our country.

My other question is it not also possible to set strategies of import substitutions? I know most of us wear imported products. In a country of over 100M, how producers of such items could be affected due to lack of market just because Biden does not want to buy us any longer? I don’t understand how our economists are thinking. Instead, the government should set policies on some imported items that easily be produced at home. Unfortunately, Ethiopia is a country importing almost everything, including agricultural products that the country would have produced in surplus and exported out. Just a simple example, Ethiopia that can produce wheat up to 80Q/ha is importing it from countries where their maximum yield does not exceed 25Q/ha (eg. Australia). Interestingly, wheat is produced rainfed (not irrigation) almost everywhere. Ethiopia receives much better rain than the countries from where we are importing wheat. In my view, Ethiopia lacks designers; otherwise, it could have produced nearly all agricultural products, including food oil, in surplus of its domestic demand. I am not sure if there is any country the size of Ethiopia on this planet endowed with such an ideal environment to produce from the low latitude tropic to the high latitude temperate crops. This would have been an enormous opportunity to fully feed ourselves and export much more products. I still ask the government to bring together designers and set strategies here where I may also help my part. I have a network (over 100 high-profile experts) that can stand alone to develop the full design.

I keep on asking Ethiopian economists. Is it not possible to use the population of Ethiopia as an opportunity for more production and more consumer market? Who are experts in the macroeconomy? This looks to be a key for a country to ensure economic growth and reduce a corrupted system.

I think Ethiopia would have rather quit the AGOA and any trading with the US. Not only trading, I think now it is time to even break other relationships with the US turn its face to other countries which have been consistent in their good relationships with us. The majority of Africa can also follow this way.

Thanks,

ቅዱስ እግዚአብሔር ኢትዮጵያንና ሕዝቧን ይጠብቅ! አሜን!