November 14, 2003

U.S. Trade Law Gives Africa Hope and Hard Jobs

By MARC LACEY

UGOLOBI, Uganda — Uganda is banking its future on 1,400 girls — young women, really — plucked from their villages around the country and plopped down in front of row upon row of sewing machines at a vast factory here outside the capital.

Every time they stitch a pocket, attach a button or hem a skirt, the leaders of the land tell them, they are performing acts of patriotism that will help transform this country's economy.

These are the AGOA girls, as the Ugandans call them, named for the American trade legislation that lured their employer, Tri-Star Apparel, from Sri Lanka to Uganda.

To hear President Yoweri Museveni tell it, AGOA, the African Growth and Opportunity Act, approved by Congress in 2000, is the best thing the West has done for Africa since independence.

AGOA, which reduced or eliminated tariffs and quotas on more than 1,800 items, has drawn similar factories across Africa as foreign investors, mostly from Asia, seize upon its incentives to give this underdeveloped continent a chance.

For workers the job can be as grueling as a day in the fields, still Africa's most common way of making a living. The Tri-Star workers, all new to formal employment, say their shoulders ache and their feet swell by quitting time, which bosses sometimes extend into the evening if a big deadline looms.

But at least they have work. Job creation has been dramatic. For the first time in some African countries, the largest employer is no longer the federal government but a private enterprise. Kenya has projected 50,000 AGOA-related jobs. Lesotho estimates it has created 10,000 new jobs in the last year, most of them going to young women.

"Made in Uganda," say some of the tags on clothing sent to Target, Mervyn's and the Children's Place. "Made in Lesotho," say others bound for stores like the Gap and Limited.

The labels, representing a tiny percentage of apparel imports to the United States, give tremendous pride to countries that have long been at the margins of the global trading system.

Although products from oil to umbrellas to fresh yams are included under the trade law, clothing exports appear to be giving stagnant African economies the biggest stimulus.

Foreign apparel manufacturers, mostly from Asia, have made a beeline to Africa, mostly because the trade law allows them to sidestep quotas that limit the apparel they may export from Asia to the United States. By shifting to Africa, manufacturers can operate quota free under the law.

Uganda has seen its exports to the United States increase from a minuscule $32,000 in 2002 to $909,000 in the first nine months of this year, an increase that will widen by year's end.

The biggest winner may be tiny Lesotho, which has become the largest African apparel exporter to the United States. Its exports grew from $129.5 million in 2001 to $267.7 million by the end of this September, according to United States government statistics.

While jobs have been created, most of those getting rich from AGOA are not Africans but Asian investors, rising numbers of whom have returned to Uganda after being expelled in the 1970's by the former dictator Idi Amin.

To fill the jobs, Uganda had a countrywide recruiting campaign, with government officials aiding in the process. Workers take home $40 a month, live in a company dormitory and eat three free meals a day at the company canteen. The jobs attract plenty of interest among Africa's legion of unemployed even if workers sometimes complain that the salaries — above average in the local market — go far quicker than they imagined.

"The products we're making are fetching a lot of money," said Rebecca Bagonza, 28, who has a diploma in social work but could find no other job than the one at Tri-Star. "Shouldn't the people who make the clothes get some of that money?"

She is not the only AGOA girl who has not completely bought into Mr. Museveni's economic blueprint for the country. The introduction of factories has also introduced something relatively rare in Africa: the labor dispute.

In an embarrassment to the president, who visited Washington earlier this month to urge American officials to extend AGOA benefits, hundreds of Uganda's AGOA workers recently walked off their jobs, accusing their supervisors of exploiting them. The AGOA girls wanted to form a union, a kind of protection that is weak in Uganda and throughout Africa.

The boss at Tri-Star, Veluppillai Kananathan, a Sri Lankan businessman, promptly fired nearly 300 workers whom he considered trouble makers.

The women marched to Parliament, camped on the lawn for nearly a week and won the sympathy of some top government officials. "The AGOA girls have a legitimate case," Dr. David Ogaram, the labor commissioner, said.

But Mr. Kananathan has connections at the top. He rebuffed attempts by officials to inspect the factory and ignored an order from the High Court to reinstate the workers.

In an interview, he likened his job to that of a father with a very large, unruly family. "The bad girls are gone," he said, strolling through the factory to show that his hundreds of sewing machines were back up and running.

Challenges remain if AGOA is going to have any lasting economic effect. To get into the market, Uganda has heavily subsidized Tri-Star, giving it an abandoned factory, waiving taxes and paying for six months of training for the workers to introduce them to sewing machines. The government gets social security tax on the workers' modest salaries and utility fees on the company's water and electricity.

But Ugandan officials hope Tri-Star is just one of many such factories that will eventually open their doors. Uganda wants to export more of the country's fresh flowers, vanilla and organic produce.

By showing that Uganda is capable of international trade, Mr. Museveni hopes to shed the country's reliance on foreign aid. But African countries must be wary about counting too much on AGOA.

The trade law is set to expire in 2008, a short time away for investors, although there is a move to extend it another seven years.

Even if AGOA remains on the books, a prime benefit that the trade law provides will be undermined in 2005 when World Trade Organization quotas on clothing and textiles expire. The elimination of the quotas will take away one of the most powerful incentives that foreign businesses now have to invest in Africa.

Next year, AGOA could be weakened in another way. As it is now, most of the apparel shipped to the United States from Africa comes from fabric made outside the continent, usually from Asia. Unless a waiver is approved by Congress, AGOA will soon require that the fabric originate in Africa.

That sounds like just what would be needed to restart Africa's shuttered textile mills. But more likely, experts say, such a requirement would raise costs for the apparel factories and prompt many of them to move out of Africa.

The lobbying campaign to improve AGOA has already begun in the halls of Congress. But a stumbling block has emerged: trade officials in the Bush administration are upset at Africa's defiant stand against trade subsidies at the recent trade organization talks in Cancún, Mexico. Enhancing AGOA is not on the fast track, officials say.