African Development Foundation

A United States Government Agency

USADF and agoa

USADF contributes to the goals of the African Growth and Opportunity Act by helping African small entrepreneurs access new regional and international markets. The Foundation provides expansion capital and management, marketing, and technical assistance to African-owned businesses and producer groups seeking to develop products for global customers.

USADF Presents Its Investment Model At The 2007 AGOA Forum In Ghana ... click here for details

USADF's Role under AGOA

• What is AGOA?

• What is USADF's role under AGOA?
  The United States Trade Reprentative's (USTR) 2006 AGOA Report

• 2006 AGOA Report of the African Development Foundation
  (pp. 45-47 of USTR 2006 AGOA Report)
• 2006 African Development Foundation Project Examples
  

What is AGOA?

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets. President Bush signed amendments to AGOA, also known as AGOA II, into law on August 6, 2002 as Sec. 3108 of the Trade Act of 2002. AGOA II substantially expands preferential access for imports from beneficiary Sub-Saharan African countries.

AGOA currently provides 37 African countries with the most liberal access to the U.S. market available to any country or region with which the United States does not have a Free Trade Agreement. AGOA expands the list of products that eligible Sub-Saharan African countries may export to the United States subject to zero import duty under the Generalized System of Preferences (GSP). While general GSP covers approximately 4,600 items, AGOA GSP applies to more than 6,400 items. AGOA GSP provisions are in effect until September 30, 2008, nearly two years longer than general GSP.

AGOA can change the course of trade relations between Africa and the United States for the long term, while helping millions of African families take advantage of opportunities to build prosperity:

By reinforcing African market efforts;

By providing improved access to U.S. technical expertise, credit, and markets; and

By establishing a high-level dialogue on trade and investment.

Since its implementation, AGOA has encouraged substantial new investments, trade, and job creation in Africa. It has helped to promote Sub-Saharan Africa's integration into the multilateral trading system and a more active role in global trade negotiations. It has also contributed to economic and commercial reforms which make African countries more attractive commercial partners for U.S. companies.

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What is USADF's role under AGOA?

When Congress first enacted AGOA in 2000, the legislation highlighted USADF’s unique congressional mandate as an organization charged with generating opportunities for Africa’s poorest citizens to participate fully in development by expanding opportunities for the creation of sustainable small businesses, quality jobs, family-supporting incomes, and a more equitable distribution of income across African societies. AGOA notes that USADF has worked successfully to enhance the role of women as agents of change; strengthen the informal sector with an emphasis on supporting micro- and small-sized enterprises and indigenous technologies, and mobilize local financing. The legislation also defines a clear role for USADF under AGOA: the development and implementation of strategies that promote participation in the socio-economic development process of grassroots and informal sector groups such as nongovernmental organizations, cooperatives, artisans, and traders into the programs and initiatives established under AGOA.

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The United States Trade Reprentative's (USTR) 2006 AGOA Report

Under reporting requirements mandated by the African Growth and Opportunity Act (AGOA), the President of the United States is required to submit annual reports to Congress on United States trade and investment policy toward Africa and the potential to establish free trade agreements between the United States and African nations. The President’s annual report for 2005, prepared by the Office of the United States Trade Representative, was released in May. The following excerpt summarizes activities undertaken by the United States African Development Foundation, in its role as an independent corporation of the United States Government, to enhance the capacity of African small- and medium-enterprises to pursue sustainable overseas trade and investment opportunities.

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2006 AGOA Report of the African Development Foundation
(pp. 45-47 of USTR 2006 AGOA Report)

The United States African Development Foundation (USADF) is a U.S. Government agency and corporation that invests directly in African small and medium-scale enterprises, agri-businesses, and smallholder farming operations, in order to diversify their product lines, enhance quantity and quality of production, and enable them to access regional and global markets.   ADF’s business model – which involves African-led, on-the-ground operations, country- and industry-specific investment strategies, host government co-investment and private sector partnership – allows the agency to serve as a catalyst for enterprise development in Africa and for advancing the goals of AGOA. 

USADF responds to unsolicited funding proposals from African small- and medium-sized companies, agricultural producer groups, cooperatives, and community-based organizations. USADF helps its grantees diagnose their constraints, assess market opportunities, conduct rigorous financial analyses on investment options, and develop business plans to support commercially viable activities that generate income for owners, employees, and agricultural suppliers. USADF- supported enterprises receive up to US$250,000 in grant financing, but they commit to contribute up to 100 per cent of the grant amount – based on business projections and actual profitability – to a local development trust. 

The Trade and Investment (T&I) program is USADF’s fastest growing program area.  USADF’s investments in T&I projects have generated rapid and impressive impact over the past five years.  During FY2005:

USADF made direct investments in 25 new enterprises, totaling US$5,627,298.

T&I projects accounted for 49 percent of new obligations.

The proportion of T&I projects in USADF’s total portfolio grew to 26 percent, up from 10 percent in FY 2002.

95 percent of all projects with export targets had already had export sales to regional markets in Africa and to overseas markets in the United States, Europe and Asia.

The diverse range of almost 50 export products included:  organic spices (vanilla, ginger, paprika, chili peppers), specialty fruits and vegetables (organic mangos, snow peas, dried pineapple), rock lobster, Nile perch, packaged ethnic foods, ostrich skins and wet blue hides, citronella and black teas, specialty and fair trade coffee, essential oils, textiles (reeled silk, dye-tie and embroidered clothing, and other finished products), decorative ceramics, and solar hearing aids.

Export revenues of USADF-assisted enterprises totaled US$33.8 million, an almost 60 percent increase over the previous year.

USADF concluded two new strategic partnerships with African governments which leverage matching contributions for USADF-funded T&I projects.  The highlight was a $5 million annual commitment from the Government of Ghana to grow small, indigenous-owned businesses and involve them in the global market.

USADF’s T&I program helps launch smaller-scale African enterprises and agricultural producers into the global economy by:

Identifying and promoting the production of high-value, non-traditional crops that are in demand in world markets;

Supporting the development of African-owned value-added processes so that more revenue remains at the level of the producers or with local enterprises;

Providing producers with the technical assistance, training, and technology to enable them to meet international quantity requirements and quality standards;

Forging supply chain opportunities for small producers; and

Assisting small businesses in establishing trading partnerships with international buyers.

In FY2005, USADF funded T&I projects across a range of sectors, including agriculture and food processing, aquaculture, mineral extraction, printing, handicrafts, furniture construction and transportation.  After only a year, a number of these are already demonstrating substantial growth in outputs and revenue.  Moreover, T&I projects funded in previous years continue to perform well, demonstrating a commitment by African small-scale enterprises to meet established business targets and the demands of international markets.  Of equal importance is the impact that these enterprises are able to have on their communities, in terms of job creation and increased incomes, and, in some cases, shared ownership amongst employees. 

2006 African Development Foundation Project Examples

Four USADF-funded T&I projects demonstrate the success and impact of USADF’s investments in small, African-owned businesses. 

Bosbel Vegetable Oil Mills Ltd., located in southwest Ghana, specializes in the production of vegetable and groundnut oils for the Ghanaian and export markets. Aging equipment and limited resources were hampering Bosbel’s ability to meet increased demand both from the local and export markets.  In FY2004, Bosbel Vegetable Oils was approved for the equivalent of $245,117 in funding support, enabling it to expand production.  Since USADF’s intervention commenced, Bosbel Vegetable Oils has experienced revenue growth of $306,977, of which over 50 percent is derived from exports. (see 1560 for more details)

The Tanzania Mtibwa Sugar T&I project has demonstrated an impressive capacity to scale up its production to meet the demands of the export market through its support for the production of small-scale sugarcane outgrowers. First funded during FY2002, Mtibwa Sugar has increased its gross export revenues by 423 percent over the past three years, rising to over $5 million in FY2005.

Ruembe Outgrowers Association, another small-scale sugarcane producer in Tanzania, has already exceeded most of the targets established when it was approved for $228,740 in USADF funding in FY2004.  Yields per hectare are up 30 percent and cumulative export sales stand at US$4.7 million.  The number of participating cane farmers has increased by 50 percent since project inception and the income of the 1440 growers has almost doubled as a consequence of USADF’s investment. (see 1516 for more details)

Kelvin Shaun Investments Ltd., Uganda, a hydrated lime processing business, received a $250,000 grant in FY2005 to enable it to expand production and meet market demand.  Support from USADF allowed the firm to construct new facilities, procure equipment, and purchase inputs. Kelvin Shaun has subsequently secured a contract to supply an international construction company with 200 metric tons of hydrated lime valued at $259,500.  The company’s net income has increased 17-fold since USADF support commenced. (see 1556 for more details)

USADF operated in 15 sub-Saharan African nations during FY2005: Benin, Botswana, Cape Verde, Ghana, Guinea, Mali, Namibia, Niger, Nigeria, Rwanda, Senegal, Swaziland, Tanzania, Uganda, and Zambia. Of these, Rwanda and Zambia represent new country programs established in FY2005.

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