WHAT BEGAN IN 2000 as a nonreciprocal trade preference programme that was enacted by the Bill Clinton administration to boost sub-Saharan Africa’s trade with the United States, and was signed into law in May that year, has survived for a quarter of a century. Considering its history, the programme, known as African Growth and Opportunity Act (AGOA), forms part of United States trade legislation with broad bipartisan support in the US. It is the cornerstone of U.S. economic engagement with the countries of sub-Saharan Africa with a long-term commitment that could be described as somehow resilient. This survival was not without some twists, turns and various hurdles in its implementation. As a mechanism that was created to deal with 54 African countries, with all their diversities and differences, AGOA has not found the voyage particularly smooth sailing in many countries. However, for some, the AGOA agreement benefited them immensely. So, for Africa as a continent, AGOA has been a mixed bag of opportunities gained and opportunities missed, reflecting how individual countries have responded to the programme.
Broadly, the duty-free and quota-free access to the US market provided by AGOA has impacted evidently well on trade and investment between sub-Saharan Africa through a significant boost in certain areas. By providing duty-free access to the U.S. market, AGOA has succeeded in helping eligible nations grow, diversify their exports to the US and create employment as well as inclusive economic growth. Lesotho, a southern African country, found growth opportunities in AGOA. Lesotho’s garment industry, in particular, has gained significantly. Since a year after AGOA’s commencement, Lesotho’s apparel industry has harnessed the programme’s benefits successfully and strategically, accounting for more than 20 percent of all AGOA apparel exports to the US. With AGOA’s support, the apparel industry generates about 30 percent of Lesotho’s GDP. Under AGOA, eligible sub-Saharan African countries have duty-free access to the U.S. market for over 1,800 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalised System of Preferences programme.
Although Nigeria and Angola are the largest exporters under AGOA, theirs are not as diverse as their export is mainly concentrated in the energy sector. Countries with more diverse export commodities under AGOA include Eswatini, Kenya and Madagascar. In essence, in some countries, the Act has achieved its broad aims of improving economic policymaking in Africa, enabling countries to embrace globalisation, and securing durable political and economic stability. It has served as an incentive for Africa to adopt the necessary policy reform enabling increased preferential access for African exports to the US.
The status of countries vary widely under AGOA. Despite all the opportunities, only 35 out of the 49 potential beneficiaries in the Sub-Saharan Africa region currently take part in AGOA. Those suspended are 14, including Burkina Faso, Ethiopia, Mali, South Sudan, and Zimbabwe. Somalia and Sudan have not requested AGOA designation, while Equatorial Guinea and Seychelles graduated out of the programme. AGOA has been renewed several times since its inception, with the last renewal occurring in 2015. Now, its effective regime is set to expire again on September 30, 2025. However, two US Senators, Chris Coons and James Risch, anticipating the expiry of the Act, introduced the AGOA Renewal and Improvement Act 2024 on April 11, 2024, proposing an extension of AGOA by another 16 years, until 2041.
How well the outcome of this extension bodes for Africa will become evident with time. An approval of extension by the Congress could extend authorisation for the programme and modify the programme to promote other congressional priorities in the region, such as strengthening U.S. trade and investment ties with sub-Saharan Africa and increasing regional participation in global value chains.
It is important to reiterate that the notable AGOA-eligible items, which include duty-free treatment for certain apparel; handloomed, handmade, and folklore articles; ethnic printed fabrics; and for yarns, fabrics, textiles and made-up textile articles such as towels, sheets, blankets and floor coverings are originating entirely in one or more lesser developed countries. This shows that there are many yet untapped potentials for many other countries. For countries and analysts that are already complaining that President Trump’s new tariffs effectively end AGOA, or expose some African economies and sectors to serious risks, it is important to understand the need for proactive positive engagement with the US as the Act authorises the President to designate countries as eligible to receive the benefits of AGOA if they are determined to have established, or are making continual progress toward establishing market-based economies, the rule of law and political pluralism and elimination of barriers to U.S. trade. This knowledge should assist African leaders who are torn in their dealings with the Trump administration, seeking to balance their desperate need for investment with deep commitment to long-term mutually beneficial trade relationships. It could be argued, however, that inherent in AGOA are the strict eligibility requirements and out of cycle review mechanism as well as the unilateral nature of AGOA that deprive it of the necessary stability, certainty and predictability. So, going forward in the regime of the anticipated new extension, the Act needs to introduce measures to ensure greater flexibility, considering the different levels of capacity and diversity of African countries.
In modernising AGOA, the role of Congress is pivotal, such as introduction of credit to incentivise U.S. companies to make job-creating and value addition investments in specific sectors in AGOA eligible countries, including critical minerals and supply chains, digital infrastructure and skilling. The Brookings Institution suggested aligning AGOA with the implementation of the African Continental Free Trade Area. According to Brookings, one of the most significant developments to have taken place on the continent since AGOA was last renewed in 2015 is the ratification of the African Continental Free Trade Area (AfCFTA) by 47 African nations and the creation of a secretariat in Accra, a market designed to create a $3 trillion free trade area, which would be the largest in the world seen as capable of being “instrumental in reducing poverty and inequality on the continent and accelerating economic diversification, value addition, and structural transformation.” The Brookings added that, as an initial step toward alignment with the AfCTA, Congress should consider the proposal by Senator Chris Coons to modify AGOA’s rules of origin to allow inputs from North African AfCFTA countries — presently excluded from AGOA — to count toward the requirement that 35 percent of a product’s value originate in the region.
The Brookings urged the US to also continue the strategic working groups and the annual summit process that were established in the MOU with the AfCFTA secretariat during the December 2022 African Leaders Summit. It recalled that only 16 countries have developed national utilisation strategies following the extension of AGOA in 2015. It noted that those countries have seen increases in their exports to the U.S. Examples were given, such as Togo, with an increase of 91 percent of its agricultural exports to the U.S. between 2017 and 2020; Mozambique with increased AGOA exports by 813 percent between 2018 and 2020, again largely agricultural products; and Zambia with increased exports over 3,000 percent, including semi-precious stones, pearls, and copper.
Brookings advised that AGOA should be modernised in several ways to provide policy certainty and support for American companies entering the African market. It identified one strategy for lowering the risk and increasing the return on investment as through investment incentives. AGOA’s conditionalities have also been identified as exacerbating the uncertainty of the African market for U.S. companies. “As part of the original legislation, conditionalities have largely been used to deny AGOA benefits to countries where coups, conflicts, or significant human rights abuses have occurred. In practice, the individuals who are more likely to suffer the consequences of lost AGOA benefits are those who are assembling products for export to the United States — in most instances, women employees.”
The Centre for Global development (CGD) has some suggestions, for example, the restoration of Africa’s tariff advantage vis-a-vis China with negative tariffs. The Centre argued in favour of complementing access to American markets with American capital, expanding AGOA’s definition of “Africa” to match AfCFTA. In this context, it refers to AGOA’s definition of Africa roughly as sub-Saharan Africa. But the new African Continental Free Trade Area (AfCFTA) is broader, encompassing North Africa as well. It made a case for admission of African critical minerals under the new IRA sourcing rules, keeping the rules of origin as flexible as possible and making eligibility more predictable. According to the CGD, successive US administrations have used AGOA eligibility as a stick to discipline African governments and it is unclear if this works, and very clearly it imposes big costs on African economies. It observed that one of AGOA’s main benefits is providing predictable, long-term market access that justifies upfront investments in manufacturing capacity. Therefore, suspending countries too capriciously undermines this. The CGD called for the opening up of American markets to African cotton, tobacco, and beef, giving African students and businesspeople visas to build links with America and expanding AGOA’s scope to encourage trade in services. It seems clear from the foregoing that AGOA’s future lies so much in flexibility and inclusivity in the US-Africa relations to ensure mutually beneficial relationships. AGOA can therefore go on beyond 2025 if the right pieces of the puzzle are put in the right place.
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