- China’s growth to a position of nearly unparalleled influence in Africa has raised concerns in Washington, D.C.
- In the context of China’s growing presence in Africa, AGOA serves as a counterbalance to Chinese economic influence.
- The US is leveraging AGOA to offer an alternative path to development that aligns with American values and economic principles.
The African Growth and Opportunity Act (AGOA) has played a pivotal role in the economic relations between the US and Africa. Since its enactment by the US Congress in 2000, Agoa has offered African nations preferential access to American markets, promoting trade and economic growth. In recent years, however, AGOA has become a focal point in the intensifying competition between the US and China for influence in Africa.
China’s growth to a position of nearly unparalleled influence in Africa has raised concerns in Washington, D.C. While introducing a Bill to extend AGOA through 2045 in the US Congress, Sen. John Kennedy (R-La.) made some startling remarks.
The senator, while stressing the importance of Agoa in checking China’s presence in Africa, noted: “The African Growth and Opportunity Act has been the cornerstone of economic ties between the United States and Africa. Over the next two decades, the AGOA will play a pivotal role in helping Americans deter China’s growing influence throughout the region. This extension would allow the United States to keep working closely with African nations to grow our economies, reduce poverty and ensure that American values prevail in the region,” said Kennedy.
AGOA: an economic bridge for sub-Saharan Africa
AGOA was established as a cornerstone of US foreign policy toward Africa under President Bill Clinton. Its aim is to foster economic development, reduce poverty, and promote stability across the continent.
The Act provides African countries with duty-free access to US markets for a wide range of products, including textiles, agricultural goods, and manufactured items. This has boosted African exports to the US, providing African economies with a much-needed avenue for growth.
Furthermore, the trade deal encourages African countries to adopt market-based economies, support democracy, and protect the rule of law. Today, roughly 36 countries are eligible for AGOA benefits. AGOA textiles and apparel exporters employ between 240,000 and 290,000 workers, most of them women. In the US, the programme supports nearly 120,000 jobs.
According to the Senator, the AGOA Extension Act of 2023 will extend the program for 20 years to 2045. Congress last extended AGOA in 2015 by 10 years, authorizing the trade plan through 2025.
China’s expanding presence in Africa
China’s engagement with Africa has witnessed exponential growth over the past two decades. The Chinese government has made substantial investments in infrastructure projects, resource extraction, and trade with African nations.
As of 2021, China’s trade with Africa reached $250 billion, surpassing the $62 billion in US-Africa trade volume. There is no doubt that China’s involvement has led to significant infrastructure development in Africa. However, it has also raised concerns regarding transparency, environmental sustainability, and the potential for debt-trap diplomacy.
Economic experts warn that the extensive debts burdening African countries pose a significant risk to their recovery and growth. These debts, largely owed to China, could potentially push more countries further into poverty and unemployment. Additionally, these debts may prevent countries from accessing international credit markets to support their future rebuilding efforts.
“We want to make sure that we don’t create the same problems that Chinese investment has sometimes created here,” US Treasury Secretary Janet Yellen said in January when she visited Zambia. Yellen was on the second leg of an African tour to promote American investment and ties in Africa.
Read also: China’s Crucial Role in Africa’s External Debt Restructuring Arrangements
AGOA’s significance in the US-China competition in Africa
The US and China have increasingly found themselves in a battle for influence in Africa. China’s Belt and Road Initiative (BRI) and the US’s Prosper Africa program are two prominent examples of this competition. In this battle for the heart of Africa, AGOA has emerged as a key instrument for the US.
As of last year, exports to the US under the act were valued at $16.5 billion, with South Africa taking the lion’s share. In a statement by US lawmakers calling for the extension of the act, House Foreign Affairs Committee chairman Michael McCaul noted, “Africa is on the precipice of an unprecedented demographic boom. The timely reauthorisation of AGOA is important to provide business certainty and show the US’ continued support towards Africa’s economic growth.”
Top importers from China
In contrast, China-Africa trade experienced a decline in 2020, with its total value dropping from $192 billion the previous year to $176 billion. However, there was a significant rebound in 2021, as the trade value surged to $251 billion. During 2021, South Africa emerged as the primary exporter to China from the African continent, with Angola and the Democratic Republic of Congo (DRC) following suit. In the same year, Nigeria maintained its position as the top importer of Chinese goods, with South Africa and Egypt being the subsequent major buyers.
AGOA mandates that US legislators conduct yearly eligibility reviews of beneficiaries. Eligibility criteria include that beneficiaries should not be involved in gross violations of internationally recognized human rights. Participating countries can face penalties for supporting acts of terrorism or engaging in activities that undermine US interests.
Read also: Job losses on the horizon as US drops four African countries from Agoa
Democratic and market-oriented policies under AGOA
Unlike China, which rarely involves itself in the internal affairs of specific countries, AGOA contains provisions that encourage African nations to adopt democratic and market-oriented policies. This ultimately helps promote good governance, human rights, and economic reforms. Overall, this aligns with US values and ideals, creating a basis for positive engagement with African nations.
Countries that fall short of these provisions face penalties. Last week, President Joe Biden ousted the Central African Republic (CAR), Uganda, Gabon, and Niger from AGOA, citing their “non-compliance” with eligibility criteria.
Over the decades, AGOA has allowed the US to deepen diplomatic relations with African nations. Through trade ties, the US has fostered alliances, engaged in dialogues on security, and worked collaboratively on addressing global challenges, such as climate change and counter-terrorism.
In the context of China’s growing presence in Africa, AGOA serves as a counterbalance to Chinese economic influence. The US is leveraging AGOA to offer an alternative path to development that aligns with American values and economic principles.
The US trade representative, Katherine Tai, led the US delegation to the South Africa meeting. She emphasized the impact of AGOA on African enterprises and its significance to the US. She said, “AGOA remains the cornerstone of the US economic partnership with Africa. Let us not forget the real impact that AGOA has had on real lives, real people.”
Implications for Africa
Statistics reveal that in recent years, over 80 per cent of non-petroleum AGOA exports eligible for duty-free treatment have come from only five countries: South Africa, Kenya, Lesotho, Madagascar, and Ethiopia. Today, the US is Kenya’s largest export market largely on account of AGOA-based trade.
“We don’t just want to extend AGOA. We want to work with the US Congress to make it even better,” Secretary of State Anthony Blinken told US officials and trade ministers from Africa at a forum in Johannesburg discussing AGOA’s future.
As the US-China battle for influence in Africa unfolds, the continent finds itself in a unique position. AGOA provides African countries with an opportunity to diversify their economic partnerships, mitigating over-dependence on a single superpower. However, this competition should also serve as a reminder of the importance of African agency in shaping its own destiny. African nations must harness the advantages presented by both the US and China while safeguarding their sovereignty and economic interests.
For over two decades, AGOA has played a vital role in the US-China competition for influence in Africa. It offers African nations a valuable platform for economic growth and diversification of partnerships. The battle for influence in Africa, however, extends beyond trade and economics; it encompasses diplomatic relations, governance, and development.
As the competition continues under a renewed AGOA trade deal, African nations will need to navigate this complex landscape. They must draw from the advantages presented by both superpowers. Moreover, African countries safeguarding their independence and economic interests. The outcome of this competition will significantly shape the trajectory of Africa’s economic and political future.
