- AGOA has been a cornerstone of the U.S trade policy in Sub-Saharan Africa since the year 2000.
- The non-reciprocal trade preference programme that provides duty-free access to the U.S market.
- A range of manufactured goods and processed mineral products account for the bulk of exports.
African countries are pulling together to lobby the U.S Congress to approve the renewal of the Africa Growth and Opportunity Act (AGOA) this year.
Kenya and South Africa are leading the push to have a 10-year extension on the pact that allows a select number of African countries to export finished products to the US.
AGOA has been a cornerstone of the U.S trade policy in Sub-Saharan Africa since the year 2000.
The non-reciprocal trade preference programme that provides duty-free access to the U.S market, for about 40 eligible African countries, is set to expire in 2025.
Initially, it was intended to last 15 years from the year 2000. It was however extended for 10 years to September 2025 after Congress passed legislation modernising and extending the programme.
It has since then been giving duty-free access to the U.S market for over 7,000 products from the African market.
Top beneficiaries have been Nigeria, Angola, South Africa, DR Congo, Kenya, Chad, Gabon, Lesotho, Mauritius and Swaziland.
Exports from the group of AGOA beneficiaries collectively increased by 49 per cent in 2021, according to data by the U.S trade commission a few days ago.
They were valued at over $27.4 billion, compared to $18.4 billion in 2020. 2021 exports to the U.S. from this group of countries were also at their highest since 2013.
A range of manufactured goods and processed mineral products account for the bulk of exports.
They include textile and articles of apparel, refined non-ferrous metals, iron and steel goods, automotive parts, agricultural exports as well as a range of other industrial.
“Kenya is the largest exporter of garments under the AGOA programme. We pride ourselves on manufacturing for big names such as H&M, Levi’s, JC Penny, Wrangler, and Otto, among others,” Kenya Association of Manufacturers Chief Executive Anthony Mwangi says.
The expiry of the Act, which is less than two years away, is now proving to be a concern for Africa, even as countries such as Kenya push for individual Free Trade Agreements.
With trade and investment ministers from the continent set to meet in South Africa in March – April, they have already initiated a conversation that will see them lobby Congress to have the pact renewed this year.
“We have agreed that we want renewal to happen in 2023,” Kenya’s Investment, Trade and Industry Cabinet Secretary Moses Kuria told journalists in Nairobi.
But why this year?
According to the ministers, an early renewal ahead of the 2025 expiry will ensure investor confidence in the countries.
This includes those seeking to put their money in Special Economic Zones (SEZs).
An SEZ is an area in which the business and trade laws are different from the rest of the country.
SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation and effective administration.
Investors enjoy tax incentives to encourage them invest with a major focus being the export market.
Prolonged delays in extension of AGOA is said to be putting eligible countries in jeopardy, because of investors uncertainty.
“We are already facing that problem where an investor is saying…’yes you want me to put my millions of dollars into textile and other products, but how sure are you AGOA will be extended?,” the Kenyan minister said.
“That is why we are all united to see how we can be able to work with the US congress to ensure that we get an early renewal,” he added
The lobbying will however not affect Kenya’s trade talks with the US as negotiations commence next month.
During a meeting with the congressional black caucus in the US, in September last year, South Africa President Cyril Ramaphosa said: “The renewal of AGOA is vital to ensure that the progress made over many years to strengthen trade and investment ties between the US and the continent is not lost.”
During a ministerial engagement in Washington DC, on the sideline of the US-Africa leaders summit, ministers from the continent said the Act should be extended to 2035.
The call for an extension comes even as the continent pushes on with the African Continental Free Trade Area (AfCFTA).
An extension, ministers from the continent say, will allow the continent align it’s trade and investment with the US under AfCFTA.
There have however been augments that AGOA has failed to achieve an increase in the quantity and quality of exports to the US market, despite two decades in operation.
While Africa is seeking a continuation of preferential market access, the US is likely to agree to an extension, experts say, as it seeks to retain its ties with the continent.
This is in the wake of an aggressive penetration of the continent by China, which has in recent years become a key financier of mega projects in leading economies.
China has also extended billions in credit (loans) to African governments, a move that has raised concerns over its intentions, with fears of a takeover of key infrastructure facilities such as ports, airports and rail projects in case of defaults. It has been accused of setting a “debt trap” for Africa.
The Asian country has however dismissed the accusations even as it points fingers at multilateral and commercial creditors.
Speaking in Ethiopia during his recent five-nation tour of Africa, Foreign Minister Qin Gang said China’s projects and cooperation with Africa have contributed to the development of the continent and improved people’s livelihood.
Qin says Beijing is committed to helping countries alleviate their debt burdens and highlights its role in a G20 initiative to help borrowers. Last year, China issued 23 debt reliefs for 17 African countries.
The US has in recent years forged closer ties with the continent.
President Biden told African leaders at the US-Africa summit in December that Africa belongs at the table in every room…in every room where global challenges are being discussed and in every institution where discussions are taking place. I said…the United States is all in on Africa and all in Africa.”
Earlier in September, at the United Nations General Assembly, Biden had said the US would fully supports reforming the U.N. Security Council, to include permanent representation for Africa.
He has also called for the African Union to join the G20 as a permanent member of the G20.
Over the next three years, the US plans to commit $55 billion in Africa to advance for what Biden said were shared priorities and to support the African Union’s Agenda 2063.
That number represents a comprehensive commitment from the United States to invest in Africa’s people, Africa’s infrastructure, Africa’s agriculture, Africa’s health system, Africa’s security, and more,” Biden said.