Africa – The African Growth and Opportunity Act (AGOA), a pivotal trade agreement between the United States and sub-Saharan African countries, has significantly bolstered trade and investment, aiding economic growth and job creation across Africa.
According to World Economic Forum, With African countries advocating for its extension, AGOA continues to play a crucial role in the continent’s economic landscape.
Increased Trade and Diversification
AGOA has enabled a marked increase in trade between Africa and the US. Key African countries have seen success in exporting a range of goods under AGOA, with notable examples including textiles and apparel from countries like Kenya, Ethiopia, and Mauritius. For instance, Kenya’s apparel-dominated AGOA sales escalated from $55 million in 2001 to $603 million in 2022, while South Africa’s automotive exports to the US surged by 447.3% under AGOA during the same period.
Diverse Export Profiles
Each participating country showcases unique success stories under AGOA. Ghana’s exports, primarily non-oil products, to the US grew significantly, and Mauritius, Mali, Mozambique, and Togo have also benefited from exporting a variety of goods to the US.
Impact on Industrialization and Employment
AGOA has particularly impacted industrialization efforts, as evidenced by Ethiopia’s experience. The country’s industrial parks, largely focusing on textiles and garments, have created thousands of jobs and attracted substantial foreign investment, driven by AGOA’s duty-free and quota-free access to the US market.
Value Addition and Economic Transformation
AGOA has stimulated value addition in a region traditionally known for exporting unprocessed items. Its influence in enhancing Africa’s industrial product exports to the US, the European Union, and within the continent itself has been significant, aligning with Africa’s goal of economic transformation through manufacturing and industrialization.
US-Kenya Strategic Trade and Investment Partnership
The US and Kenya are currently negotiating a strategic trade and investment partnership focused on increasing investment and promoting inclusive economic growth. This partnership aims to support workers, consumers, and businesses and is distinct from a bilateral free trade agreement, as it does not entail new market access arrangements.
Recommendations for Enhancing AGOA’s Benefits
To maximize AGOA’s benefits for sub-Saharan Africa, several recommendations have been proposed:
Extending AGOA for at least 20 years to ensure market access predictability and investor confidence.
Including North African countries in AGOA to support continental trade integration through the Africa Continental Free Trade Agreement.
Revisiting the scheme’s suspension criteria, which currently penalize private firms and workers for governmental non-compliance with eligibility requirements, although this change seems unlikely given US policy.
As African countries navigate global economic disparities, trade concessions like AGOA remain crucial for their development and economic diversification.