The US State Department says that it wants to extend the benefits of its African Growth and Opportinity Act (AGOA) to least developed countries who are currently “barely using the programme”.
AGOA, which is due for renewal by the US Congress this year, provides African exporters with tariff-free access to the US market. The 21st African Growth and Opportunity Act (AGOA) Forum, held in Washington DC this month, saw policymakers discuss how to make the act more inclusive and effective.
Constance Hamilton, the assistant US trade representative for Africa said: “What we really want to do is strengthen the usage of the program, especially by the least developed countries. When we look at the experience of AGOA, we’re finding that maybe four or five countries are using it fully, and maybe one or two is using it more than everyone else, but the least developed countries are barely using the program.”
Ahead of the Forum, President Joe Biden called on the US Congress to “quickly re-authorise and modernise” AGOA. Biden said the deal “formed the bedrock of America’s economic partnership with African nations”, and claimed it created “tens of thousands of quality jobs” in Africa and “investment opportunities and new markets for American businesses.”
Joy Basu, state department deputy assistant secretary for African affairs, said there are many ways in which the US government is trying to increase utilisation of the Act. Basu said the administration has hired 100 AGOA advisors in 30 AGOA-eligible countries to give targeted advice, particularly to small and medium-sized businesses, on using the scheme.
“Many small – and medium-sized enterprises either don’t know about AGOA yet or find it difficult to kind of complete the legal work that is necessary,” he said.
African governments must also take responsibility for increased utilisation, said Hamilton, who said that “there’s a strong recognition that there’s a certain amount that the American government and African governments can do to create the right setting” for its success.
Country eligibility
AGOA has been a cornerstone of US policy to Sub-Saharan Africa since it was enacted in 2000, and was last reauthorised in 2015. The agreement allows eligible countries to export more than 1800 products duty-free to the US.
It covers products from BMW and Mercedes cars assembled in South Africa to Kenyan flowers and Rwandan garments. South Africa was the largest exporter under the agreement in 2021. It generated about $2.7bn in revenue, mostly from the sale of vehicles, jewellery and metals.
Participating countries are required to meet a set of conditions to qualify to trade under the programme. They include the removal of barriers to US trade and investment, support for political pluralism and rule of law, protection of internationally recognised human rights, and not engaging in activities that undermine US national security or foreign policy interests.
As of 2024, there are 32 eligible countries. In January 2022, Ethiopia suffered an economic blow when it lost its beneficiary status for violations of internationally recognised human rights during the war in the Tigray region.
South Africa’s AGOA status has been a source of contention as a result of its foreign policy choices, including warm ties with Russia and Iran and its leading role in referring Israel to the International Court of Justice on charges of alleged genocide in Gaza.
Hamilton responded to a question by a South African journalist about whether South African minister of trade, industry and cooperation Parks Tau was successful in convincing the US not to remove the country from AGOA. Tau led a South African delegation comprised of government, private sector, civil society and organised labour.
Hamilton said that South Africa is currently under review and that it was too early to predict the outcome for any country. The country review process to determine eligibility is done annually by the president.
AGOA renewal
Many participants at the AGOA Forum stressed the urgent need to give potential investors greater certainty that AGOA would be renewed.
Hamilton said that “Congress is completely in charge,” though, she was “very confident” that it would be renewed before its expiry date. She did not give a date but indicated that it could be completed in early 2025.
Since its inception, Africa’s tiny share of US global trade has barely flickered, peaking in 2008. In 2021, AGOA accounted for just 1% of US imports.
However, several US lawmakers see AGOA as a crucial tool in thwarting China’s influence in the region.
“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 Senator John Kennedy, after proposing a bill that would see AGOA extended for another 20 years in late 2023.