Reinventing AGOA for the New Era of US-Africa Partnership
From 24 to 26 July 2024, the 21st AGOA Forum (#AGOA2024) took place in Washington DC after the 20th edition was held in South Africa last year. The theme of this 2024 edition was “Beyond 2025: Reimagining AGOA for an Inclusive, Sustainable and Prosperous Tomorrow“.
Senior American and African officials, representatives of the #AfCFTA Secretariat, the Regional Economic Communities (REC) making up the AU and the private sector as well as labor organizations and the civil society were in attendance. Participating organizations include the Office of the US Trade Representative (USTR), the US Department of Commerce, the US Department of State, the Corporate Council on Africa, the US EXIM Bank, #ProsperAfrica and the African Union (AU).
It is worth recalling that the current African Growth and Opportunity Act (AGOA) is set to expire in September 2025 and the new draft AGOA Renewal and Improvement Bill (S.4110) has been circulated since April 2024. US President Biden called on Congress ‘to reauthorize and modernize AGOA’, which forms the bedrock of US-Africa economic relations.
Recurring criticisms about AGOA point out that it has only benefited a handful of countries in Sub-Saharan Africa and it is mostly based on one or two products. Therefore, there is room for improvement in dividing the cake more equitably and to also diversify into other sectors.
At the top of the table is oil exports from Africa to the USA. Based on 2023 figures, out of a total of USD 9.7 billion of AGOA imports, petroleum made up USD 4.2 billion or nearly half of the total. Moreover, the oil originates from just a few countries, namely, Angola, Ghana, Nigeria and the Republic of Congo. Furthermore, the oil business tends to be controlled by a few large state-owned enterprises (#SOE) or multinationals with sometimes little to show in terms of material benefits to local communities.
On the chapter of manufactured goods made in Africa exported to the USA, Kenya and Lesotho exhibit the highest utilization rates with 57% and 74% of their respective AGOA zero-tariff quota. However, the exports is made up almost entirely of apparel. Similarly, South African exports to US is dominated by its auto industry. However, South Africa has been trying to make the case that its auto industry actually brings into play regional value chains (#RVC).
In her welcome address, US Trade Representative (USTR) Katherine Tai underlined the ‘fragility of supply chains and the challenges brought about by the climate crisis.’ The office of the #USTR has been tasked to coordinate the efforts of 17 US government agencies to promote trade and investment with the 32 AGOA-eligible countries in Sub-Saharan Africa.
While reauthorizing the #AGOA, special attention will be paid to women empowerment, youth entrepreneurship and #SME. Engagement with the African Diaspora in the US will be stepped up so that the #diaspora can contribute positively to foster the economic ties between US and Africa.
Delegates also express the wish for support via the AGOA Framework to give a boost to the burgeoning IT and #FinTech sectors across Africa. To that effect, the US has so far committed USD 82 billion to expand digital access and improve digital literacy.
AU Commissioner Muchunga highlighted the Pan-African Payment and Settlement System (#PAPSS) and Single African Air Transport Market (#SAATM) which will greatly facilitate the movement of goods and people in Africa. He went on to underscore that the Africa Investment Forum (#AIF) spearheaded by the AfDB, of which the US is a key shareholder, has generated more than USD 180 billion in interest since 2018.
In 2022, the Pan-African Stock Exchange has taken off by linking 7 national stock exchanges. This Pan-African Stock Exchange is a flagship project of the African Union in order to ‘Build the Africa We Want’.
During the Private Sector Forum, US Secretary of State Antony Blinken underscored the role of the private enterprises in deepening economic ties between US and Africa. Since the US-Africa Leaders Summit (#UALS2) in December 2022, some USD 16 billion in deals have been closed between the US and African private entities.
One of the initiatives worth highlighting is the creation of the Africa Trade Desk back in March 2024. The Desk helps African agricultural producers connect with more than 20,000 US retailers such as Walmart, Whole Foods, etc. As part of the flagship contracts, a USD 56 billion deal was sealed to import South African grapes into the US.
“By allowing products from sub-Saharan countries to enter the United States without paying tariffs, AGOA has let entrepreneurs expand to new markets to grow their businesses. It’s created tens of thousands of good jobs across our nations – from Portland, Oregon to Port Louis, Mauritius. It’s helped companies further diversify and strengthen their supply chains – so that consumers can benefit from more affordable, more innovative products.”
US State Secretary Antony Blinken
Another item on the #AGOA Agenda concerns the securing of the supply of #CriticalMinerals essential to future industries and in the fight against #ClimateChange. Thus, another bellwether project is the #LobitoCorridor in the #SADC regional economic community (REC). The US, along with other development partners, is contributing USD 3 billion in upgrading and extending one of the vital #EconomicCorridors to ease access to #CriticalMinerals.
On the climate front, the US EXIM Bank has approved financing to the tune of USD 1.6 billion to implement #PV projects in Angola. Since January 2021, the US International Development Finance Corporation (DFC) has committed nearly half a billion dollars to climate-related projects which reduce carbon emissions or improve energy efficiency.
In 2025, the 22nd AGOA Forum will return to Africa. Mauritius — hailed as an economic success and on track to graduate from AGOA — has expressed interest in hosting the next edition as the expiration of the current AGOA looms over the horizon.