What Is AGOA?
The African Growth and Opportunity Act is a Trade Act that was enacted by the United States Congress on the 18th of May, 2000. This legislation significantly enhances the chances of accessing the US market for qualifying Sub-Saharan African nations. It provides duty-free access to the markets for over 6,000 different products. In order to qualify as well as maintain AGOA eligibility, each nation must be working towards improving its human rights, rule of law and have respectable core labor standards. For instance, the US recently removed Cameroon from AGOA over allegations of human rights violations.
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How African Businesses Can Take Advantage Of AGOA
By granting duty-free access to one of the world’s biggest markets, AGOA has created unique opportunities for African businesses, small or big, to improve their product quality and expand their global reach. But, that’s not all. It also confers beneficiary states competitive advantages over non-AGOA nations as these are required to pay the normal tariff rates in order to do business in the US market. This is especially true when it comes to products that have considerably high United States tariff rates like footwear, apparel and agricultural-based products.
Furthermore, through the U.S. Agency for International Development (USAID) and other U.S. agencies, AGOA provides capacity building support to African businesses and fosters relationship building with their counterparts in the United States. It significantly facilitates business operations, especially for Africans in the diaspora who are looking to build trade operations between Africa and the USA.
How African Nations Can Take Advantage Of AGOA
AGOA promotes export diversification through its provision of quota-free and duty-free benefits to qualified products that come from AGOA countries. As mentioned above, AGOA provides duty-free access to the US markets for over 6,000 different products. Though Oil remains the primary export under AGOA, apparel exports have been growing, especially from countries like Ethiopia. The trade act offers opportunities to develop new growth and employment sectors for many countries.
Some AGOA Stats?
Total 2-way products traded between Sub-Saharan Africa and the United States increased by 5.8%. It increased from 36.9 billion USD in 2015 to 39 billion USD in 2017
Countries in East Africa reached nearly one billion USD in exports to America under AGOA with the support of the USAID Hub. This was between 2017 and 2018, resulting in a seventeen percent rise.
Top Sub-Saharan Africa exports to the US include: 11.2 billion USD for oil, 4.1 billion USD for precious metals, 1.2 billion USD for cocoa, 950 million USD for iron and steel.
The top African suppliers to the US market include; South Africa with 7.8 billion USD, Nigeria with 7.1 billion USD, Angola with 2.6 billion USD, Cote d’Ivoire with 1.2 billion USD and Botswana with 772 million USD.
While oil comprises a significant proportion of Africa’s exports under AGOA, Agricultural products are a promising area. Unfortunately, much work needs to be done to help African producers meet American sanitary and phytosanitary requirements for export. The U.S. Agency for International Development (USAID) is providing technical assistance to help producers meet the export standards. They have set up three regional trade hubs in Africa for this purpose, in Accra, Ghana; Gaborone, Botswana; and Nairobi, Kenya.