Revising the African Growth and Opportunity Act: Perspectives from Africa
Global South Experts Turn the Tables
As Congress plans to renew AGOA, it should commit to addressing the program’s shortcomings in providing eligible African countries with duty-free market access
Every month, the Global South in the World Order Project convenes a meeting of experts from across the Global South to discuss key issues in international affairs that challenge conventional wisdom and inject non-Western perspectives and viewpoints into prominent policy debates in Washington. This publication is part of the Global South Experts Turn-the-Tables series, which highlights insights from select participants in these discussions.
U.S. lawmakers are revising the African Growth and Opportunity Act with a view to extending the trade program for another 16 years. The legislation is regarded as the cornerstone of economic relations between the United States and African countries, and many in Washington argue that it has contributed to economic growth and prosperity among its participant nations. But some experts have identified flaws in the legislation, which they argue hinders AGOA’s benefits from being evenly distributed across the continent. To improve the program’s effectiveness, African perspectives should be taken into account and lawmakers should reconsider AGOA’s bilateral, non-negotiable terms, including the annual certification review process, which impedes sustainable growth for African firms.
In April 2024, lawmakers in the U.S. Congress introduced the AGOA Renewal and Improvement Act of 2024 to extend the African Growth and Opportunity Act (AGOA) for another 16 years. AGOA is a trade preference program that provides eligible African countries with duty-free market access to the United States. The legislation, which was first enacted in 2000, is regarded as the linchpin of economic relations between the United States and African countries. AGOA’s proponents argue that it has advanced economic prosperity on the continent.
But despite the rave reviews that the program has received in Washington, it has drawn more mixed reviews on the African continent. Many experts argue that the legislation lacked input from African partners at its conception and operational flaws hinder its effectiveness. In addition, they say that AGOA’s benefits have not been evenly distributed across the continent due to its rigorous eligibility requirements. Large economies oriented around extractive industries in Angola, Kenya, Nigeria, and South Africa have significantly benefitted from AGOA while smaller participant nations generally have not. As a result, African opinions about the agreement vary considerably.
Furthermore, AGOA’s annual certification review creates disruptions and uncertainty for local firms, eroding the program’s trade preference systems to promote sustainable economic growth. Many African governments and entrepreneurs also tend to be unfamiliar with U.S. compliance standards and struggle to navigate AGOA’s framework, which suggests that the program’s flaws are not just about its execution but also have to do with its design.
Nearly 25 years after AGOA’s launch, U.S. lawmakers should strengthen the legislation by taking into account recommendations from a wide array of African stakeholders. The 2024 AGOA Forum, which will be held in Washington from July 24 to 26 and will bring together U.S. and African officials to discuss ways to strengthen the program, provides a good opportunity for such an exchange of views.
What Challenges Should Be Considered to Enhance the Effectiveness of AGOA Implementation?
Cham Etienne Bama, Board Member at Fairtrade Africa, shares perspectives from Cameroon
Since 2000, AGOA has provided exporters in eligible African countries like Cameroon with duty-free access to the U.S. market. To support this initiative, U.S. officials established regional Trade and Investment Hubs in West, East, and Southern Africa. The hubs aim to deepen regional integration across Africa, boost the competitiveness of select regional agricultural value chains, promote two-way trade with the United States under AGOA, and facilitate investments and the technology transfer needed to strengthen trade linkages within Africa and global markets.
Firms in several countries tapped into the resources available at these hubs to gain access to the lucrative U.S. market by implementing policy and business reforms that raised their export capacity. According to data on AGOA implementation from the South Africa-based Trade Law Centre, firms in Botswana, Ethiopia, Kenya, and South Africa made extensive gains from the U.S. Generalized System of Preferences (GSP) regime, which gives duty-free treatment to certain products from developing nations and inspired AGOA’s creation. A key distinction between AGOA and the GSP is that the former extends duty-free preferences to many products that were considered too sensitive for the GSP regime (such as textile and clothing products) and does not contain the GSP’s more regular, exhaustive renewal process, particularly for goods from the apparel, textile, and leather industries.
But despite these tangible successes, most eligible countries have struggled to meet the requirements needed to export products to the United States under AGOA. The scheme’s annual certification process, which is unilaterally enforced by the United States without the possibility of appeal if a country is suspended from participating in the program, creates volatility and stifles Foreign Direct Investment (FDI) inflows to local economies.
The lack of a standing forum—like a secretariat—that brings together senior officials from the United States and African countries to iron out key issues of trade and investment has not helped AGOA’s implementation. The annual AGOA Forum was created to bring U.S. and African government officials together to assess the program’s implementation, identify challenges, and provide solutions. But, so far, it has struggled to do so; the forum is more akin to a commercial trade fair than a platform to advance bilateral trade. The two-day event does not provide enough time for policymakers to engage with an extensive range of trade and investment-related issues and topics, including the distinct priorities and different levels of economic development among AGOA’s participant nations. The forum’s role could be augmented by the creation of a permanent secretariat tasked with designing AGOA’s implementation strategy, coordinating it among the participating nations, and conducting monitoring and evaluation assessments. It would then create quarterly reports that would be disseminated to relevant stakeholders, who could adopt the secretariat’s recommendations.
If U.S. lawmakers decide to renew AGOA, they should also consider eliminating the annual certification process and instead target funding for the regional Trade and Investment Hubs. This could be a more effective method of forcing a change of behavior among errant governments, as the businesses which benefit from the hubs might exert pressure on their governments if they lose out on those benefits.
For their part, African governments should create institutional mechanisms, such as AGOA national coordination units, to attract investments in infrastructure, energy, and resource value chain development. They should also develop priority trade areas in which their companies have a comparative advantage, much like Benin, Ethiopia, and Togo have done for their cotton industries.
What are Some Perspectives From Across the African Continent on AGOA’s Successes and Shortcomings?
Lethabo Sithole, Managing Director at Amila Africa, shares perspectives from South Africa
Trade preferences like AGOA and the GSP have been touted as sustainable alternatives to aid-based partnerships, and are believed to spur economic prosperity in developing countries. AGOA aims to strengthen economic ties between the United States and African countries by promoting trade and investment as a means of encouraging growth on the continent. In 2022, AGOA-eligible countries exported goods worth $30 billion to the United States, but only $10.2 billion worth of those products qualified for AGOA’s duty-free consideration.
AGOA has the potential to boost industrialization in Africa. But its stipulations are currently an obstacle to realizing that goal. AGOA imposes requirements on participant countries, including a market-based economy, rule of law, political pluralism, and a commitment to reducing barriers to U.S. trade and investment. Participating countries must also fight corruption, protect human rights, and avoid undermining U.S. national security and foreign policy interests. As designed, these conditions reflect Washington’s priorities rather than those of AGOA’s intended beneficiaries. For instance, relations between South Africa and the United States have strained in recent years over a range of issues, including the war in Ukraine. Last year, South Africa participated in a 10-day joint military exercise with Russia and China that drew Washington’s ire. In addition, the U.S. ambassador to South Africa accused Pretoria of supplying Moscow with weapons and ammunition for its war with Ukraine via a cargo ship linked to a sanctioned Russian company. Those disputes led some U.S. policymakers to call for the Biden administration to review bilateral relations with South Africa, and potentially exclude it from future participation in AGOA .
AGOA’s conditions tend to be inconsistently applied, which creates uncertainty in participating countries. The revocation of AGOA privileges for non-compliance with the program’s governance criteria undermines its intended impact. For instance, Madagascar’s AGOA eligibility was suspended in 2010 after a military coup there the previous year. According to experts, Madagascar’s suspension from the program caused the loss of more than 100,000 jobs and an 11 percent decline in GDP, given the country’s heavy dependence on the textile and apparel industries, which considerably gained from preferential treatment under AGOA. This experience showed how stringent conditions undermine the legitimacy and effectiveness of trade preferences in promoting fair economic growth on the African continent.
While the conditioning of trade on human rights obligations is consistent with global best practices, monitoring and application can be ambiguous and inconsistent. It is fair for U.S. policymakers to insist that the core values and principles they say they believe in are reflected in Washington’s trade policies, but they should also guarantee that AGOA reflects international principles of trade preferences. The WTO’s Enabling Clause emphasizes non-reciprocal, non-discriminatory preferences that address the “development and economic needs” of developing countries. U.S. officials should ensure that AGOA is steeped in transparency, consistency, and alignment with the genuine developmental needs of participant nations in order to ensure that the program achieves its intended objectives.
How Can AGOA Support African Economic Development Beyond Exporting Raw Materials and Low-Value-Added Products?
Teniola Tayo, Principal at Aloinett Advisers, shares perspectives from Nigeria
AGOA’s potential renewal by U.S. lawmakers presents a critical opportunity to enhance the program’s effectiveness by linking its objectives with the African Continental Free Trade Area (AfCFTA). This alignment can spur the development of African value chains and better integrate them into global networks via trade with the United States.
Linking African and US Value Chains
To maximize AGOA’s benefits, it is essential to support the creation and development of value chains that span the breadth of the African continent. AGOA can facilitate the growth of high-value industries in Africa by prioritizing industries that the AfCFTA has identified for regional value-chain development, such as agribusiness, textiles, automotives and pharmaceuticals. Linking African value chains to U.S. networks would enable AGOA to incorporate African economies of different sizes, thereby promoting inclusive economic growth across the continent. This integration would ensure that small and large economies alike can benefit from expanded access to the U.S. market and diversify their range of exports. Figures 1 and 2 below illustrate how African countries gradually diversified their AGOA-related exports from 2000 through 2022. The increase in the share of non-oil exports coincided with a steep decline in the total volume of exports under AGOA. The figure also shows why a nuanced interpretation of AGOA utilization data is necessary. For instance, Nigeria is listed as a top exporter under AGOA, but its export figures were primarily driven by the oil and gas industry. The insufficient diversification of exports under AGOA undermines one of its main objectives, i.e. contributing to African industrialization and growth efforts that would eventually lead AGOA’s participating countries to the path of more equitable trade relations with the United States.
Recommendations to Improve AGOA’s Effectiveness
The capacity of African public and private sector actors varies significantly, and this has affected AGOA’s implementation. A revamped AGOA framework should take a tailored approach to trade and investment facilitation among its participant nations. Here are some recommendations on steps to improve AGOA-related outcomes.
Technical Assistance: U.S. officials should work to increase awareness of AGOA among African firms and government officials, and revamp the technical assistance provided to local exporters and trade institutions. Reforms to the program should focus on improvements to its regulatory framework that would enable firms in participant countries to meet U.S. compliance standards. For instance, a peer-training model, in which firms that have successfully leveraged AGOA’s benefits can be incentivized to train others in their supply chains, can be deployed in countries with a lower implementation capacity. Successful trade-facilitating agencies can also be used as resources to train exporters who need capacity-building help.
Infrastructure Development: African governments should take advantage of financing instruments like the U.S.-led Partnership for Global Infrastructure and Investment to develop the transport and logistics infrastructure necessary to reduce business costs and improve market access. These reforms would make it easier to connect production facilities within countries, such as the transport of agricultural inputs from rural communities to factories located in urban areas.
Exploring the AfCFTA’s Investment Protocol: U.S. and African governments should leverage opportunities presented by the AfCFTA's protocol for coordinated investment promotion, which can attract FDI from U.S. companies and foster regional economic integration in Africa.
Sustainability Standards: African exporters must have access to sufficient resources and expertise needed to comply with AGOA requirements if they are to retain access to key global markets and contribute to industrialization efforts in their countries. AGOA’s implementation strategy should incorporate global sustainability standards like the European Union's due diligence requirements and the Carbon Border Adjustment Mechanism. This support can be private sector-driven and include incentives for U.S. firms to transfer knowledge to African peers. This can be a form of trade finance by subsidizing training sessions.
Going forward, AGOA should align its objectives with the AfCFTA, which is the world’s largest free trade area. This would significantly enhance trade relations between African countries and the United States, support sustainable economic growth in Africa, and create mutually beneficial opportunities for African and U.S. entrepreneurs. By promoting continental value chains, adopting a tailored approach to trade facilitation, and providing on-the-ground support to African firms, AGOA can deepen economic integration and mutual prosperity.
Revising the African Growth and Opportunity Act: Perspectives from Africa
Global South Experts Turn the Tables
By Aude Darnal • Cham Etienne Bama • Lethabo Sithole • Teniola Tayo • Natika Kantaria
Grand Strategy
Every month, the Global South in the World Order Project convenes a meeting of experts from across the Global South to discuss key issues in international affairs that challenge conventional wisdom and inject non-Western perspectives and viewpoints into prominent policy debates in Washington. This publication is part of the Global South Experts Turn-the-Tables series, which highlights insights from select participants in these discussions.
U.S. lawmakers are revising the African Growth and Opportunity Act with a view to extending the trade program for another 16 years. The legislation is regarded as the cornerstone of economic relations between the United States and African countries, and many in Washington argue that it has contributed to economic growth and prosperity among its participant nations. But some experts have identified flaws in the legislation, which they argue hinders AGOA’s benefits from being evenly distributed across the continent. To improve the program’s effectiveness, African perspectives should be taken into account and lawmakers should reconsider AGOA’s bilateral, non-negotiable terms, including the annual certification review process, which impedes sustainable growth for African firms.
In April 2024, lawmakers in the U.S. Congress introduced the AGOA Renewal and Improvement Act of 2024 to extend the African Growth and Opportunity Act (AGOA) for another 16 years. AGOA is a trade preference program that provides eligible African countries with duty-free market access to the United States. The legislation, which was first enacted in 2000, is regarded as the linchpin of economic relations between the United States and African countries. AGOA’s proponents argue that it has advanced economic prosperity on the continent.
But despite the rave reviews that the program has received in Washington, it has drawn more mixed reviews on the African continent. Many experts argue that the legislation lacked input from African partners at its conception and operational flaws hinder its effectiveness. In addition, they say that AGOA’s benefits have not been evenly distributed across the continent due to its rigorous eligibility requirements. Large economies oriented around extractive industries in Angola, Kenya, Nigeria, and South Africa have significantly benefitted from AGOA while smaller participant nations generally have not. As a result, African opinions about the agreement vary considerably.
Furthermore, AGOA’s annual certification review creates disruptions and uncertainty for local firms, eroding the program’s trade preference systems to promote sustainable economic growth. Many African governments and entrepreneurs also tend to be unfamiliar with U.S. compliance standards and struggle to navigate AGOA’s framework, which suggests that the program’s flaws are not just about its execution but also have to do with its design.
Nearly 25 years after AGOA’s launch, U.S. lawmakers should strengthen the legislation by taking into account recommendations from a wide array of African stakeholders. The 2024 AGOA Forum, which will be held in Washington from July 24 to 26 and will bring together U.S. and African officials to discuss ways to strengthen the program, provides a good opportunity for such an exchange of views.
What Challenges Should Be Considered to Enhance the Effectiveness of AGOA Implementation?
Cham Etienne Bama, Board Member at Fairtrade Africa, shares perspectives from Cameroon
Since 2000, AGOA has provided exporters in eligible African countries like Cameroon with duty-free access to the U.S. market. To support this initiative, U.S. officials established regional Trade and Investment Hubs in West, East, and Southern Africa. The hubs aim to deepen regional integration across Africa, boost the competitiveness of select regional agricultural value chains, promote two-way trade with the United States under AGOA, and facilitate investments and the technology transfer needed to strengthen trade linkages within Africa and global markets.
Firms in several countries tapped into the resources available at these hubs to gain access to the lucrative U.S. market by implementing policy and business reforms that raised their export capacity. According to data on AGOA implementation from the South Africa-based Trade Law Centre, firms in Botswana, Ethiopia, Kenya, and South Africa made extensive gains from the U.S. Generalized System of Preferences (GSP) regime, which gives duty-free treatment to certain products from developing nations and inspired AGOA’s creation. A key distinction between AGOA and the GSP is that the former extends duty-free preferences to many products that were considered too sensitive for the GSP regime (such as textile and clothing products) and does not contain the GSP’s more regular, exhaustive renewal process, particularly for goods from the apparel, textile, and leather industries.
But despite these tangible successes, most eligible countries have struggled to meet the requirements needed to export products to the United States under AGOA. The scheme’s annual certification process, which is unilaterally enforced by the United States without the possibility of appeal if a country is suspended from participating in the program, creates volatility and stifles Foreign Direct Investment (FDI) inflows to local economies.
The lack of a standing forum—like a secretariat—that brings together senior officials from the United States and African countries to iron out key issues of trade and investment has not helped AGOA’s implementation. The annual AGOA Forum was created to bring U.S. and African government officials together to assess the program’s implementation, identify challenges, and provide solutions. But, so far, it has struggled to do so; the forum is more akin to a commercial trade fair than a platform to advance bilateral trade. The two-day event does not provide enough time for policymakers to engage with an extensive range of trade and investment-related issues and topics, including the distinct priorities and different levels of economic development among AGOA’s participant nations. The forum’s role could be augmented by the creation of a permanent secretariat tasked with designing AGOA’s implementation strategy, coordinating it among the participating nations, and conducting monitoring and evaluation assessments. It would then create quarterly reports that would be disseminated to relevant stakeholders, who could adopt the secretariat’s recommendations.
If U.S. lawmakers decide to renew AGOA, they should also consider eliminating the annual certification process and instead target funding for the regional Trade and Investment Hubs. This could be a more effective method of forcing a change of behavior among errant governments, as the businesses which benefit from the hubs might exert pressure on their governments if they lose out on those benefits.
For their part, African governments should create institutional mechanisms, such as AGOA national coordination units, to attract investments in infrastructure, energy, and resource value chain development. They should also develop priority trade areas in which their companies have a comparative advantage, much like Benin, Ethiopia, and Togo have done for their cotton industries.
What are Some Perspectives From Across the African Continent on AGOA’s Successes and Shortcomings?
Lethabo Sithole, Managing Director at Amila Africa, shares perspectives from South Africa
Trade preferences like AGOA and the GSP have been touted as sustainable alternatives to aid-based partnerships, and are believed to spur economic prosperity in developing countries. AGOA aims to strengthen economic ties between the United States and African countries by promoting trade and investment as a means of encouraging growth on the continent. In 2022, AGOA-eligible countries exported goods worth $30 billion to the United States, but only $10.2 billion worth of those products qualified for AGOA’s duty-free consideration.
AGOA has the potential to boost industrialization in Africa. But its stipulations are currently an obstacle to realizing that goal. AGOA imposes requirements on participant countries, including a market-based economy, rule of law, political pluralism, and a commitment to reducing barriers to U.S. trade and investment. Participating countries must also fight corruption, protect human rights, and avoid undermining U.S. national security and foreign policy interests. As designed, these conditions reflect Washington’s priorities rather than those of AGOA’s intended beneficiaries. For instance, relations between South Africa and the United States have strained in recent years over a range of issues, including the war in Ukraine. Last year, South Africa participated in a 10-day joint military exercise with Russia and China that drew Washington’s ire. In addition, the U.S. ambassador to South Africa accused Pretoria of supplying Moscow with weapons and ammunition for its war with Ukraine via a cargo ship linked to a sanctioned Russian company. Those disputes led some U.S. policymakers to call for the Biden administration to review bilateral relations with South Africa, and potentially exclude it from future participation in AGOA .
AGOA’s conditions tend to be inconsistently applied, which creates uncertainty in participating countries. The revocation of AGOA privileges for non-compliance with the program’s governance criteria undermines its intended impact. For instance, Madagascar’s AGOA eligibility was suspended in 2010 after a military coup there the previous year. According to experts, Madagascar’s suspension from the program caused the loss of more than 100,000 jobs and an 11 percent decline in GDP, given the country’s heavy dependence on the textile and apparel industries, which considerably gained from preferential treatment under AGOA. This experience showed how stringent conditions undermine the legitimacy and effectiveness of trade preferences in promoting fair economic growth on the African continent.
While the conditioning of trade on human rights obligations is consistent with global best practices, monitoring and application can be ambiguous and inconsistent. It is fair for U.S. policymakers to insist that the core values and principles they say they believe in are reflected in Washington’s trade policies, but they should also guarantee that AGOA reflects international principles of trade preferences. The WTO’s Enabling Clause emphasizes non-reciprocal, non-discriminatory preferences that address the “development and economic needs” of developing countries. U.S. officials should ensure that AGOA is steeped in transparency, consistency, and alignment with the genuine developmental needs of participant nations in order to ensure that the program achieves its intended objectives.
How Can AGOA Support African Economic Development Beyond Exporting Raw Materials and Low-Value-Added Products?
Teniola Tayo, Principal at Aloinett Advisers, shares perspectives from Nigeria
AGOA’s potential renewal by U.S. lawmakers presents a critical opportunity to enhance the program’s effectiveness by linking its objectives with the African Continental Free Trade Area (AfCFTA). This alignment can spur the development of African value chains and better integrate them into global networks via trade with the United States.
Linking African and US Value Chains
To maximize AGOA’s benefits, it is essential to support the creation and development of value chains that span the breadth of the African continent. AGOA can facilitate the growth of high-value industries in Africa by prioritizing industries that the AfCFTA has identified for regional value-chain development, such as agribusiness, textiles, automotives and pharmaceuticals. Linking African value chains to U.S. networks would enable AGOA to incorporate African economies of different sizes, thereby promoting inclusive economic growth across the continent. This integration would ensure that small and large economies alike can benefit from expanded access to the U.S. market and diversify their range of exports. Figures 1 and 2 below illustrate how African countries gradually diversified their AGOA-related exports from 2000 through 2022. The increase in the share of non-oil exports coincided with a steep decline in the total volume of exports under AGOA. The figure also shows why a nuanced interpretation of AGOA utilization data is necessary. For instance, Nigeria is listed as a top exporter under AGOA, but its export figures were primarily driven by the oil and gas industry. The insufficient diversification of exports under AGOA undermines one of its main objectives, i.e. contributing to African industrialization and growth efforts that would eventually lead AGOA’s participating countries to the path of more equitable trade relations with the United States.
Recommendations to Improve AGOA’s Effectiveness
The capacity of African public and private sector actors varies significantly, and this has affected AGOA’s implementation. A revamped AGOA framework should take a tailored approach to trade and investment facilitation among its participant nations. Here are some recommendations on steps to improve AGOA-related outcomes.
Going forward, AGOA should align its objectives with the AfCFTA, which is the world’s largest free trade area. This would significantly enhance trade relations between African countries and the United States, support sustainable economic growth in Africa, and create mutually beneficial opportunities for African and U.S. entrepreneurs. By promoting continental value chains, adopting a tailored approach to trade facilitation, and providing on-the-ground support to African firms, AGOA can deepen economic integration and mutual prosperity.
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