PEMBROKE, North Carolina — The African Growth and Opportunity Act (AGOA), enacted in 2000, grants African countries with certain criteria access to more than 1,800 duty-free products in the United States (U.S.). AGOA plays a crucial role in fostering economic growth and reform across Africa. From 2017 to 2020, the U.S. ranked among Africa’s top three largest export destinations, alongside the European Union (EU) and within Africa’s intercontinental trade. This legislation exemplifies the mutual benefits AGOA provides to both Africa and the U.S.

AGOA’s Current Status and Impact

Discussions around the AGOA are intensifying as it approaches renewal this year. Initially enacted for 15 years, Congress extended AGOA for another decade, with the current term ending in 2025. Senators Chris Coons (D-Del.) and James Risch (R-Idaho) introduced the renewal bill, which reached the Senate floor in September 2023. The Senate Finance Committee is reviewing the bill, and AGOA will expire this year without further action.

AGOA’s Achievements Over 25 Years
Over its 25-year history, the AGOA has significantly boosted the imports and exports of qualifying countries, particularly in textiles and apparel exports to the U.S. Kenya, a major contributor, sends 67.6% of its textile exports to the U.S., illustrating the act’s quality of mutual benefit between Africa and the U.S. Under the act, Kenya’s export sales soared from $55 million to $603 million over the last 23 years. Ethiopia, Mauritius, Lesotho, Ghana and Madagascar have also experienced substantial growth in this export category.

Ghana highlights another example of the AGOA’s impact on Africa and the U.S. Since joining AGOA, Ghana has introduced new products, including plant roots, textiles and travel goods, to the U.S. market. While most of Ghana’s exports are outside the AGOA framework, their export value has soared from $206 million to $2.76 billion over the act’s last 22 years.

South Africa presents another success story of the AGOA. In its first year under AGOA, South Africa’s vehicle exports to the U.S. surged by 1,643.6%. Over the last 21 years, these exports have continued to grow, increasing by 447.3%. This growth exemplifies the mutual benefits of AGOA for both Africa and the U.S.

Investment Opportunity

Experts call for the new bill to be extended longer than the proposed 16 years under Coons’s and Risch’s bill. Shorter AGOA timelines have made investors hesitant about the availability of returns on investment, meaning shorter timelines have the potential to slow growth. A longer timeline will ensure the predictability of market access and boost confidence among investors of a sufficient time to recoup investments. Mutual benefit between Africa and the U.S. must be maximized for this act to have maximum impact.

Further undermining investment trust is the volatile rate at which countries’ AGOA status changes. In the current act, countries must uphold a long list of qualities to remain part of the AGAO – some of them oddly specific. The new proposed bill changes this, making the requirements like other, more established human rights classifications. This clarity will encourage growth by removing AGOA suspension as a punishment and instead allow countries to reap the benefits of AGOA as a driving economic force of reform.

Expansion Opportunity

The newly proposed bill aims to expand the African Growth and Opportunity Act (AGOA) beyond the original sub-Saharan countries to include North African nations as well. This expansion redefines “Africa” within the AGOA framework, increasing the number of eligible countries while retaining the rule that 35% of the resources must be made in Africa. Currently, resources imported from North African countries do not qualify as made in Africa because the act has only included sub-Saharan countries. Expanding eligibility is a significant move toward fostering economic integration across the continent.

Other expansions to the act come in the form of adding additional items and products to AGAO’s agreements. Opportunity for increased mutual benefit between Africa and the U.S. can be achieved through re-working how the U.S. values Africa’s minerals – namely minerals that are needed in creating green vehicles and technologies – like cobalt and manganese. With current policy under the Inflation Reduction Act (IRA), there is little incentive, perhaps discouragement, for the U.S. to import and invest in African minerals. Experts claim that adding AGOA countries to the qualifications under the IRA will mitigate this issue.

Looking Ahead

The renewal and expansion of the AGOA promise enhanced trade benefits and economic growth for Africa. By extending eligibility and refining the act’s framework, AGOA can further stimulate investment and foster deeper economic ties. These ongoing modifications could not only support sustainable development but also strengthen international partnerships in an increasingly global economy.

– Carlee Unger/Carlee is based in Pembroke, NC, USA and focuses on Politics for The Borgen Project.

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