AGOA Forum 2023: Navigating economic, political and geopolitical dynamics in Africa

November 14, 2023 - Reading Time: 3 minutes - By Jewel Tete

 

During the 20th  African Growth and Opportunity Act (AGOA) Forum held from 2nd  to 4th November calls for the renewal of the trade partnership echoed through the halls of discussions and deliberations. As the expiration date approaches in September 2025, the urgency to extend this crucial trade partnership is not merely a matter of economic continuity for African nations, but a strategic move in the international chessboard. AGOA, enacted in 2000, has been a linchpin in US-Africa relations, providing eligible nations, including Kenya, with duty-free access to the vast American market.

 

Indeed, AGOA has been a beacon of economic empowerment for African states, presenting another avenue for economic prosperity while bolstering international trade ties. In 2021, South Africa emerged as the preeminent beneficiary of AGOA, securing its position as the largest exporter within the agreement. This translated into $2.7 billion (£2.2 billion) in revenue, primarily derived from the sale of vehicles, jewellery, and metals. Following closely, Nigeria came in second with revenue exceeding $1.4 billion, predominantly sourced from oil exports. Kenya, ranking third, contributed significantly with approximately $523 million. Notably, Kenya’s textile and apparel sector played a pivotal role, accounting for a staggering 70% of all AGOA exports from the country.

 

Other countries known to have seemingly benefitted from this agreement include Eswatini, Ethiopia, Lesotho, Malawi, and Mauritius, experiencing an increase in their exports to the US under AGOA. Additionally, it is worth noting AGOA’s impact on job creation within the export-related industries across Africa. As these nations capitalize on the trade preferences granted by AGOA, the partnership has since provided job opportunities for the local workforce which is plagued by the challenge of unemployment.

 

Nevertheless, it is important we acknowledge the controversies that have occasionally marred this trade agreement. A notable incident took place in July 2018 when former US President Donald Trump suspended Rwanda’s right to export clothing duty-free under AGOA. This decision came as a response to Rwanda’s ban on the import of second-hand clothes, a move aligned with the 2016 agreement of the East African Community (EAC) to prohibit used clothing imports by 2019. The ban, aimed at boosting local clothing manufacturing businesses, faced opposition over concerns about the potential economic impact on America’s used clothing industry.

 

In a more recent development, Uganda followed suit by announcing a ban on used clothing imports in August, citing the “Buy Uganda Build Uganda” policy and referring to second-hand clothes as belonging to deceased Westerners. Additionally, AGOA deems countries eligible based on their commitment to establishing or progressing continuously towards specific requirements, including the protection of human and worker rights. Uganda’s recent enactment of a harsh anti-LGBTQ law raises concerns about human rights violations. These occurrences are argued to have potentially contributed to the decision to remove Uganda from the AGOA agreement.

 

Beyond the economic benefits extended to African States, AGOA can be seen as a counterbalance to China’s growing influence in Africa. With China’s deepened economic ties on the continent, the renewal and revamping of AGOA can be fashioned as a tool for the United States to bolster its economic presence in the region. If restructured to enhance efficiency and utilisation, AGOA could better position the US in the ongoing battle for economic influence over Africa. A revamped AGOA could accrue more economic benefits for Africa by increasing American investments, trade, and partnerships. Africa is on the precipice of an unprecedented demographic boom. The timely reauthorization of AGOA is important to provide business certainty and show the United States continued support towards Africa’s economic growth. The trade partnership remains the cornerstone of the US economic partnership with Africa. As the conversation develops, we ought to acknowledge the real impact that AGOA has had on real lives and people.

 

In navigating its economic relationships, the continent finds itself in a delicate position, needing to pull off a balancing act in managing its international relations in a sensible way that protects and advances its economic interests. As the global economic landscape continues to evolve, it is clear that the continent is playing an increasingly pivotal role in managing international relations. In the face of these developments, AGOA’s renewal takes on added significance. It is not merely an extension of a trade partnership but a strategic move to ensure that Africa retains agency in shaping its economic destiny. As the international community watches and waits for the decision on AGOA, the repercussions extend beyond trade relations. Perhaps it is time to consider the potential impact on the geopolitical chessboard, and the delicate dance between the West and the East.

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