The African Growth and Opportunity Act (AGOA) has been a driver of economic empowerment for African states, presenting another avenue for economic prosperity while bolstering international trade ties. It has been the cornerstone of the US economic relationship with sub-Saharan Africa by lowering the cost of trade and encouraging investment in the region. The Agoa Renewal and Improvement Act of 2024 was recently introduced by Senators Chris Coons and James Risch. The US Congress has put forward proposals that would see AGOA extended by 16 years, pushing the expiry of the programme from 2025 to 2041. This move is intended to continue boosting Africa’s duty-free status as a means of attracting private-sector investment to help underwrite economic development. This extension is designed to provide businesses the certainty needed to invest in sub-Saharan Africa, supporting economic growth and development in the region. The extension is expected to integrate AGOA with the African Continental Free Trade Agreement (AfCFTA) to support the development of intra-African supply chains. 

The bill updates how AGOA eligibility is evaluated and enforced. The existing law mandates the President to conduct a yearly assessment of all AGOA-eligible nations to determine their ongoing qualification for the programme. This proposed legislation aims to reduce this requirement, necessitating an evaluation of each country once every two years. The rationale behind this adjustment is to free resources to focus on the efficient execution of AGOA and ensuring compliance with its regulations. Similarly, the bill tasks the US International Trade Commission with coming up with a study that examines the economic effects of adding additional products to the list of goods covered under AGOA. The list of covered goods has not been updated since the inception of the programme in 2000.

Regarding the termination of contracts, an issue of controversy that has occasionally marred this trade agreement, the bill provides the President with a menu of options for enforcement that go beyond termination. Currently, AGOA mandates that the President must terminate a country’s AGOA benefits if it fails to meet the program’s eligibility criteria. Rwanda and Uganda have faced this consequence due to their bans on importing second-hand clothing from the West. In addition to full termination of benefits, the bill introduces enforcement alternatives such as termination of benefits for certain products, issuance of a warning letter providing notice that benefits will be terminated in the following year without corrective action, and the option to take no action, if US interests are best served by taking no action.

Although AGOA currently pertains solely to sub-Saharan African nations, the bill proposes amending AGOA’s rules of origin to permit inputs from North African AfCFTA members to be included in the calculation requiring 35% of a product’s value to originate within the region. This adjustment aims to bolster the establishment of intra-African supply chains. North African countries seeking to partake in the extended rules of origin would need to satisfy AGOA’s eligibility criteria concerning governance, human rights, and foreign policy. 

The convergence of an extended AGOA term and the Strategic Trade and Investments Partnership (STIP), if successful, would present a significant opportunity for Kenya’s economic trajectory, giving Kenya unprecedented access to the US market. However, it’s important to recognise that realising the full potential of both agreements would require concerted efforts from both the public and private sectors, as well as active collaboration between the US and Kenyan governments. Additionally, Kenya would need to navigate various challenges, including geopolitical uncertainties, regulatory hurdles, and global market dynamics. Geopolitical tensions, trade disputes, and changes in international regulations can all impact trade flows and investment patterns. Complying with diverse regulatory regimes in both Kenya and the US can be a complex task. Furthermore, consumer preferences and industry standards evolve rapidly. Therefore, Kenya must remain agile and responsive to emerging trends and developments in the global arena. This requires ongoing investments in trade intelligence, diplomatic engagement, and fostering a business environment that is adaptable and responsive to change in order to fully enjoy the benefits of these trade agreements.