AGOA ends after 25 years

The Africa Growth Opportunity Act, AGOA finally came to an end this week bringing to a close 25 years of duty free access to numerous products from the continent into the US. Started by President Bill Clinton in 2000, AGOA was America’s investment into the reform of Africa’s economies, based not on aid but trade.

Through the program, Africa has exported products worth billion dollars into America, ranging from primary products to manufactured goods, largely apparels. Though it has not impacted many of the eligible countries, it has been a major game changer for those that took advantage of the program. In 2023 for instance, AGOA exports from Africa amounted to 10 billion dollars.

While this accounted for only a small fraction of overall US merchandise imports, it represented a substantial share of exports from eligible countries, including Kenya. AGOA preferences have boosted the competitiveness of African exporters due to the zero tariffs and the improved quality of goods through specialisation. The lack of a formal extension, despite lobby by African governments over the last two years has created uncertainty for African trade and jobs. 

The expiration means African countries will lose duty-free access to the U.S. market, leading to higher tariffs and trade disruptions for many businesses.  Country-specific and sectoral tariffs will now apply instead of the current preferential treatment. The sudden jump in tariffs could disrupt long-standing trade relations and severely disadvantage African exporters, particularly in highly protected sectors like textiles and apparel, where AGOA has so far provided critical market access.

For example, Kenya would see its trade-weighted average US tariff nearly triple, jumping from 10% to 28%. This will have huge implications for the country. In terms of employment, the Kenya National Bureau of Statistics indicates that 66,804 Kenyans are directly employed  in the apparel and textile sector. Many factory owners have indicated their intention to either close or substantially reduce their workforce.

In terms of foreign exchange, in 2024 alone, Kenya exported 60.5 billion Kenya shillings worth of apparel and textiles under AGOA.  The job losses that will follow will exarceberate an unemployment crisis that is already decimating the country. The most impacted sector of the population would be young women who form the bulk of workers in AGOA producing factories.

These changes come at a difficult time for Kenya where the economy has been shrinking and competitiveness in global trade eroded by cheaper products particularly from Asia. The latter makes it difficult to diversify to other markets. For those in Africa that celebrated the Trump Presidency, the actions of the Republican administration has been a bitter pill.

First was the sudden termination of USAID programs, which not only led to job losses but also closed access to life sustaining drugs especially for HIV patients. For AGOA, it is true that the formal extension of the agreement requires Congressional approval, and Congress is equally weighted between the two  parties. However, a temporary extension is  a remedy issuable by the American President.

One however gets the sense that President Trump’s focus is everywhere expect on a continent he once used very derogatory terms on. While Trump’s approach to Africa is supposedly away from philanthropy to transactional, the failure to extend AGOA, even temporarily, betrays this stated commitment.

For Kenya and Africa generally, it is a time for a serious rethink about dependency on far away countries like America for aid and trade. It is a time for Africa to invest in the much touted Africa Free Trade Area agenda so that the bulk of trade occurs within the continent, a surer bet to the continent’s sustainability.

In this respect the end of AGOA and similar initaitives, even the death of USAID, may be tough in the short term but it may lead to more long term solutions for the continent. For instance, Kenya’s largest trading partners are now our East African neighbours.

Tanzania, with who we have a stormy relationship, took in more than 60 billion worth of our products last year, the same volume of exports under AGOA. These are the places we need to invest in good relations that ensure continued and enhanced trade. America and the West are so focussed on their own survival that they have no margins for Africa.