As the future of the African Growth and Opportunity Act (Agoa) hangs in the balance, the stakes for the continent’s economies have never been higher. Buyers are weighing whether to cancel orders, exporters face mounting uncertainty, and investors are holding back on investment decisions.

 

Agoa is the cornerstone of United States-Africa trade policy, providing duty-free access to the US market for over 6,000 products from eligible African countries. It is set to expire at the end of this month—unless Congress renews it—with immediate consequences for both African and American stakeholders.

The core misconception about Agoa is that it’s a favour from Washington, yet it is a two-way partnership delivering value for both US and Africa. It is a framework intended to deliver reciprocal value and strategic alignment with the economic and geopolitical interests of both sides.

Since 2000, Agoa has underpinned more than $100 billion in two-way trade according to the US International Trade Commission. It has opened markets to American exporters, lowered costs for US consumers and strengthened supply chains in critical sectors.

It has also offered US companies a competitive sourcing alternative and a hedge against concentrated supply chain risks. According to the Office of the US Trade Representative, American goods exports to Africa were approximately $28.7 billion in 2023, while services exports reached $19.2 billion, resulting in a $5.5 billion services US trade surplus.

However, Agoa’s full potential remains fully untapped. While some countries have benefited, especially in apparel and agro processing, others have failed to participate due to limited infrastructure, weak export capacity and low awareness.

That Agoa can be withdrawn unilaterally has also created uncertainty.

The renewal and reform of Agoa is important in a world where protectionism is rising, supply chains fragmenting and new powers competing aggressively for influence.

In June, China announced zero-tariff access for all 53 African nations with diplomatic ties, backed by large-scale investment in infrastructure, energy and digital connectivity.

Russia and Gulf states are also increasing their presence in mining, defence and logistics. Allowing Agoa to lapse would weaken the US’s ability to engage Africa through a values-based framework that links market access to governance, transparency and social standards.

In April 2024, a bipartisan group of US senators proposed a 16-year extension to Agoa, recognising the need for structural improvements, aligning it with the African Continental Free Trade Area (AfCFTA), simplifying eligibility reviews, mandating national utilisation strategies to drive Agoa uptake and enhancing transparency.

Although the Bill stalled, it laid important groundwork for a modernised, more effective Agoa that reflects today’s trade realities.

As the deadline approaches, any path forward must be anchored in a two-phased approach. In the first phase, securing a transitional extension of Agoa from October 1 would provide critical continuity for exporters and investors, and offer breathing space for African industries and US supply chains to plan with greater certainty.

This could mean cost increases of up to 30 percent on garments, processed foods and auto components, and lead to factory closures, job losses and a sharp decline in investor confidence. According to the US Fashion Industry Association, 30 percent of American apparel companies have reduced orders from Africa due to uncertainty.

In the second phase, Africa must use any extension window to reshape its trade and industrial future by investing in competitiveness, reducing trade costs, building industrial infrastructure and scaling value addition across sectors.

It must also strengthen its trade negotiation capacity to engage more effectively, in bilateral and multilateral agreements including reciprocal trade deals beyond Agoa.

At the same time the AfCFTA should be leveraged as the central vehicle to build scale across strategic sectors and accelerate intra-Africa trade.

Ultimately, a longer-term agreement on renegotiated terms that reflect Africa’s evolving needs and capabilities will be in the geopolitical and economic interest of both the US and Africa.

The writers are the Africa MD; Senior Advisor (Global Lead) Industry & Commerce; and Senior Advisor (Global Lead) Trade and Infrastructure, respectively at the Tony Blair Institute for Global Change.

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