(3 minutes read)
Of late, the African Growth and Opportunity ACT (AGOA) is in the limelight for several reasons. Foremost is that its operations are coming to an end in September 2025. Secondly, the US, which implements the scheme ostensibly to help Africans and to strengthen its agricultural base is also using this as a tool to punish countries that pursue norms that are supposed to be undemocratic.
Of late, the African Growth and Opportunity ACT (AGOA) is in the limelight for several reasons. Foremost is that its operations are coming to an end in September 2025. Secondly, the US, which implements the scheme ostensibly to help Africans and to strengthen its agricultural base is also using this as a tool to punish countries that pursue norms that are supposed to be undemocratic. Recently, the US has denied the benefits to several countries in Sub-Saharan Africa, which have witnessed regime changes, where military juntas took over the reins of the rule. In the case of Uganda, the denial was for a different reason that can be attributable to the violation of human rights while passing draconian rules against the LGBT community.
While the slugfest on AGOA is going on and its end is coming, there is an increasing demand for its rollover with relaxed conditions. Tanzanian President, recently urged for an extension of the scheme for 10 years, thereby indicating that the African countries are still looking at duty-free access to the US market is important for their diversifying market access. There are odd opinions voiced from other quarters, particularly by the Ugandan President who lashed out at the US Administration for denying the market access due to its tough stand on the LGBT community. While that is the public posture, it is obvious that the East African country is pursuing efforts through the backdoor to urge the US to take back the decision. African nations are advocating for a 10-year extension, underlining its role in providing duty-free access to the U.S. market.
A background of AGOA
Implemented in 2000 to transform its economic relations with sub-Saharan Africa, AGOA was designed to promote economic growth with good governance. The scheme has eligibility criteria, such as beneficiaries should demonstrate progress towards market liberalization and adherence to the rule of law and upholding human rights. AGOA continues to give benefits to 44 countries in the region with occasional black listing and subsequent lifting of the ban. AGOA tenets have been amended four times since its inception. Initially meant for eight years, the Act was extended four times, the last was done in Jun 2015 by the then President Barak Obama, who set the expiry date in 2025.
Why AGOA is important for the US?
With China expanding its foothold in Africa, in almost all countries, triggered by the sloppy Africa policy of President Trump, all Western forces including the US had to recalibrate their Africa strategy. There is also an increasing presence of Russia in the defense sector. Countries like India and Brazil are increasingly focussing on Africa as it is billed as the future growth hub with abundant opportunities for investments in sectors including infrastructure, mining, ports, energy, etc. A cakewalk to China would mean further diminishing of Western clout in the region, which the US can ill-afford since Africa also accounts for more than 30% of the rare earth mined and is used extensively in sectors like ICT and green energy. Therefore, Washinton’s engagement with Africa is a continuing one since Washington is increasingly veering around the concept that it would be strategically a wrong decision to allow AGOA to expire.
What then?
The question is what should be the new form and format of the repackaged AGOA? While weaving a new package of AGOA, the US should take into account three things. Foremost is the changing complexion of Africa. It is a contiguous market of 1,3 billion people spread over 55 countries, which are embarking on economic integration through the unveiling of policies including AfCFTA, which envisages, the largest continent in the world as a future guzzler of goods and services.
Secondly, the investment appetite of the continent is ever-increasing. It has to potential to attract trillions of dollars in investments from the Western world in a wide range of sectors. It can be an ideal hub, among other things, for the manufacture of equipment that goes into green energy devices because of the proximity of rare earth that goes into their manufacture. So is the case with the ICT sector, including silicon chips and electronic batteries.
Thirdly, the landmass of the continent is enticing as is predicted that the world population will soon surpass 7 billion necessitating more food grain production and horticultural products. Last but not least, the young population in the continent of the aging West is to be seen not as a mere contrast but as a source for drafting the workforce in the coming years for the aging West.
