The African Growth and Opportunity Act (AGOA) is a trade preference program that facilitates deeper investment and stronger commercial ties between the United States and sub-Saharan African countries. First enacted in 2000, AGOA is due to sunset next year.
Recognizing the importance of this program, Senators Jim Risch (R-Idaho), ranking member of the Senate Foreign Relations Committee, and Chris Coons (D-Del.), introduced the African Growth and Opportunity Act (AGOA) Renewal and Improvement Act of 2024 to renew and strengthen a key trade program with sub-Saharan African countries.
Map of Sub-Saharan Africa
Key Provisions of the AGOA Renewal and Improvement Act
The AGOA Renewal and Improvement Act of 2024 will extend AGOA and improve the program to encourage sustainable development, regional integration, and stronger relations between the United States and countries in the region.
Specifically, the Act aims to:
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- Extend AGOA by 16 years, pushing back the program's expiration from 2025 to 2041.
This long-term extension would offer businesses the certainty they need to increase investment in sub-Saharan Africa at a time when many firms are looking to diversify supply chains away from China.
The Impact of AGOA
“Over the past 24 years, AGOA has created jobs and economic growth in one of the fastest-growing regions of the world and created investment opportunities for American businesses,” said Senator Coons.
Markets due to AGOA has stimulated economic growth and development across Africa. The program directly has generated 300,000 jobs on the continent, and indirectly sustains as many as 1.3 million African jobs related to AGOA-dependent businesses. AGOA has led to major growth in sectors like apparel, with exports to the United States nearly doubling over 20 years.
AGOA has been a tool that furthers American economic interests and American values. It is a vehicle to promote the liberal international order.
Challenges and Opportunities
To be clear, AGOA as it exists today is not perfect. The biggest knock on the program is that it hasn’t been used as much as initially hoped. That is often combined with the observation that, in the quarter century since the program’s inception, the world has changed: the digital economy has boomed, and the United States has not taken the opportunity to keep pace by expanding its relationship beyond AGOA to address the development of digital and other service sectors in the dynamic African market.
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If the United States wants a twenty-first century relationship with Africa and if it wants to properly compete with China, AGOA must be in its tool kit, and extending the program for at least another 10 years without fussing over updating it is better than letting the program fall to the wayside.
As AfCFTA creates regional and continental value chains, access to markets like the United States through programs like AGOA have never been more important. If AGOA expires, it is African jobs, American companies, and American consumers that will be hurt, including by foregoing the United States’ most appropriate tool to engage with Africa’s evolving market.
The Strategic Importance of AGOA
Africa is on track to be increasingly consequential in the global economy. With a fast-growing population, ample natural resources, and the world’s largest free trade area, the continent has a dynamic economic landscape with immense potential for private sector growth, foreign commercial investment, and sustainable development. With AGOA, the United States possesses a promising tool to both support and benefit from Africa’s economic ascendancy.
Almost all African states have forged or deepened economic ties with Beijing under the framework of the Belt and Road Initiative, allowing China to overtake the United States as the continent’s largest trading partner and equity investor.
Trade with African states is just one-fifth the size of China-Africa trade, and the United States currently trails behind China, Russia, and the United Arab Emirates (UAE) in foreign direct investment (FDI).
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The United States cannot fight something with nothing. AGOA is part of the United States’ something. It must be renewed.
Modernizing AGOA
AGOA should be modernized in several ways to provide policy certainty and support for American companies entering the African market.
Central to contributing a predictable investment environment in Africa is the length of time that AGOA might be renewed. Senator John Kennedy has introduced legislation that would extend AGOA for 20 years, to 2045. This would be ideal.
As part of the original legislation, conditionalities have largely been used to deny AGOA benefits to countries where coups, conflicts, or significant human rights abuses have occurred. Today, the United States has a range of sanctions, such as the Global Magnitsky Act, that it can use to hold accountable those responsible for initiating conflicts, perpetuating human rights abuses, widespread corruption, or electoral fraud.
Furthermore, AGOA eligibility should be reviewed every six years.
Senator Coons' Vision for AGOA
Senator Chris Coons (D-Del.) delivered a speech at the Wilson Center Africa Program’s Brown Capital Management Africa Forum on the importance of reauthorizing the African Growth and Opportunity Act (AGOA).
He highlighted how AGOA facilitates deeper investment and stronger commercial ties between the United States and sub-Saharan African countries.
In his address, Senator Coons emphasized the growing importance of Africa, stating, "Now, lots of folks say that the goal right in front of us should be improving AGOA, because at some point in the future, Africa is going to be this great continent of promise. My argument would be, that moment is now; it has already happened. It is the fastest-growing continent; the youngest population. [There are] more than 350 companies across the continent with a market capitalization above $1 billion. Thirty years from now, the middle class of Africa will exceed 1 billion people."
He also underscored the need for a lengthy extension of AGOA to provide certainty for businesses looking to diversify their supply chains.
Africa is the continent of this century
“This legislation will bolster Congress’ involvement in the eligibility process and oversight, demonstrating a strong commitment to AGOA. foreign policy. agencies accountable for their advice to the president,” said Risch.
The continent is the world’s most rapidly growing market, with its current population of 1.3 billion expected to nearly double within the next 25 years, reaching 2.5 billion people. The sub-Saharan region needs tens of millions of new jobs for young people to prepare for the looming youth population boom, which, under the right conditions, could create a “demographic dividend” where a growing, educated, and healthy population coupled with good governance could accelerate economic growth.
He also highlighted the need to address concerns related to countries like South Africa in the reauthorization process. What the path forward for AGOA looks like - specifically, with relation to South Africa - has been raised over and over by members of the House and Senate. We will not get through reauthorization without directly addressing that.
Senator Coons also pointed out that the United States should not view its engagement with Africa through the lens of great power conflict. It was based on economic and diplomatic engagement rooted in respect and shared values.
Just last month, President Biden hosted a very successful visit by William Ruto, the President of Kenya, and I’ll remind you that his principal and primary ask in the runup was the swift reauthorization of AGOA.
In Kenya, it sparked the growth of a dynamic new apparel sector; I’ve had the opportunity to visit a number of new light manufacturing companies that are in the business because of the opportunities of AGOA, and it’s driving more investment in both agriculture and manufacturing at exactly the time when every African leader whom I meet looks for more and better jobs at higher ends in the value chain.
The United States, in a global competition to see which system works best, needs to show up and prove that through the pull of AGOA, through modernizing the MCC and the DFC, and through engagement, engagement, engagement, we have the better model and a better opportunity. Yes, African countries have many options, but what we offer is far better than the debt-trap diplomacy extended by some of our competitors.
What is this moment? Well, in a world that is increasingly isolationist and protectionist, it stands as one of the few remaining, long-lasting, reliable market-access mechanisms to the United States market.
Businesses have options; so, too, does sub-Saharan Africa. The United States and American companies committed $55 billion in investment over the ensuing three years. And we need to build upon the successes of that summit: There needs to be a clear commitment to another summit and there needs to be a clear path forward towards implementing some of the recommendations of that summit.
Road to AGOA Reauthorization: The Future of US-Africa Trade and Investment
Concerns Regarding the Delay in AGOA Extension
As Congress scrambles to prevent a partial government shutdown, the House Appropriations Committee released the text of its much-awaited continuing resolution (CR) late on Tuesday night. Notably absent in the 1,547-page document was funding to extend the African Growth Opportunity Act (AGOA). This is highly concerning.
Fingers are pointing every which way for what will prove to be an economic and geopolitical catastrophe for the United States should AGOA lapse.
I warned policymakers just six months ago in my testimony before the House Ways and Means Subcommittee on Trade that “champagne corks will pop in Beijing and Moscow over our failure to renew AGOA.” Unfortunately, the actions taken earlier this week have moved that possibility closer to reality. Xi Jinping is holding the corkscrew in his hand. Will the United States let him use it?
Key Aspects of AGOA
AGOA (P.L. market for most exports from eligible countries in sub-Saharan Africa (SSA).
AGOA directs the President to provide TCB to AGOA beneficiaries. Agency for International Development (USAID) has administered certain TCB-related projects in support of AGOA, including funding African trade and investment hubs, which work to increase AGOA utilization and regional producers' access to international markets.
AGOA requires the President to convene an annual forum on trade and investment relations and AGOA implementation. The AGOA Forum typically alternates between the United States and an AGOA country.
The 2015 reauthorization amended the program to allow for out-of-cycle reviewsin response to public petitions. The Administration may remove country eligibility entirely or for specific products, subject to congressional notification.
Since 2000, Congress has directed the executive branch to seek reciprocal trade and investment negotiations with AGOA countries.
Country Eligibility and Reviews
There are currently 32 AGOA-eligible SSA countries, of 49 potential program country beneficiaries. foreign policy interests, inter alia, which countries must satisfy to be beneficiaries of the program. The President annually reviews and determines each country's eligibility for the following calendar year.
Following the 2024 annual review, then-President Biden made no changes to the list of countries eligible for AGOA benefits for calendar year 2025. Seventeen SSA countries remain ineligible for the program's preference benefits in 2025.
Rwanda's AGOA benefits for apparel exports have been suspended since July 31, 2018, following an out-of-cycle review (outside of the annual review period) in response to increased Rwandan tariff barriers on used clothing imports from the United States.
Trade and Investment Patterns Under AGOA
AGOA imports totaled $8.0 billion, down 13% from $9.3 billion in 2023. AGOA imports remain concentrated in a few countries and industries, but diversification has grown since the 2000s.
Crude oil imports stood at $2.0 billion in 2024, and comprised 25% of AGOA imports. production. Non-energy imports in 2024 were valued at $6.0 billion. South Africa is the top supplier of AGOA non-energy imports (Figure 1).
Trade preferences. imports of eligible products from beneficiary countries.
The third-country fabric provision in AGOA is a major factor enabling AGOA countries' competitiveness in the sector.
AGOA Imports by Top Countries (excl. Crude oil)
