Ten Year Extension Sought for US African Growth Opportunity

Addis Ababa, Ethiopia – Next week, hundreds of delegates will converge in Addis Abeba. They will brainstorm and discuss the current state of the African Growth & Opportunity Act (AGOA). This is despite the US Congress still debating on the extension of the quota and duty-free status the AGOA offers to African exports to the US.

The opportunity was enacted into law by the US congress in 2000, so as to offer incentives for eligible countries to open their economies and build free markets. In addition, it served to transform the US-African donor-recipient relationship into a better partnership. It put the US in a position to benefit from the many emerging economies in Africa outside the extractive sectors. The AGOA  allows sub-Saharan exporters export their products quota free and tariff free.

Initially set to complete its mission by 2008, it has twice been extended; in 2006 and 2008. The last extension was again set to expire in 2008. Yet, eligible countries are still asking for ten more years.

A number of eligible countries are not benefiting, the African Union Commission (AUC) claims. Out of the 39 eligible countries, only 10 of them gained more than 100 million dollars, in 2012, from exports through the AGOA.  This is according to the available data from the Trade and Industry Commission of the AUC. The greater share, even in this gain, is taken by oil exporters.

“The countries haven’t been beneficiaries from the AGOA as expected,” says Fatima Haram, commissioner of AUC.

Since the legislation went into effect, exports under the AGOA have increased more than 500pc. This has seen them climb from 8.15 billion dollars, in 2001, to 53.8 billion dollars, in 2012. Approximately 90pc of this has been oil.

This underscores Africa’s growing strategic importance to the US, according to report released in 2012. Exporters from non-oil producing countries are still not benefiting. Internal factors are increasingly being attributed for this failure.