The African Growth and Opportunity Act (AGOA), aimed at assisting sub-Saharan African economies and improving economic relations between the United States and the region, was introduced in 2000 and DHL, one of the bigger gainers of the act wants it extended beyond its current 2015 expiry date.
“Trade lanes in Africa have increased significantly as a result of relieved trade barriers, which have had a positive impact on many local businesses,” said Charles Brewer, Managing Director of DHL Express Sub Saharan Africa, who noted that the company has enjoyed tremendous growth in the region, in terms of trade with the US since the introduction of AGOA.
Brewer, who along with many world leaders drummed support for the extension of the AGOA at the 2014 US – Sub Saharan Africa Trade and Economic Cooperation Forum (known as the AGOA Forum) held in Washington last week, described the AGOA as a key growth driver, which he said has stimulated trade and investment between Africa and the United States.
Goods worth $8.5 million were imported by the US from the Southern Africa Development Community (SADC) region in 2000 and $19.869 million in 2012, Brewer said, citing figures by AGOA.
The U.S. Department of Commerce – International Trade Administration also reported that US imports from Sub Saharan Africa in 2013, under AGOA, totalled $39.3 billion, with Angola, Nigeria and South Africa accounting for $8.74, $11.72 and $8.48 billion respectively, to be the top three trade lanes to the US from the region.
“AGOA has facilitated trade between Sub Saharan Africa and the US by enabling the trade process, as well as successfully promoting the integration of Sub Saharan Africa into the global economy,” Brewer adds, while calling for the renewal of the act.
The favourable trade conditions offered by the act to approximately 40 countries in have also allowed the region to maximize the opportunities available and increase exports.” says Brewer.
The Act, according to Brewer, offers tangible incentives to approximately 40 Sub Saharan African beneficiary countries, such as duty and quota free access to the US market for certain product lines.
Since the introduction of AGOA, DHL Africa have witnessed a rise in primary trading sectors like manufacturing, footwear and apparel, which are all supported directly by the act. An increase in secondary sectors dependent on agriculture, petroleum and natural gases, have also been seen, with strong positive growth in trade between sub Saharan Africa and the U.S. recorded in the last year.
As important as AGOA may seem to the region’s economy, it is due to expire in 2015 and an extension beyond then lies solely with the U.S. Congress.
A July, 2013 report by Brookings on the AGOA noted that “without an extension, there will be declines in African exports, economic diversification and employment for many AGOA-eligible countries.”
With sub Saharan Africa’s growth still dependent on trade facilitation and enhancing both intra-regional and global trade, relevant stakeholders are expected to make a case for the extension.
“While trade between the US and Sub Saharan Africa has increased significantly in the last few years, there is still much room for growth,” Brewer noted, stressing that a huge untapped growth potentials still exist as US imports from Sub Saharan Africa represented only 1.7 percent of total US imports from the world in 2013.
Brewer called Africa the ‘last frontier and tasked the continent as a whole, to be more focused on connecting with the world. He said the more this is done, the more sustainable the continent’s economies will be “and the more jobs we will create – creating a virtuous cycle of success.”
