Uganda, Gabon, Niger, and the Central African Republic (CAR) have been expelled from AGOA, a special US-Africa trade program. The countries either seriously violated human rights or weren’t moving towards democracy.
“Despite intensive engagement between the United States and the Central African Republic, Gabon, Niger, and Uganda, these countries have failed to address United States concerns about their non-compliance with the AGOA eligibility criteria,” said President Biden, in a letter sent to the speaker of the US House of Representatives.
President Biden stated that Niger and Gabon, both of which are presently governed by military regimes after coups earlier this year, do not qualify for AGOA. He cited their failure to establish or sustain consistent progress in protecting political pluralism and the rule of law. He also noted that the exclusion of the CAR and Uganda from the program was due to “gross violations of internationally recognised human rights” by their governments.
Burkina Faso, Mali, and Guinea have also been previously expelled from AGOA as a result of military coups in their respective countries.
The African Growth and Opportunity Act (AGOA) was enacted in 2000. It is a U.S. trade initiative driven toward strengthening economic connections with Sub-Saharan Africa and supporting the economic development of African nations. AGOA grants eligible African nations tariff-free entry into the U.S. market for most of their agricultural and manufactured goods. There are about 35 eligible African countries.
The membership criteria of AGOA include economic policies, support for democracy, and protection of human rights. The participants can either gain or lose their membership depending on their adherence to the conditions. The eligibility of each country is renewed yearly. Meanwhile, the AGOA program is expected to expire on 30 September 2025.
Countries such as Ghana, Kenya, Lesotho, Madagascar, and Ethiopia, have effectively leveraged AGOA to increase their exports to the United States. U.S. imports from AGOA beneficiaries reached their highest point in 2008 but in 2021, they made up just 1% of all U.S. imports. Data from the US International Trade Commission (ITC) and the US Department of Commerce showed that South Africa was the top exporter, generating around $2.7 billion in revenue, mostly from selling vehicles, jewellery, and metals in 2021. Nigeria was second, earning over $1.4 billion, mainly from oil sales, and Kenya came in third with approximately $523 million.
The expulsion of Uganda, Gabon, Niger, and the Central African Republic from AGOA is expected to take effect from the beginning of 2024 and it will likely hurt their economies. AGOA has been credited with boosting exports, economic growth, and job creation in the participating countries. An expulsion will lead to reduced export opportunities, especially for textiles and clothing industries that rely heavily on AGOA benefits.
In 2021, the main products mainly exported from Uganda to the United States were coffee ($53M), and vanilla ($12.4M). While the U.S. imports crude oil, manganese ores, agricultural products, and wood from Gabon.
There will be a drop in foreign exchange earnings for these countries, affecting their balance of payments and foreign currency reserves. This might put pressure on their respective currencies and potentially lead to inflation. The rate of unemployment in these countries will also rise as many of the industries that benefited from AGOA will have to lay off a significant fraction of their employees working in the affected sectors.
Moreover, AGOA provided an incentive for foreign and domestic investment in industries that could export to the U.S. Without AGOA benefits, the lure of these countries for investment may decline, possibly slowing down economic growth. However, these possible implications can vary depending on the specific circumstances and strategies each country adopts in response to the removal from AGOA.
