AfDB Set to Help African Countries Better Exploit Agoa Export Opportunities

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The African Development Bank is working towards helping African countries better benefit from the African Growth and Opportunity Act (AGOA) opportunities.

"The African Development Bank has launched a series of bilateral discussions on ways to boost U.-Africa trade and investment, especially under AGOA," said Moono Mupotola, AfDB Manager for Regional Integration and Trade. "AGOA, together with the Trade and Investment Framework Agreements, are considered critical tools of U.S.-Africa trade relations."

As a result, the AfDB has identified several areas of possible support to be discussed with US government agencies and African countries at the AGOA XII Forum that will be held in Addis Ababa in this summer.

Some of the identified areas include support and capacity building for export and investment promotion agencies in Africa. AfDB-US cooperation could also materialize in the development of general trade infrastructure, especially in the area of trade facilitation.

The AfDB is also considering increasing its support for the development of agricultural and non-agricultural value chains in Africa.

"There is growing political will within the Bank to help boost US-Africa trade relations, in accordance with the general spirit to boost African trade as agreed by African Heads of Government during the 18th and 19th sessions of the Summit of Heads of States and Governments," said Mupotola.

Since its inception in 2000, AGOA has acted as a catalyst to US trade with Sub-Saharan Africa (SSA), particularly in the oil, footwear, vehicles and parts, clothing and textiles sectors. In the apparel sector alone, AGOA is estimated to have created as much as 350,000 jobs in SSA since 2001 and some 100,000 jobs in the US economy.

US-African trade grew by more than 500 per cent between 2001 and 2011, with exports from Sub-Saharan Africa to the US reaching US $79 billion. In 2012, petroleum products accounted for the largest portion of AGOA imports and this explains why Nigeria, Angola, Chad and Gabon are four of the five largest AGOA beneficiaries.

However, while AGOA non-oil imports remain small, non-oil exports totaled US $4.8 billion in 2012, more than triple the amount in 2001, and South Africa (AGOA's largest non-oil beneficiary) is among a number of AGOA beneficiary countries exporting a range of non-oil products. US goods exports in 2012 were US $22.6 billion, with top export categories of machinery, vehicles, aircraft, oil, and cereals and top export markets in Sub-Saharan Africa being South, Nigeria, Angola, Ghana and Ethiopia.

The US Government has made serious efforts to deepen its economic engagement with Africa through a range of tools including AGOA, Trade and Investment Framework Agreements (TIFAs), Bilateral Investment Treaties (BITS), and a new initiative with the East African Community (EAC) that will negotiate a regional investment treaty, trade-enhancing agreements (such as trade facilitation), provide technical assistance, and establish a US-EAC Commercial Dialogue, said Florizelle B. Liser, Assistant US Trade Representative for Africa in the Office of the US Trade Representative (USTR).

She noted that the June 2012 Obama Administration Policy Directive towards Sub-Saharan Africa which includes economic growth, trade and investment as a key pillar of US policy toward the region.

The new policy promotes greater US Government and private sector engagement to take advantage the tremendous trade and investment opportunities in Africa, recognizing that many other countries (such as Brazil, China, India, the EU and others) are active in advancing their respective trade, investment, and business relationships with the continent.

However, the low utilization of AGOA preferences by beneficiary countries is in stark contrast to the aggressive export strategies that other developing countries like Bangladesh, Cambodia and Vietnam have adopted to access the US market. These are countries that share many of same infrastructure challenges facing Sub-Sahara African countries.

"Overall, the Bank would want to support SSA countries to more than double and further diversify their non-oil AGOA exports over the next decade - with a special emphasis on enhancing SSA value chains, and value addition," said Calvin Manduna, Principal Trade Expert, AfDB.

The series of bilateral meetings on AGOA between the AfDB and US government agencies was launched on the back of the recent IMF / World Bank Spring Meetings held in April 2013 in Washington, DC.

The first meeting included officials from the US Departments of State, Commerce, Treasury, Agriculture, Transportation; the Millennium Challenge Corporation; US. Trade and Development Agency; and the Overseas Private Investment Corporation (OPIC).

The Bank also held discussions on AGOA with the African Union Mission to the USA, Washington-based diplomats representing AGOA-eligible countries - hosted by Ambassador Somduth Soborun of Mauritius.

AGOA beneficiaries have intensified efforts in Washington to secure renewal of AGOA beyond 2015. The Bank also engaged in consultations with the Brookings Institute and the Inter-American Development Bank, whose member countries have a long history of trading with the US and can provide valuable lessons for African countries on successfully tapping into that market.

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