The United States has scrapped Uganda off the list of beneficiaries of the African Growth and Opportunity Act (AGOA), a major blow to the Ugandan economy, as AGOA has been a major driver of trade and investment between Uganda and the United States. AGOA exports accounted for approximately 8% of Uganda's total exports in 2021.
AGOA is a U.S. trade preference program that provides duty-free access to the U.S. market for qualifying products from eligible sub-Saharan African countries. Uganda has been an AGOA beneficiary since 2000.
The U.S. Trade Representative's Office (USTR) announced the decision to delist Uganda from AGOA on November 1, 2023 saying that Uganda had failed to make sufficient progress on meeting AGOA eligibility requirements, including protecting intellectual property rights and eliminating child labor, criteria related to human rights and rule of law among others.
The delisting of Uganda from AGOA will have a number of negative implications for the Ugandan economy. Ugandan exporters will face higher tariffs on their exports to the United States, making their products less competitive. This could lead to a decline in Ugandan exports to the United States and a loss of jobs in the Ugandan export sector coupled with loss of foreign exchange earnings. AGOA exports support an estimated 200,000 jobs in Uganda. The loss of AGOA benefits is expected to lead to job losses in the textile, apparel, and agricultural sectors among others.The delisting could also deter foreign investment in Uganda. Foreign investors may be less likely to invest in a country that is not eligible for AGOA benefits, this thus leading to a slowdown in economic growth and job creation in Uganda.
The Ugandan government has expressed its disappointment with the U.S. decision to delist Uganda from AGOA. The government has said that it is committed to meeting AGOA eligibility requirements and that it is working to address the USTR's concerns.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
The delisting of Uganda from AGOA is a setback for the Ugandan economy. However, the Ugandan government has the opportunity to turn this setback into an opportunity. By working to address the USTR's concerns, the Ugandan government can create a more attractive environment for trade and investment. However as the pan to get back onto the AGOA beneficiaries list gets underway if Uganda is up to it, the East African nation could look upto strengthening other markets for example,
The European Union (EU) which is Uganda's largest trading partner. With the EU-East African Community Economic Partnership Agreement (EPA) which provides preferential access to the EU market for a wide range of Ugandan goods, this could be a fall back position for Uganda.
The United Kingdom (UK) comes as Uganda's second-largest trading partner. The UK-Uganda Trade Continuity Agreement as well provides preferential access to the UK market for number of Ugandan goods.
China remains another option for Uganda to bolster as it (China) has been increasing its investment in Uganda in recent years. This investment could lead to increased demand for Ugandan goods in China.
Among other markets, Uganda can also trade with other African countries. The African Continental Free Trade Agreement (AfCFTA) is expected to increase trade between African countries with an estimated 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion (World Bank, 2020) . The African Continental Free Trade Area (AfCFTA) is one of the flagship projects of the African Union (AU) Agenda 2063 "The Africa We Want" which seeks to set Africa as a world powerhouse and reduce dependability on the west.
