United States (US) is set to reconsider Uganda for the African Growth and Opportunity Act (AGOA) after previously removing the country for passing the controversial Anti-Homosexuality Bill, a law that could impose life imprisonment or even the death penalty for same-sex conduct.
The President Joe Biden-led administration struck Uganda off the list of sub-Saharan African countries that can benefit from AGOA, citing President Yoweri Museveni‘s government’s “gross violations of internationally recognized human rights”
Biden said in an executive order dated December 29, 2023, that he had “determined” Uganda alongside three other countries-Central African Republic, Gabon, and Niger as they no longer meet the requirements necessary to allow them to continue benefiting from the AGOA trade deal.
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In what appeared to be a move to upturn the removal of Uganda, US lawmakers have now proposed to extend the AGOA to all the 54 Countries in Africa. With this development, Uganda is expected to be recaptured in the program.
The AGOA currently focuses on Sub-Saharan Africa; however, the recently approved legislation by the US Congress aims to expand its scope to encompass North African nations. This expansion is contingent upon these countries fulfilling the eligibility criteria about governance, human rights, and foreign policy.
This new addition will help support the growth of Intra African supply chain in the continent.
The US legislators believe that AGOA would provide US businesses interested in sourcing from Africa or investing in its supply chain assurance that the region possesses long-term trade potential, thereby, contributing to the growth of the continent by facilitating mutual trade between the United States and AGOA member countries.
It was gathred that Senators Chris Coons of Delaware and James Risch of Idaho have proposed the bipartisan Agoa Renewal and Improvement Act of 2024, aiming to expand Agoa’s coverage to include 54 African nations.
The extension is expected to integrate Agoa with the African Continental Free Trade Agreement (AfCFTA) to promote and enhance the African supply chain in the continent.
AGOA was introduced in 2000 and it is set to expire next year.
Gina Raimondo, the US Secretary of Commerce, mentioned during an economic event in Nairobi that the extension of AGOA was progressing as planned.
“President Biden and our administration have made it a priority to renew Agoa. It is the decision of the US Congress, so we have to work with some of the members,” Raimondo said.
The two US senators who proposed the bill stated that the proposed update of the pact would push beneficiary countries to increase their exports under the agreement.
“This bipartisan bill aims to refine Agoa’s eligibility criteria, increase transparency, and hold US agencies accountable for their advice to the president,” Senator Risch said.
Senator Coons, one of the Senators supporting the cause, presented a compelling argument in favor of renewing and enhancing the AGOA pact, highlighting its advantageous impact on the African nation.
The AGOA Renewal and Improvement Act is necessary to support continued economic development on the continent while further strengthening ties between the United States and partners in sub-Saharan Africa,” said Senator Coons.
What To Know
The AGOA Pact covers almost all goods imported to the US from sub-Saharan Africa. The list of covered goods has not been substantially updated since the program was created in 2000. The new proposal by the US Congress seeks to add additional products to the list of covered goods.
Countries in Africa become ineligible for AGOA once they become high-income economies according to the World Bank’s measure of GDP per Capital. This means that AGOA is only meant for developing economies in the continent.
Nigeria is eligible for AGOA qualifying for textile and apparel benefits.
It allows eligible African countries to export some of their produce to the US without paying taxes, meaning they are cheaper for US consumers to buy, and so they should buy more.
It covers more than 1,800 products – from BMW and Mercedes cars assembled in South Africa to Kenyan flowers and even jeans.
African Countries That Has Benefited Most From AGOA
South Africa was the largest exporter in the agreement in 2021. It generated about $2.7bn (£2.2bn) in revenue, mostly from the sale of vehicles, jewelry and metals.
Nigeria came second with a revenue of more than $1.4bn, mostly oil, while Kenya came third with about $523m, according to statistics from the US International Trade Commission (ITC) and the US Department of Commerce.
Other countries such as Eswatini, Ethiopia, Lesotho, Malawi, and Mauritius have also massively increased their exports to the US under Agoa.
Hundreds of thousands of jobs have been created across the continent, although there are no precise figures. It also reportedly supports nearly 120,000 jobs in the US.
However, much of the initial growth in exports was in fuel, which has since declined.
And few of the African countries that qualify for Agoa benefits have used them fully.
There are several reasons, including a lack of infrastructure such as transport networks, energy supplies, and specialist export-processing zones, as well as difficulties meeting the standards required by the US market.
