America's international trade interest is largely North America, Europe and Asia centric. Insights from the World Bank and the office of the United States Trade Representative places Canada, Mexico, Japan, China, and the United Kingdom as America's biggest trading partners.
The Africa Growth Opportunities Act (the Act) was enacted to expand America's trade frontiers into Africa within the precinct of the World Trade Organization (WTO) sanctioned Generalized System of Preferences (GSP).
Data from the office of the United States Trade Representative places Nigeria's trade export to the United States in 2021 at $1.4 billion. While this represents a significant leap from a 2020 trade export of $431 million, compared to Nigeria's export potentials, she is currently hitting below her weight.
This article briefly examines the Africa Growth Opportunity Act – making a case for a clear, industry specific implementation strategy.
Africa Growth Opportunities Act (AGOA)
The Africa Growth Opportunity Act was enacted in 2000 by the Clinton administration as a parting gift to Sub-Sahara Africa. Pursuant to several lifespan expanding amendments, what was initially enacted with a lifespan of eight years has since been extended to 2025.
The Act seeks to improve "Afrimerica" trade relations and provide a clear trade policy framework between Sub-Sahara Africa and the United States by providing a non-reciprocal, tariff free access to products from eligible African countries. Insights from diverse sources unanimously agree that the Act is grossly underutilized and has not lived up to expectation.
Barring any new amendment, the Act is expected to expire by the 30th September, 2025. A clear AGOA's implementation strategy as an impetus for an export driven economy is essential before the curtain closes on the Act.
AGOA Implementation strategy
Section 4 of the Nigerian Export Promotion Council Act, CAP N108, LFN 2004 empowers the Nigerian Export Promotion Council (hereinafter the council) to inter alia promote the development and diversification of the country's export trade through incentives and the development of export promotion strategies.
The Council's AGOA implementation strategy should be industry specific, based on aggressive export promotion campaigns and the creation of a one stop hub for AGOA related exports.
- Industry Specificity
With a GDP per capital of $76,3981, the United States is the largest consumer market in the world. Owing to an expanding diaspora, an AGOA implementation strategy with emphasis on consumer goods industries with a niche focus on Africa specific goods is bound to scale through. Areas of focus would be:
- Traditional fabric and apparel industry: An AGOA implementation strategy with a focus on the country's ailing local fabric and apparel industry will help resuscitate the industry by creating an export driven market for its product. Traditional fabrics like Aso Oke, Akwete, and Adire will find favour in the country's America diaspora and the black American community.
- Agro allied and Food processing industry: According to the Nigerian Bureau of Statistics, Nigeria's major agriculture export countries are Netherlands, Canada, Germany, Korea and Belgium. The United States is a global export destination for agricultural exports. Fully utilising AGOA can help identify prospective American market for the country's agriculture export. Furthermore, a huge Africa diaspora in the Americas creates a demand for Africa processed goods including yam flour, and orijin bitters, etc.,
It is worthy to note that identifying specific industries for AGOA's implementation is just a piece of the puzzle. As deductible from Ethiopia's AGOA's success story2 identifying and tackling industry specific constraints to export is essential.
- Aggressive export promotion campaign
It falls within the ambit of the Nigerian Export Promotion Council to facilitate an aggressive export promotion campaign with key industry leaders and experts. The campaign should focus on the American export market and its potential as a viable market for Nigerian export under the Act. Activities to undertake include trade fairs, and exhibitions, trade directory assistance for exporters, and collaboration with relevant stakeholders.
- Ease of regulatory bottlenecks
The creation of a one stop hub for all AGOA related regulations including appellation of origin centre, NAFDAC, and NEPC registration will increase incentive to trade under the Act. The hub may also double as an information hub for the country's export prohibition items including timber, maize, and unfinished leather.
Conclusion
The gains from a clear AGOA implementation strategy will outlive the Act. They are extendable to other bilateral trade agreements, free trade agreement, and comprehensive economic agreements.
References
Nigerian Export Promotion Council Act
Nigerian Bureau of Statistics
Footnotes
1 World bank 2022 estimate
2 Ethiopia was suspended from AGOA due to allegations of human rights violations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
