AGOA: AU’s Call for Better Trade Terms Good for Africa

Published on 13th August 2013

The African Union Commission’s call for a review and negotiation for better terms with the USA under the African Growth and Opportunity Act shows that the continent’s leaders are mastering negotiation skills for the benefit of the continent.

While Africa’s exports under AGOA increased by more than 500% between 2001 and 2011 from $8.15 billion in 2001 to $53.8 billion in 2011, about 90% of these were oil products. Total U.S. trade with Africa excluding North Africa between 2010 and 2011 grew by 29.5% and 17% respectively, the top U.S. export markets being South Africa, Nigeria Angola, Mauritius, Ghana and Ethiopia. The top export categories were machinery and parts (22%), transportation equipment (17%), cereals (8%), mineral fuels (8%), aircraft and parts (7%), and electrical machinery (6%).

It is worth noting that while AGOA generated about 350,000 direct jobs in Africa, especially in the textile and apparel sectors between 2001 and 2011, in 2011 alone, U.S. exports to Africa, excluding North Africa, accounted for more than 100,000 jobs in the US with oil and gas contributing the largest share of imports to the US.  This is an indicator that the partnership contributed to the industrialization and job creation in the US more than what it contributed to Africa over the period.

It is for this reason that Africa must not be shy to review existing trade pacts with developed and emerging nations with a view of establishing a win-win relationship. The continent must diversify its exports and negotiate better terms for non-oil products. It must also focus on partnerships that facilitate intra-Africa infrastructure projects; grow value addition and bring more returns.

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