The Bashir Adeniyi Centre for International Trade and Investment (BACITI) of the Nigerian Institute of International Affairs (NIIA) has charged sub-Saharan African (SSA) countries to urgently strengthen their structural and productive capacities, diversify exports as well as boost production hubs, industrial parks, farms, ports and policy institutions, citing uncertainty of the future of the African Growth and Opportunity Act (AGOA).
In its latest BACITI Economic Insight titled “Trade under AGOA: What Next?”, made available by the Head, BACITI, Adesuwa Erediauwa, cautioned that with the recent expiration of AGOA and the ongoing debate in Washington, DC, regarding its renewal, redesign, or replacement within a broader United States (US)-Africa trade strategy, African nations must take proactive steps to sustain trade gains and reposition effectively in a post-AGOA environment.
However, the report revealed that while AGOA, enacted by the United States Congress under the Trade and Development Act of 2000, significantly expanded Africa-U.S. trade in its early years, the programme’s long-term impact has been undermined by commodity dependence, weak industrialisation and infrastructure gaps across the continent.
The centre reported that while AGOA aimed to stimulate export growth, encourage job creation, and support economic and governance reforms, its benefits have varied significantly across the region, especially in the oil-exporting countries, a trade pattern dominated by hydrocarbons rather than productive growth.
The report stated that US imports from SSA between 2001 and 2008 rose from $8.2 billion to $66.3 billion, largely driven by crude oil exports from Nigeria, Angola, and Chad during a period of high global oil prices.
According to the report, exports from AGOA-eligible countries to the U.S. nearly tripled between 2000 and 2010, rising from about $22 billion to $61 billion.
“At its peak, mineral fuels accounted for over 85 per cent of total AGOA exports. Following the 2008 global financial crisis and the subsequent U.S. shale oil boom, demand for African crude declined,” the report stated.
However, by 2014, total trade volumes under AGOA had plunged to $14.3 billion and have remained subdued due to falling oil prices and the U.S. shale boom.
The report stated that while U.S. exports to the region held steady between $6 billion and $10 billion yearly, African exports did not substantially diversify.
The United States also recorded a persistent trade deficit of $57.8 billion with the region in 2008.
As oil imports declined, the deficit narrowed and, in some recent years (2019-2021), shifted into a modest surplus. However, this balance reflects reduced imports, not increased African competitiveness diversification. The trade relationship remains vulnerable to commodity cycles rather than underpinned by robust industrial production,” the report stated.
BACITI stated that after the 2008 financial crisis and the subsequent U.S. shale oil boom, oil imports declined sharply, reaching near parity with non-oil imports by 2015.
While AGOA spurred growth in some non-oil sectors, notably apparel, textiles and agricultural goods, which remained relatively stable between $3 billion and $6 billion in Kenya, Ethiopia, Lesotho, and Madagascar, progress remained uneven, as the non-oil exports were insufficient to offset commodity dependence.
Also, vehicle exports from South Africa grew from $150 million in 2000 to $2.2 billion in 2013, while agricultural exports from all AGOA beneficiaries rose from $750 million in 2000 to $2.9 billion in 2022.
