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U.S. curbs African trade benefits

By Babs Odukoya
25 December 2009   |   11:20 am
SOME African countries have a year-end raw international commerce bargain from the United States of America (USA), as President Barack Obama, stopped Madagascar, Guinea and Niger from receiving trade benefits for a year. The President explained that the countries had failed to make "continual progress" in meeting USA's requirements for a programme designed to create jobs in Africa. Obama said that each of the countries "has experienced an undemocratic transfer of power" meaning they did not satisfy the criteria. However, Mauritania was re-instated to the programme. The Africa Growth and Opportunity Act (AGOA), was set up in 2000 to offer "tangible benefits" for African countries trying to adapt their economies to a free market.

In order to take part, countries much show they are working towards, among other things, introducing the rule of law and political pluralism, the elimination of barriers to U.S. trade and investment and efforts to combat corruption.

In Niger, President Mamadou Tandja, refused to give up office at the end of his term, while both Guinea and Madagascar have both seen military-backed coups.

A coup took place in Mauritania last year, but an election was held this year that, although it returned the coup leader, General Mohamed Ould Abdelaziz to power, was deemed by observers to be transparent.

U.S. total trade with Sub-Saharan Africa (exports plus imports) increased 28.0 per cent in 2008, as both exports and imports grew.

U.S. exports increased by 29.2 per cent to $18.5 billion, driven by growth in several sectors including: machinery, vehicles and parts, wheat, non-crude oil, aircraft, and electrical machinery (including telecommunications equipment). But imports in 2008 increased by 27.8 per cent to $86.1 billion.

As has been the case throughout 2008, this growth continues to be due to a significant increase of 31.9 per cent in crude oil imports (accounting for 79.5 per cent of total imports from sub-Saharan Africa).

Among the top five African destinations for U.S. products, exports to South Africa rose by 17.6 per cent, to Nigeria by 47.7 per cent, to Angola by 62.6 per cent, to Benin by 192.4 per cent (due to a large increase in the export of non-crude oil and vehicles and parts), and to Ghana by 46.1 per cent.

However, imports from the oil producing countries grew in every case with imports from Nigeria growing by 16.2 per cent, from Angola by 51.2 per cent, from the Republic of Congo by 65.2 per cent, from Equatorial Guinea by 89.5 per cent, from Chad by 55.4 per cent, from Gabon by 4.4 per cent, while imports from South Africa grew by 9.9 per cent.

Declines in the import of platinum and diamonds from South Africa were more than balanced by strong growth in the import of ferroalloys and extremely high growth of over 350 per cent in the import of passenger vehicles (caused by a surge in imports from South Africa as new car lines produced in South Africa came on the market at the end of 2007).

In 2008, U.S. imports under the AGOA were $66.3 billion, 29.8 per cent more than in 2007.

Petroleum products continued to account for the largest portion of AGOA imports with a 92.3 per cent share of overall AGOA imports.

With these fuel products excluded, AGOA imports were $5.1 billion, increasing by 51.2 per cent. Much of this non-energy product increase was due to a 224.8 per cent increase in imports of AGOA transportation equipment, virtually all from South Africa as mentioned above.

AGOA minerals and metals also increased by 58.8 per cent and AGOA chemical and related products by 38.7 per cent. AGOA textiles and apparel imports declined by10.4 per cent, while agricultural products fell by 7.9 per cent.

U.S. imports under AGOA were becoming increasingly diversified. Some of the more significant products include: jewelry and jewelry parts; fruit and nut products; fruit juices; leather products; plastic products; and cocoa paste.

The top five AGOA beneficiary countries included Nigeria, Angola, South Africa, Chad, and the Republic of Congo. Other leading AGOA beneficiaries included Gabon, Cameroon, Lesotho, Madagascar, Kenya, Swaziland, and Mauritius.

The U.S. merchandise trade deficit with sub-Saharan Africa continued to widen in 2008 to $67.5 billion, from $53.0 billion in 2007.

Nigeria, Angola, the Republic of Congo, South Africa, Chad, and Equatorial Guinea accounted for 97.2 per cent of the trade deficit with sub-Saharan Africa in 2008.

Sub-Saharan Africa’s total merchandise imports continued to increase in 2007, growing 25.6 per cent to $269.2 billion, compared to slightly lower growth of 24.1 per cent in 2006.

South Africa and Nigeria accounted for almost half of sub-Saharan Africa’s total imports with a 46.4 per cent share.

In 2007, South Africa’s imports increased by 25.9 per cent to $85.6 billion, about the same growth as in 2006.

Nigeria’s imports increased by 33.7 per cent to $39.4 billion, higher than the 20.3 per cent growth in 2006.

Based on a review of some of the major suppliers to sub-Saharan Africa, no single sector appears to account for the majority of the growth in sub-Saharan African imports.

Instead, the imports appear to be spread over a range of sectors, including a variety of electrical and other machinery, refined oil, telecommunications equipment, vehicles, aircraft, iron and steel products, pharmaceutical products, medical equipment, apparel, footwear, ocean vessels, and wheat.