Introduction
China is Africa’s largest trading partner and most African countries have a deficit. To rebalance trade away from China and accelerate trade integration with the United States (U.S.), U.S. policymakers enacted the African Growth and Opportunity Act (AGOA) in 2002 and this policy has since remained at the core of U.S. economic policy and diplomatic engagement in Africa. AGOA provides eligible African countries with duty-free access to U.S. markets for over 6,500 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalized System of Preferences program.
To meet AGOA’s rigorous eligibility requirements, countries must establish or make continual progress toward establishing a market-based economy, the rule of law, political pluralism, and the right to due process (USTIC, 2023). Additionally, countries must eliminate barriers to U.S. trade and investment, enact policies to reduce poverty, combat corruption, and protect human rights.
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Africa Imports to the U.S. Increased
In 2022 alone, total exports from Africa to the U.S. under AGOA were estimated at $10.3 billion, up 26% from 2001, which is an increase of $11.6 billion on average (Figure 1). The largest portion of exports to the U.S. were petroleum products (45% of total imports) while non-oil imports were estimated at $5.7 billion in 2022 – quadrupling the outcome from 2001 (Fernandes et al, 2023).
Several non-oil sectors experienced significant increases during this period, which include apparel, auto parts macadamia nuts, jewelry, fresh oranges, and footwear. At present, South Africa is the largest beneficiary of the AGOA (UNCTAD, 2023). According to the AGOA statistics, top AGOA suppliers were South Africa ($3.6 billion; mostly vehicles and parts, fruits, precious metals, and chemicals), Nigeria ($3.5 billion; mostly crude oil), Ghana ($746 million; mostly crude oil), Kenya ($614 million; mostly apparel), Madagascar ($406 million; mostly apparel), and Angola ($391 million; exclusively crude oil). Other leading AGOA beneficiaries included Lesotho ($260 million; mostly apparel), Cote d’Ivoire ($127 million; mostly cocoa products), Gabon ($125 million; mostly crude oil), Congo Kinshasa ($92 million; mostly copper ore and products), Tanzania ($75 million; mostly apparel), and Mauritius ($74 million; mostly apparel).
Leading AGOA import categories were Mineral Fuels ($4.6 billion in 2022; up 140.0% from 2021), Transportation Equipment ($1.5 billion; up 86.4%), Textiles and Apparel ($1.4 billion; down 1.1%), Agricultural Products ($914 million, up 32.9%), Minerals, Metals, and Associated Products ($755 million; down 13.8%), and Jewelry and Precious Stones ($420 million; down 1.1%). This illustrates that Africa’s exports are mostly raw materials and unprocessed agricultural products and reinforces the need to add value to the African products before they are exported (Seyoum & Abraham, 2022).
One can argue that a current account surplus between Africa and the United States means that Africa is well placed to grow sustainably, without reinforcing its dollar-denominated debt and/or exacerbating the financial implications of the dollar’s exorbitant privileges. However, AGOA has boosted Africa-U.S. trade, which should not be interpreted as an anti-China win but rather a win for multilateralism.
Figure 1: U.S. imports under AGOA have increased from 2001 – 2022 (cover page)
Source: AGOA Website
Snapshot of Trade After COVID-19
In 2021, Sub-Saharan Africa’s GDP (including the United States) was an estimated $24.9 trillion (current market exchange rates), and the population was 1.5 billion. Not including the United States, Sub-Saharan Africa’s GDP was an estimated $1.9 trillion, and the population was 1.1 billion (Source: IMF) U.S. Goods trade (exports plus imports) with Sub-Saharan Africa totaled $44.9 billion in 2021. Goods exports totaled $16.6 billion; goods imports totaled $28.3 billion. The U.S. goods trade deficit with Sub-Saharan Africa was $11.7 billion in 2021. According to the Department of Commerce, U.S. exports of goods and services to Sub-Saharan Africa supported an estimated 74 thousand jobs in 2020 (58 thousand supported by goods exports and 16 thousand supported by services exports). (USTR, 2023).
Figure 2: Non-Mineral Fuel Exports to the U.S. have risen on Average
Source: USITC DataWeb
Africa Emerging Markets are the Top Exporters to the United States
U.S. goods imports from Sub-Saharan Africa totaled $28.3 billion in 2021, which is 47% ($9.1 billion) higher than in 2020, but down 62% from 2011. The top import categories (2-digit HS) in 2021 were: precious metal and stone (platinum) ($11.2 billion), mineral fuels ($6.0 billion), cocoa ($1.3 billion), vehicles ($868 million), and knit apparel ($749 million) (Kouam, 2021). Meanwhile, the top suppliers in 2021 were: South Africa ($15.7 billion), Nigeria ($3.5 billion), Ghana ($1.7 billion), Cote d’Ivoire ($1.2 billion), and Angola ($1.1 billion). As most African countries are focused on exporting agriculture, total agriculture exports were $34.3 billion in 2021, dominated by cocoa beans ($974 million), cocoa paste and cocoa butter ($340 million), unroasted coffee ($300 million), spices ($289 million), and tree nuts ($182 million).
Africa Imported Higher Value-Added Products from the U.S.
According to data from the AGOA website, African imports from the U.S. rose 22.6% ($3.1 billion) to $16.6 billion in 2021 but this was down 22% in comparison to 2011. Imports from the U.S. include vehicles ($3.2 billion), machinery ($2.0 billion), mineral fuels ($1.8 billion), aircraft ($1.1 billion), and cereals (wheat) ($918 million). As with exports, the top import markets were equally South Africa ($5.5 billion), Nigeria ($3.9 billion), Ghana ($983 million), Ethiopia ($585 million), and Kenya ($551 million). Finally, U.S. total exports (domestic exports plus re-exports) of agricultural products to Sub-Saharan Africa totaled $2.4 billion in 2021. Leading domestic export categories include wheat ($739 million), poultry meat and products (excluding eggs ($513 million), food preparations ($134 million), vegetable oils (excluding soybean) ($115 million), and pulses ($88 million)
Africa’s Trade Balance
These trade dynamics leave Sub-Saharan Africa with a trade surplus of $11.7 billion in 2021, a 104.8% increase ($6.0 billion) over 2020. To put this into perspective, from 2002 – 2022, Africa – China’s import and export values of goods rose from $11.67 billion to $257.67 billion (Oyintarelado, 2023). Meanwhile, foreign direct investment (FDI) in Sub-Saharan Africa was $30.0 billion in 2021, a 1.1% decrease from 2020, driven by the uncertainty caused by the Covid-19 pandemic.
Conclusion
The African Growth and Opportunity Act (AGOA) has given African Countries a unique opportunity to export to the United States. Not only does Africa have a trade surplus estimated at $11.7 billion in 2021, it represents a 104.8% increase ($6.0 billion) over 2020. The main exporters are South Africa ($15.7 billion), Nigeria ($3.5 billion), Ghana ($1.7 billion), Cote d’Ivoire ($1.2 billion), and Angola ($1.1 billion). While countries such as Uganda, Niger, Gabon, and Central African Republic, have lost their beneficiary status, AGOA has created solid foundations for the U.S. – Africa trade. However, both regions should seek to accelerate two-way trade, enabling Africa to industrialize and escape the trap of low-value exports.
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Author
Mr. Henri Kouam is the Founder and Executive Director of the Cameroon Economic Policy Institute (CEPI). He is equally a contributor to the Economist Intelligence Unit (EIU) and was previously a consultant for the North American Treaty Alliance (NATO). Prior to this, we worked as a consultant on the Demographic Dividend sponsored but the Bill and Melinda Gates Foundation in 2017 and worked for London-based macroeconomic research firm Continuum Economics
