The African Growth and Opportunity Act — a trade provision that allows thousands of products from African countries to enter the U.S. tax-free — is due to expire in September. While the U.S. Senate has recently passed legislation to extend the Act for another 10 years, it still has to go through the House of Representatives. Meanwhile, many say the program has only benefited a few sub-Saharan African countries and needs some revisions.
When President Obama visited Africa two years ago, people were visibly excited. But local business owners such as Sadiya Gueye of Senegal hoped the U.S. leader would address export barriers, which, she thinks, remain too high for small businesses like her clothing design workshop that exports to the U.S.
"In the textile sector, AGOA brings with it lots of restrictionsm," said Gueye. "Since we signed the agreement, people are always holding meetings left and right, but I believe that we have not been able to do anything real."
According to Serigne Aliou Diop of Asepex, the agency in charge of promoting Senegalese exports — including fisheries, agricultural and artisanal products — AGOA has benefitted the country.
“Today after 13 to 14 years of being eligible, I don’t think Senegal has really benefited from AGOA," Diop told VOA. "Some of it is due to the limited financial capacities of our companies: the quasi-inexistence of cargo flights to the U.S and the strict rules regarding our products."
According to the U.S Department of Commerce, the top five AGOA beneficiary countries are Angola, Nigeria, South Africa, Chad and Gabon. Among other leading beneficiaries: Lesotho, which has one of the largest textile industries with about 40 plants mainly run by Asian businessmen.
While the program is working for countries like Lesotho, it's not the norm for all eligible countries.
"In its peak year, 2008, [the program drove] $80 billion," in revenue, said Rick Helfenbein, chairman of the American Apparel and Footwear Association. "However, 2014 finished [with] $23 billion.
“Sixty seven percent was energy-related," he added. "Where is the other 33 percent? Twenty of the 33 percent is South African ... 13 percent of the 33 percent in non-energy coming from 35 countries. Underutilized, completely underutilized."
Last year, U.S. imports from sub-Saharan Africa decreased by 32 percent, according to the U.S. Department of Commerce. The reason was mostly due to a 51 percent decrease in U.S. oil imports from the region. But Senatore Orrin Hatch (R-Utah), who heads the Senate Finance Committee, recently praised the trade agreement.
“Since AGOA was enacted in the year 2000, trade with beneficiary countries has more than tripled, with U.S. direct investments growing more than sixfold," he said. "The program has helped create more than 2 million jobs."
Hatch, who helped craft the reauthorization language for the new bill, says that in order to improve on AGOA’s past successes, it is important to allow both sub-Saharan Africa and the U.S. to benefit from expanded market access.
