The African Growth and Opportunity Act (AGOA) was enacted by the United States’ legislature in May 2000 to enable developmental trade agreements between the US and sub-Saharan African countries. Since then, it has been at the core of US economic policy and commercial engagement with sub-Saharan Africa.

AGOA provides African countries with duty-free access to the US market for more than 1,800 products, if those countries can prove themselves eligible for preferential trade agreements by satisfying a range of criteria. The main stipulations for trade are that 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. Additionally, countries must eliminate any domestic barriers to US trade and investment, and enact policies to reduce poverty, combat corruption and protect human rights.

Unleashing Africa’s economic potential

Currently, 36 African countries are eligible for AGOA benefits, after the US Congress passed legislation in 2015 modernising and extending the programme to 2025. Recent negotiations have focused on further extending and refining the current agreements. In 2021, the last full year for which figures are available, total US trade (exports plus imports) with sub-Saharan Africa amounted to US$44.9 billion. 

The top export categories were vehicles ($3.2 billion), machinery ($2 billion), mineral fuels ($1.8 billion), aircraft ($1.1 billion) and cereals ($918 million). The top 5 export markets were South Africa ($5.5 billion), Nigeria ($3.9 billion), Ghana ($983 million), Ethiopia ($585 million) and Kenya ($551 million). The top suppliers to the US economy in that year were SA ($15.7 billion), Nigeria ($3.5 billion), Ghana ($1.7 billion), Côte d'Ivoire ($1.2 billion) and Angola ($1.1 billion).

These figures show how important the AGOA agreement is to the local economy. Recent negotiations for the extension and refinement of its trade provisions were complicated by South Africa’s stance on the Russia–Ukraine conflict, but in late 2023, SA motivated for the broader economic and developmental benefits that AGOA brings to the continent. Participating African countries, regional value chains and the US all derive trade benefits from AGOA, including access to the US market for African goods and reciprocal opportunities for US companies to increase the export of goods into African value chains.

Driving sustainable growth in Africa

Apart from the access which AGOA provides for African exports to the US market, it also offers huge opportunities in job creation and local economic development, enabling even smaller businesses to enter the export market. It provides a platform for companies to move up the value chain in the manufactured goods sector, rather than simply trading in commodities or bulk resources.

AGOA helps the US economy with access to cheaper goods, but also contributes greatly to sub-Saharan Africa’s economic development. It’s one of the more important trade agreements for developing more inclusive economies on the continent. For SA, one of the most industrialised and diversified economies in Africa, AGOA is important not only in the export of raw materials, but also in encouraging job creation in key sectors like agriculture and manufacturing.

Raw materials are a traditional export sector for which SA has strong markets in the US. We provide up to 25% of US imports of 9 critical minerals, including manganese and platinum. This basis in trade relations has been substantially expanded and diversified by AGOA, a situation that the South African Department of Trade and Industry has been looking to secure in recent negotiations. 

These negotiations focused on the 2-way nature of trade agreements and sought to allow African countries to access more of the US market, rather than the US relying on raw-material imports. Industrialisation and beneficiation are important for this process, something which presents major opportunities for small business to export goods into the US market.

Developing African regional trade

While AGOA has a continental focus for US trade, it can also play a role in promoting trade with our direct neighbours. European Union countries conduct about 70% of their trade with neighbours, while countries in South-east Asia and North America also trade similarly significant proportions regionally. However, this has not historically been the case with intra-African trade.

The recent development of the African Continental Free Trade Area (AfCFTA) is intended to address this shortcoming. The regional agreement will further benefit AGOA and broader economic development of the continent, by promoting trade in beneficiated goods in diversified sectors, rather than focusing on being resource producers as many African countries do. For example, many of SA’s motor vehicle manufacturers can benefit from participation in regional value chains through the AfCFTA, but this also benefits local automotive manufacturing businesses using US auto components through the AGOA platform that can benefit SA-manufactured vehicles sold around the world.

For businesses in the import–export sector who may be looking to expand or change markets, or diversify their offerings, entering the AGOA or AfCFTA business platforms might prove beneficial. But this requires professional advice and networks to navigate the regulatory and other challenges that exist in export–import trade.

Nedbank has the advice and support you need to make the right business decision – whether you run a small business (under R30 million yearly turnover), a larger commercial enterprise, or you need help with international trade solutions.