Is the Africa Growth & Opportunity Act a Failure?
By Toyin Umesiri Chief Executive Officer, Nazaru llc. USA
In the year 2000, a bipartisan U.S. policy called The African Growth and Opportunity Act (AGOA) was passed into law. AGOA was created to provide goods originating from eligible African countries the opportunity to receive duty free preferential treatment without quota, when entering the U.S. market. This policy was expanded during President Bush’s era and was also extended to expire in September, 2025 by President Obama. AGOA was touted to transform U.S. – Africa trade relations and also to ignite mutually beneficial economic growth through good governance and free market access. Among experts, it is agreed that this policy has not lived up to its hype and here are 5 reasons why I believe AGOA has remained gravely underutilized.
Politics not Business
U.S. and African government leaders are no strangers to AGOA. It has sat on the books for 20 years and every year the AGOA forum is held to engage and assess its performance. I have found however, that outside of Washington, D.C., the U.S. Business and Buying Community have largely never heard about this policy before. Those who have heard about it use it for importing Oil but opportunities in Non-Oil export from Africa, for over 6,000 eligible items and commodities, remain yet to be captured. The U.S. government has failed to sensitize and galvanize the U.S. business community behind this policy like we have seen done for policies such as USMCA. The marketing of AGOA to U.S. buyers and its supply chain cost savings benefit has yet to happen.
Limited or no Training of US Border Patrol Agents (USP): In the fall of 2018, after just moving to Chicago I made the attempt to import items under AGOA here. My experience was horrible and shocking to say the least. The USP officers I tried to work with to clear my items insinuated that AGOA did not exist. My interaction with them turned into a mild argument and I had to bring out my phone to show them the AGOA website. The officer I was initially speaking with after seeing the website called on two more officers asking them “Do you know anything about this?” to which they both said No. They eventually said they couldn’t help me that I should go and work with their recommended Agent. I wish I could tell you that my interaction with the “USP recommended Agent” was any better; it wasn’t – it was actually worse. The Agent tried to walk me out of their office because I was insisting on using a policy they had never heard of before. They even made a point to say they have been in operations for decades and I was not in the position to tell them how to do their job. I insisted to speak with the Manager… To summarize I eventually was able to explain all over again how AGOA worked and that my items were eligible. It took 2 weeks of back and forth with this team before they could figure out how to apply AGOA benefits to my items by what time my goods had entered demurrage. So, in my opinion, if by 2018 USP Officers and top Agents in U.S.’s 3rd largest city; Chicago, have no idea what AGOA is and how to apply it, AGOA has failed!
Access to information
Utilizing AGOA is not a streamlined process. In fact, because of my work in leading Trade with Africa discussions, I have asked those who run African Stores in the U.S. if they have ever heard about it. They keep importing eligible items and paying tariffs on eligible items because no one has bothered to educate or inform them of the cost saving opportunities. You have to know that the way AGOA is designed ,if you do not request to use it CBP and Agents will take you through the regular process. It is the responsibility of the importer to stay informed and to initiate AGOA should they want to leverage it and not the regular tariff paying process. Information on AGOA is not readily available and for 20 years not much has changed in the way people import from Africa due to lack of published information and publicly available educative content. The reality is that if you are not searching for information about AGOA you will not encounter information about AGOA. That is why my company in 2019 created an AGOA training E-Course to help those importers to learn how to navigate the terrain. I do not want other people to go through the same things.
Africa’s Lackadaisical attitude about AGOA: When AGOA was passed, Africa’s leaders must have assumed that it was going to be U.S. government’s responsibility to mobilize and train Africa Exporters as well as find buyers and initiate Export Promotion and Development initiatives. What has to happen hasn’t happened. Africa has wide access to the US market but they have mostly failed to fully mobilize the exporter community behind it. The collective investment to enter new market lies squarely on the shoulders of Africans and their government. They have failed to give it first rate attention, educate the world about their export potential, organize the local market as well as invest in establishing strategic partnerships to drive Trade. This has resulted in failure to benefit fully even after 20 years.
U.S. Buyers and Africa’s Exports yet to connect dynamically: Until U.S. Buyers start engaging directly and transparently at scale with Africa’s Non-Oil Exporters, AGOA will remain a policy on paper. Buyers have to be trained on how to use AGOA, its benefits and opportunities and similarly Exporters across Africa will need to be educated on all U.S. importation requirements to ensure their goods are not rejected but actually they meet all standards.
With the China – US trade war continuing to escalate, the U.S. buying community are exploring alternative sources of supply and I believe Africa holds unique value proposition for a disrupted supply chain. For example importing Cashew directly from Africa will provide cost savings since today it is largely exported raw out of Africa into South East Asia before being imported into U.S. Market. Imagine what cost savings it presents if those items are routed directly from Africa to the U.S. under AGOA.
About Toyin Umesiri
Toyin served in corporate America at both Walmart and Whirlpool Corporation headquarters leading Global Sourcing, Merchandising & Technology strategic initiatives. She now runs Nazaru llc. a U.S. based company that connects the world to Africa through market insights, export promotion, consulting, trade events and more. She is the Founder of the acclaimed Trade with Africa Business Summit where she convenes business and political community leaders engaged to drive Trade with Africa®. For business inquiry email: email@example.com