What’s AGOA-ing On

The old joke in the trade community is that Africa has been the “next big thing” for the past 40 years. Waiting for that to happen has been like waiting for Godot. If you think demographically, though, it’s inevitable. The median age in Africa is 19. In the United States and China, it is 38. Africa is clearly where the future lies, although making it a productive future with good education and jobs for everyone remains a challenge.

The United States has an interest in how other nations grow and prosper. In the short run, our presence, or lack thereof, in Africa relates directly to our competition with China. The issue has never been whether U.S. companies are fairly treated in China—they are not—or whether we can reciprocate here in the United States. The economic issue has always been whether we will be able to compete with China on the world stage—in Africa, Europe, India, Latin America, the Middle East, and Southeast Asia. Those are the real competitive battlegrounds, and so far, we are losing, particularly in Africa.

There are reasons for that, and many of them are out of the U.S. government’s hands. Potential investors often overlook Africa because of corruption, lack of infrastructure, market fragmentation, and the numerous obstacles to doing business there. Many African governments understand that and are taking steps to address the problems, but even if they succeed, it will take time for perception to catch up with reality.

Meanwhile, the main U.S. government initiative, the Africa Growth and Opportunity Act (AGOA) is floundering. AGOA, which provides for tariff-free imports from eligible countries, expires in September 2025. Companies doing business in Africa have been advocating for early renewal of AGOA for several years in order to maintain stability and certainty about the investment climate going forward.

Despite the pressure, including from the Biden administration, Congress has not acted. There has been no shortage of members of Congress saying they need to renew AGOA and no opposition, but, as usual, this appears to be priority number twenty-four for a Congress that rarely gets beyond its top five. That means the most likely outcome is renewal a few weeks before expiration, at which point there will be no time to consider improvements to the program.

That will not be good for the U.S. image in Africa, as it signals a lack of interest and attention. But, ironically, it might be good for renewal, because there is potential for disagreement if Congress actually looks at the program in detail—within Congress, between Congress and the administration, and between the United States and African governments. There are a variety of issues, but the big ones relate to graduation and eligibility.

Graduation refers to the provision in AGOA that calls for “graduating” a country out of the program when a country reaches “high-income” status as defined by the World Bank, currently $14,005 in per capita gross national income (GNI). In past years, this has led to a yo-yo effect, where a country is graduated, only to see its GNI drop below the threshold, which allows it to rejoin. Eligibility refers to a growing string of noneconomic requirements that countries respect human rights, enact policies that combat corruption, protect worker rights, reduce poverty, and not undermine U.S. national security. For example, Ethiopia has been removed from the program on human rights grounds, and there have been calls in Congress to remove South Africa—the biggest beneficiary—because of its support for Russia’s invasion of Ukraine. The Biden administration has also hinted that the criteria should include addressing environmental concerns, and there have been suggestions that access to critical minerals should also be considered. African nations prefer more flexibility on both these standards—a longer period of review for graduation and easing of noneconomic requirements. Congress is divided, and the administration seems to be tilting toward more requirements.

I mention graduation and eligibility because they demonstrate a dilemma that is not unique to AGOA: Who is it for—the United States or the beneficiary countries? The values AGOA seeks to promote are all good ones—nobody is in favor of corruption, at least not publicly—and they would be good for African nations as well as foreign investors and traders. But at the same time, AGOA’s efforts risk being perceived in Africa as simply a twenty-first-century version of colonialism. In particular, a provision on critical minerals tells African nations that AGOA is not about helping them, it is about helping the United States. From a practical perspective, at some point the requirements become so onerous it is simply not worth the trouble of applying.

AGOA is not a big program, and it has been getting smaller. Eligible imports last year were $9.7 billion out of total imports of $29.3 billion. They peaked in 2011 at $54 billion. Slightly less than half were oil imports, mostly from Nigeria, and most of the non-oil imports came from South Africa, with Kenya, Madagascar, Lesotho, and Ghana following distantly. This is a drop in the bucket for a trillion-dollar continental economy. But AGOA is an element of U.S. soft power, and in the case of Africa, virtually our only economic one, and it signals our economic goals to other developing countries as well. If we are going to compete successfully with China in the areas that matter most, then we should do a faster job of renewing AGOA, and we must do it in a way that demonstrably benefits Africa and will not be perceived as colonialism in disguise.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.