African Growth and Opportunity Act (AGOA): Program Usage, Trends, and Sectoral Highlights

On April 17, 2023, the U.S. International Trade Commission ("USITC") released African Growth and Opportunity Act (AGOA): Program Usage, Trends, and Sectoral Highlights Publication Number: 5419, Investigation Number: 332-589.

The report finds that the impact of the AGOA program on beneficiary countries can be substantial depending on the sector, especially apparel. Moreover, although the influence throughout SSA as a whole has been minimal, interviews by Commission staff, fieldwork, and some academic literature indicate that AGOA may have had a positive impact in key areas such as poverty reduction and job growth in some countries. The effect was found to be particularly important in the apparel sector and among underserved groups, such as women. Anecdotal evidence indicated that while meeting AGOA eligibility requirements created a positive impact on workers and poverty reduction, the loss of program eligibility due to failure to meet program requirements had a negative impact on beneficiary economies and regional integration. 

Additional highlights from the report include:

• AGOA benefits accrue to a subset of countries and sectors within SSA. Over three-quarters of non-crude petroleum imports under AGOA originated from five countries during 2014–21: South Africa, Kenya, Lesotho, Madagascar, and Ethiopia. Countries with lower utilization rates typically have few exports to the United States in general, or their primary traded goods are not eligible for AGOA preferences or are already duty free under normal trade relations.
• The SSA apparel sector has benefited substantially from the AGOA program. Of non-petroleum imports under AGOA, imports of textile and apparel constitute the largest share. Duty savings of up to 30 percent and the third-country fabric provision have allowed multiple countries to expand their manufacturing capacity. Employment in this sector has provided an avenue for women to enter the formal economy and earn relatively high wages. While there remains little direct usage of SSA-grown cotton and a reliance on East Asian mills for yarn and fabric, there are some limited examples of regional integration connecting SSA producers of textile inputs to apparel manufacturers.
• Agricultural products like cotton and cocoa are important sectors for a number of SSA economies. Growing these crops employs millions of farmers across the region, and their export is critical for accessing foreign exchange. Cocoa processing operations in the region allow the export of higher-value commodities like cocoa butter and powder. However, growing cotton and cocoa provides low income and therefore does not provide a reliable pathway for poverty reduction. Additionally, higher income cocoa processing employment is limited. Child work and child labor are present in the industries, particularly on family farms.
• Despite the SSA region’s access to ample feedstocks, the chemical industry’s potential impact across the region is limited, and substantial development will likely depend on mitigating competitive infrastructure weaknesses. South Africa is the only AGOA beneficiary or SSA country with an established and comparatively diversified chemical industry, but its growth beyond basic and commodity chemicals has been hindered because of unreliable transportation, water shortages, and a lack of dependable electricity.