Part 1 – Effectively Improving AGOA

It is amazing how little the beneficiaries of America’s largest program for Africa know about the opportunity it presents. Go to any meeting on the African Growth and Opportunity Act (AGOA), and you will rarely find people that have the complete picture. Many call the program an ‘agreement’ between the U.S. and Africa. It is not. Others think that the U.S. must use AGOA to export more to Africa. It cannot. Worse still, the Africans themselves think that AGOA has failed them. It has not. At its common core, AGOA is access to the U.S. market. If you are an African farmer, you can take advantage of AGOA by exporting your coffee into the U.S. market without having to pay any taxes on your exports. Of course, you must get the produce to the shores of these United States. And yes – you must have established a need for either your Arabica coffee or organic vanilla. Ultimately, to get into the world’s largest and most insatiable market, you must do so much more than just have an excellent product. But this is, perhaps, jumping the shark.

For a 14-year old program, AGOA has not been as successful as it should have been. And much of the blame goes to those that set out to sell the program’s benefits. For a country like Uganda, AGOA was sold as a job package for seamstresses. When the factory making clothes for stores like Banana Republic and Gap closed down, the Ugandan media and those who consumed it were apoplectic. AGOA had failed, they said. The Ugandan Parliament, which had provided huge amounts of money to a corrupt and incompetent management of the factory, bayed for blood. Almost 10 years later, there are crickets in the air every time one mentions AGOA to a Ugandan.

But right next door – in Kenya – some people were smiling all the way to the bank: In 2013, on top of exporting knit and woven apparel under AGOA, Kenyans sold spices, coffee, tea, macadamia nuts, and electrical machinery. Speaking of machinery, South Africa made about 2.6 billion dollars from selling platinum and diamonds; 2.3 billion dollars from selling cars; 696 million dollars from selling iron and steel, and they also sold some machinery worth 404 million dollars.

Invariably, these cars, machines and stones all pale in comparison to oil: For the 2013 period, Nigeria alone exported more than 11.6 billion dollars worth of oil – with its next biggest export, cocoa, bringing in only a paltry 29 million! Angola exported up to $8.7 billion worth of crude oil – and its diamonds fetched only $19 million! This is a major problem. On top of these exports from Africa contributing to America’s trade deficit, they also expose a deficiency in Africa. Not only does Africa export basically unprocessed products; the continent does not have any experience in diversification. As noted from the balance between oil and other products in both Nigeria and Angola’s cases, sub Saharan Africa could do with a little more balancing.

Nonetheless, I’d be remiss not to mention that these things have been spoken about ad nauseum. That Africa produces primary products is an unfortunate fact. That Africa has a major infrastructure problem is another unfortunate fact. That Africa has not been able to muster its supply chain and distribution network ability is yet another glaring unfortunate fact. And what are African countries doing about it? Nothing much, in terms of AGOA. And there is good reason for this. On top of being fettered to China’s unquenched thirst for resources and the European Union’s economic partnership agreements (EPAs), Africa sees the U.S. as far too removed from things on its soils. Yes – American goods and services like Coca Cola are everywhere. Barack Obama is black. Commando and Rambo are still exceptional, blah, blah, blah. America is still too darn far – way out of reach of the common man.

To Be Continued