US Govt Investigates AGOA Underperformance

The United States government says it is committed to ensuring the revival and success of the African Growth and Opportunities Act (AGOA) initiative that has faltered over the last 10 years, according to officials.

The debate on the performance and future of AGOA was one of the side events at the just concluded US-African Leaders Forum in Washington DC, whose main focus was increasing trade and investment between the two regions.

This followed concerns that the initiative was failing despite some countries investing money to take advantage of it. Uganda is one of the 36 countries that are eligible to benefit from the initiative that allows Low-income African countries to export to the US up to 18,000 products duty-free, in addition to the more than 5,000 products eligible for duty-free access under the Generalized System of Preferences program.

Countries that have continued to perform well include South Africa, which exports cars to the US and those that export oil, which accounts for more than 60 per cent of the AGOA trade. Uganda’s exports under AGOA are coffee, cut flowers, fish, and textiles and apparel, but the US agrees that like many countries these have not performed as had been planned.

Jose Fernandez, the Under-Secretary for Economic Growth, Energy, and the Environment say they have discussed at length the under-performance of AGOA to find out the cause and get possible solutions.

Uganda’s exports to the US have fluctuated over the last 22 years of AGOA. In 2000, Uganda’s exports to the US were recorded at 29 million Dollars, compared to the 28.3 Dollars’ worth of imports. The situation has since changed.

While total trade has grown from 57 million Dollars to 260 million Dollars, the trade balance is highly tilted in favour of the US which sent to Uganda goods worth 167.6 million Dollars and imported 92 million Dollars worth in 2021.

Susan Muhwezi, the senior Presidential Advisor on AGOA says that said earnings from AGOA exports to the US grew from 233,000 Dollars in 2016 to 5.6 million Dollars in 2021. According to her, there is a pick–up in exports as more people take advantage of the post-COVID-19 initiatives to promote production and exports.

Addressing the African media on the outcomes of the Forum, Fernandez said that in 2023, the US private sector is going to become more active on the continent implementing the decisions they have made. These, he said, will largely be taken on from the existing initiatives like food security, and the millennium challenge corporation among others.

At the meeting, President Joe Biden said that the U.S. government would support the African continent with over 55 billion Dollars to support health and climate adaptation over the next three years.

The initiatives under this support will be in sectors like food security, health, climate, trade and investment, economic growth, and also education, peace and security, and democracy. Heads that this will partly help in implementing the agreement they signed with the African Continental Free Trade Area, AfCFTA.

On Climate, Fernandez said they are partnering with Africa’s resource-rich countries, starting with Zambia and the Democratic Republic of Congo to promote an “electric car value chain.”

On the sidelines of the forum, the US signed a deal with the two countries through which the US will help them in the processing and development of the minerals to serve the global electric vehicle industry.

He said they will ensure that the minerals sectors are exploited in ways that benefit the countries and even help in mitigating the effects of climate change.

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