Trade With
Sub-Saharan Africa
Office of
Africa, Market Access and
Compliance
Sub-Saharan Africa, a
region with 48 countries and
643 million people, accounts
for nearly 10 percent of the
world’s population, and the
largest regional bloc both in
the United Nations and the
World Trade Organization (38
members and 4 observers.
However, the region has long
been a marginal player in
global trade. The volume of
world trade has tripled while
sub-Saharan Africa’s trade
has grown less than 10
percent. In the last two
decades, sub-Saharan
Africa’s share of world
trade has fallen from two
percent to less than one
percent.
Sub-Saharan Africa accounts
for less than one percent of
U.S. merchandise exports, and
less than two percent of U.S.
merchandise imports. From 1997
to 2000, U.S. exports to
sub-Saharan Africa averaged $6
billion. Although U.S. exports
to Africa formed only one
percent of total U.S.
merchandise exports, the
United States exported nearly
80 percent more to sub-Saharan
Africa than to all the former
Soviet republics and Eastern
European countries combined.
U.S. exports contribute
significantly to building,
developing and modernizing
sub-Saharan Africa’s
infrastructure. The principal
U.S. exports included the
following product categories:
aircraft and parts; oil and
gas field equipment; motor
vehicles and parts; industrial
chemicals; computers and
peripherals; construction
machinery and parts;
telecommunications equipment;
and agricultural machinery.
U.S. exports to sub-Saharan
Africa are concentrated among
a small number of countries.
The top four markets — South
Africa, Nigeria, Kenya, and
Angola — accounted for 72
percent of U.S. sales in 2000.
There is potential for
increased U.S. exports to the
region given developments in
many sub-Saharan African
countries over the last
decade. The apocalyptic media
portrayal of Africa often
overshadows the progress that
many African countries have
made and continue to make in
strengthening democratic and
free market institutions.
Undeniably, a number of Afr ican
countries are in the midst of
political, economic and social
turmoil. However, over two
dozen countries in sub-Saharan
Africa have made progress and
continue to work toward
reducing trade barriers,
improving their business
climates, selling state-owned
companies, undertaking poverty
alleviation programs,
combating corruption, and
building physical, financial,
communications and legal
infrastructures. These
countries are progressively
breaking the vicious cycle of
poverty and political
instability and entering the
virtuous cycle of democracy
and free market economics. The
evidence of reforms can be
seen in the upward GDP growth
trends, lower inflation, and
improved business climates.
Opportunities exist for U.S.
firms to participate in these
countries’ efforts to build
infrastructure, modernize
their agricultural sectors and
extract and process natural
resources.
From 1997 to 2000, U.S.
imports from the region
averaged nearly $17 billion.
In 2000, sub-Saharan Africa
supplied 18 percent of U.S.
crude oil imports by value in
2000, up from 16 percent in
1999. In comparison, Persian
Gulf suppliers provided 25
percent of U.S. imports.
Platinum group metals and
woven and knit apparel are the
second and third leading U.S.
imports respectively.
U.S. imports from Africa
remained highly concentrated
among a small number of
suppliers, even more so than
U.S. exports. Four countries
— Nigeria, South Africa,
Angola, and Gabon —
accounted for more than 87
percent of U.S. purchases.
Three were major crude oil
suppliers, while South Africa
was an important supplier of
platinum, diamonds and steel.
To help Africa transition out
of exporting commodities and
into suppling value-added
goods, the African
Growth and Opportunity Act (AGOA)
was enacted in May 2000, as
part of the Trade and
Development Act of 2000. The
Act extends to African
beneficiary countries the most
liberal access to the U.S.
market available to any
countries except those with
which the United States has
free trade agreements (FTAs).
It also establishes a
permanent forum for high-level
dialogue between Africa and
the United States on economic
and commercial issues. The
U.S.-African Trade and
Economic Cooperation Forum
convened in Washington at the
end of October this year,
hosted by the Secretaries of
State, Commerce, Treasury and
the Office of the U.S. Trade
Representative (USTR).
AGOA serves as the centerpiece
of U.S. engagement with
Africa. AGOA establishes a new
framework for U.S. trade,
investment and development
policy for sub-Saharan Africa.
It establishes a set of
tangible incentives to
encourage sub-Saharan African
countries to implement
economic, commercial and
governance reforms, in an
effort to build a new
framework for U.S. trade,
investment, and commercial
policy for the region. The
Bush Administration is working
to ensure full implementation
of AGOA and a broadening and
deepening of U.S. relations
with the countries of
sub-Saharan Africa.
Since May 2000, key steps have
been taken to implement AGOA.
The U.S. government has
designated 35 AGOA beneficiary
countries. As of now, nine
sub-Saharan African countries
have been designated for AGOA
apparel benefits with five
other countries in the process
of meeting the requirements.
The United States has provided
extensive technical assistance
to sub-Saharan African
countries, including
widespread outreach efforts.
An Internet site, www.agoa.gov,
has been created to provide
information on the AGOA. Over
a dozen regional and national
AGOA implementation seminars
have been conducted in Africa
and the United States. The
U.S. government has produced
and distributed a
comprehensive AGOA
implementation guide and an
AGOA video. The U.S. Customs
Service has conducted training
seminars for officials from at
least 24 sub-Saharan African
countries and sent technical
assistance teams to five
countries to provide guidance
on requirements for AGOA
apparel benefits. U.S.
Embassies have also conducted
intensive outreach campaigns
and speakers on the AGOA have
been
sent to 25 countries. Outreach
and ensuring full
implementation of AGOA will
remain a priority for the U.S.
government.
Recognizing the importance of
financing, AGOA encourages the
Export-Import Bank (EXIM) and
the Overseas Private
Investment Corporation (OPIC)
to expand their programs in
sub-Saharan Africa. One of the
four OPIC Africa funds, the
Africa Millennium Fund, was
mandated by the AGOA
legislation. This $350 million
fund will invest in
telecommunications,
transportation, electricity,
water and sanitation projects.
In addition, OPIC’s three
global funds can invest a
portion of their capital in
sub-Saharan Africa. OPIC has
also committed $1 million to
support micro-finance in
Africa, in collaboration with
Reverend Leon Sullivan’s
organization the International
Foundation for Education and
Self-Help and the African
Development Bank. OPIC has
also created an African
Investment Council as required
by the AGOA legislation.
The AGOA legislation urges Ex-Im
Bank to expand its financial
commitments in sub-Saharan
Africa under its loan,
guarantee and insurance
programs. Ex-Im Bank programs
are available in 32 countries
in sub-Saharan Africa. Ex-Im
Bank support to sub-Saharan
Africa has grown from $56
million in 1998 to $914
million in 2000. Ex-Im Bank
created a new initiative to
provide $1 billion a year in
loans and loan guarantees to
support the purchase of
HIV/AIDS goods and service.
This initiative is available
to both the public and private
sector in sub-Saharan Africa.
In an effort to increase
African businesses’ ability
to access financing, Ex-Im is
providing more flexible
financing terms under its
Short-term Insurance Pilot
Program, and is pursuing
guarantee agreements with
African banks.
AGOA has already begun to
stimulate robust growth in
U.S.-African commercial ties.
Trade with the 35 AGOA-eligible
countries tracked closely with
all of sub-Saharan Africa in
the first half of 2001. U.S.
imports grew seven percent,
while exports jumped 35
percent. Imports of knit and
woven apparel expanded 28
percent, with especially
strong performances by
Madagascar, Mauritius,
Lesotho, and South Africa.
Anecdotal information
indicates that United States
and third country investors
have been especially active in
the region’s textile and
apparel sector, in an effort
to take advantage of AGOA’s
apparel import provisions.
U.S. industry has reported new
sourcing contracts with
African suppliers and many
inquiries from African firms
seeking joint ventures or U.S.
expertise and inputs.
AGOA has not only had an
effect on trade, but also on
policy. Many African countries
have implemented or
strengthened economic and
political reforms and
committed to improving labor
or human rights situations
during the AGOA country
eligibility review process and
the bilateral consultations. A
number of governments either
committed to tackling
corruption or instituted new
laws, procedures, or
commissions to do so.
Countries are strengthening
and reforming their business
and trade laws and updating
their intellectual property
regimes to comply with the WTO
Agreement on Trade-Related
Aspects of Intellectual
Property Rights (TRIPS). Other
countries are working to
improve their customs
procedures, streamline their
tax systems, and accelerate
privatization. Governments
also have implemented or made
commitments to implement a
number of reforms related to
worker rights, eliminating the
worst forms of child labor,
and human rights. In addition,
many sub-Saharan African
businesses have become
advocates for economic and
political reform, because of
their interest in specific
AGOA trade benefits.
The Department of Commerce is
encouraged by the actions of
many sub-Saharan African
countries that are
implementing difficult
economic and political reforms
and seeking to strengthen
trade relations and business
ties with the United States.
African governments are
acknowledging that they must
address impediments to U.S.
trade and investment. At the
same time, they are looking to
the United States, among
others, for assistance in
helping them achieve their
visions for a more stable,
economically sound, and
democratic region.
AGOA is expected to help
countries diversify their
exports and to assist them in
building a manufacturing base
to create long-term economic
growth. Anecdotal evidence
indicates that in many
countries, AGOA has led to
substantial new investment,
jobs and trade. Countries
where this is particularly
true include Ghana, Kenya,
Lesotho, Madagascar, Malawi,
Mauritius, South Africa,
Senegal, Tanzania, Uganda and
Zambia. Examples of results
from AGOA include: a
government of Kenya estimate
of creation of 50,000 direct
and 150,000 indirect jobs
resulting from new
investments; new investment in
Lesotho of $120 million, four
times the size of official
development assistance flows
to Lesotho; and investment in
a new tuna processing plant in
Ghana.
AGOA has also promoted
increased dialogue between
African governments and their
private sectors. The
U.S.-African Trade and
Economic Cooperation Forum, in
particular, provided an
opportunity for increased
public-private dialogue on
economic and political reform
and on conditions for
generating enhanced trade,
investment, and growth (see
sidebar).
U.S. companies stand to gain
from AGOA. Because of
historical ties, Africans are
more familiar with trading
with Europe. By building
commercial linkages, AGOA will
orient African countries to
the United States. U.S. firms
will have an opportunity to
supply goods and services that
African firms need to build
productive capacity to enter
the U.S. market. In addition,
the annual U.S.-Africa Trade
and Economic Forum will become
an important venue for the
United States to encourage and
press for continued economic
and political reforms.
The First U.S.-Sub-Saharan
Africa Trade and Economic
Cooperation Forum
“No nation in our time has
entered the fast track of
development without first
opening up its economy to
world markets. The African
Growth and Opportunity Act is
a road map for how the United
States and Africa can tap the
power of markets to improve
the lives of our citizens”
– President George W. Bush,
October 29, 2001
With these words, President
Bush addressed the first
U.S.-Sub-Saharan Africa Trade
and Economic Cooperation
Forum, more commonly known as
the AGOA Forum. The AGOA Forum
was held October 29–30, 2001
and was hosted by the
Secretaries of State, Treasury
and Commerce and the U.S.
Trade Representative. Trade,
Foreign Affairs and Finance
Ministers from 35 eligible
sub-Saharan African countries
attended the Forum, along with
representatives from African
regional organizations. The
focus of the Forum was on
discussing further measures
that the U.S. and sub-Saharan
African nations can jointly
take to stimulate economic
growth and trade enhance
democracy and good governance
and combat HIV/AIDS. The Forum
was a resounding success
largely because of the broad
cabinet-level participation
and the interactive format of
the plenary sessions. The
participation of President
Bush, Secretary Powell,
Secretary O'Neill, Secretary
Evans, Secretary Veneman, U.S.
Trade Representative Zoellick,
National Security Advisor
Rice, USAID Administrator
Natsios and Members Of
Congress of both political
parties demonstrated the deep
commitment of the
Administration and U.S.
Government to strengthening
trade and investment ties,
increasing prosperity and
combating poverty on the
African continent. During the
Forum, U.S. officials
emphasized the United
States’ commitment to Africa
and noted the initial success
of AGOA. U.S. speakers
underscored the necessity of
good governance, rule of law
and political freedom to
attract investment and achieve
growth. The use of African
co-chairs and active question
and answer sessions allowed
African officials the
opportunity to speak openly
about the benefits and
challenges of AGOA. In his
address to the Forum,
President Bush announced the
creation of a $200 million
Overseas Private Investment
Corporation support facility
that will give American firms
access to loans, guarantees
and political risk insurance
for investment projects in
sub-Saharan—Africa. He also
announced the establishment of
a Trade and Development Agency
(TDA) regional office in
Johannesburg and the TDA Trade
for African Development and
Enterprise Program, both to
provide guidance and
assistance to governments and
companies, which seek to
liberalize their trade laws,
improve the investment
environment and take advantage
of AGOA.
Please see our companion
guide: The
African Growth and Opportunity
Act and related webpages:
Africa
- Mideast WebGuides
Date
Revised: March 27, 2007
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