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Market Digest Nigeria

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AGOA still dominated by petroleum products, exports from Nigeria, others

AGOA

With six years to the expiration of the extended African Growth and Opportunity Act (AGOA), the United States (U.S.), has expressed concerns about the performance of the scheme, saying petroleum products continued to account for the largest portion of AGOA imports, with a 67 percent share.

Indeed, the Assistant U.S. Trade Representative for Africa, Constance Hamilton, said AGOA has not led to trade diversification as originally anticipated. On Nigeria’s performance under the scheme, Hamilton said: “I think that Nigeria has not taken advantage of AGOA because they send us mainly oil, so to a certain extent, they actually are taking advantage of it, probably more than some of the other countries, but it is petroleum. And oil doesn’t really create the kind of jobs or other benefits from trade that I think that countries are looking for. “I really think that the question for the Nigerian Government is, how do we take better advantage of the opportunities that AGOA presents? I mean, we have opened the door; we’ve got the trade hubs there to provide assistance to individual entrepreneurs, but it’s up to the government to create the conditions and to provide its businesspeople with what they need to access this market.

“So I think that Nigeria, and I think the new government is talking about trying to expand and go beyond just petroleum production and get into other things, but that really is a question for what Nigeria wants to see happen. You’re part of ECOWAS; ECOWAS is always talking about the liberalisation of trade barriers, removing those barriers to trade and investment. “I think that the fact that Nigeria has now joined the conversation with the Continental Free-Trade Area Agreement; it will also be submitting its commitments on liberalisation, because those are opportunities to open up the Nigerian market in many, many ways, not just for the United States and other partners outside of Africa, but also within the region.” In the AGOA clothing sector, for example, the U.S. said it gets about $1 billion per year from Africa, representing roughly one per cent of the United States’ $95 billion imports in global clothing imports.

To maximise AGOA, Hamilton argued that countries must take an active role in creating the competitive conditions in which companies, entrepreneurs, and farmers can thrive, adding that the AGOA’s eligibility criteria were designed to help improve these conditions. “While AGOA has brought important benefits, we recognize that the benefits are uneven, and there remains more that can be done to realise the full potential of U.S.-African trade. Our experience over these past 19 years shows not only the benefits of trade preferences like AGOA, but the limitations. And as successful as AGOA has been, its benefits have not been broadly shared by all the countries that are part of the program. “Last year, the top five AGOA beneficiaries accounted for more than 75% of AGOA exports. In the strategic textiles and apparel sector, the top five countries accounted for 95% of AGOA apparel exports. “For almost two decades, AGOA has been the cornerstone of the United States’ economic engagement with sub-Saharan Africa, and during that time we have invested heavily to help African countries better utilise AGOA, including creation of the trade hubs as resources for African businesses and entrepreneurs, and allocating more than $7 billion for trade capacity building initiatives,” Hamilton added.

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