The African Growth and Opportunity Act (AGOA) between the United States of America and Africa provides critical support from the former to the latter to grow its manufacturing sector and expand its markets, according to Standard Bank Africa, the continent’s largest lender.
Speaking ahead of the 20th AGOA Forum to be held in Johannesburg from 2-4 November 2023, Kenny Fihla, chief executive, corporate and investment banking at Standard Bank Group, said a renewal of the AGOA programme will help boost trade and support the ongoing investment relationship between the US and Africa. The benefits are profound, as it will also support sustainable growth, job creation, and industrialisation.
This comes at a time when African businesses are challenged by access, cost, risk, and credit issues when trading across regional and international borders.
“African businesses and markets are increasingly sophisticated and ready to move to the next level. Powerful initiatives such as AGOA and the African Continental Free Trade Area (AfCFTA) are key to making this happen,” said Fihla.
Recent statistics show the significant impact of AGOA on trade. Total US AGOA imports were $9.4bn in 2022, up 57 per cent from $6bn in 2021 and more than double the 2020 figure. In particular, non-energy AGOA imports increased by 21 per cent to $5bn in 2022. Top non-energy import categories include motor vehicles ($1.5bn), textiles, and apparel ($1.4bn), agricultural products ($679mn) and metals ($626mn).
As a leader in facilitating Africa-US trade, Standard Bank is using its resources to enable access to and participation in regional and global value chains and to ensure that partnerships with leading economies such as the US continue to flourish. “We believe that active contributions to public-private dialogues like AGOA are essential to these developments and future growth,” added Fihla.
AGOA grants duty-free and quota-free treatment for exports from eligible sub-Saharan African countries to the United States (US), with 35 countries eligible for AGOA benefits in 2022. AGOA is up for renewal in 2025.
“As the world’s largest economy, the US is a key driver of global trade and investment. As Standard Bank, we are committed to promoting Africa as an attractive investment market for all investors, including those from America,” Fihla added.
Africa is a continent of traders
Along with AGOA, Standard Bank is also optimistic about the transformative impact the AfCFTA can have on inter-regional trade in Africa.
The US has expressed its support for the AfCFTA, which, when fully implemented, will be the largest free trade area in the world, bringing together 55 countries with a combined GDP of approximately $3.4 trillion.
“The AfCFTA will create much-needed efficiencies across Africa’s trade borders. The potential with the world’s largest economy is immense as financing for priority infrastructure projects, energy, and other key investments take place,” said Fihla.
Standard Bank believes that this single market is key to unlocking sustainable growth, reducing poverty and expanding industrial capacity across the continent.
“We are committed to building trusted and efficient domestic/ regional value chains integrated into global supply ecosystems. Standard Bank is building finance and trade solutions to help address the tariff and non-tariff barriers required to realise the continent’s ambitions. Standard Bank is also leading efforts to reduce the impact of climate change by building sustainable solutions. The future is extremely bright – especially if we have the right partners on board,” said Fihla.
As long-term bulls on Africa, Standard Bank believes that Africa is the growth story of this century.
“This week’s AGOA forum is an important opportunity for the continent to showcase its value and growth prospects, while also allowing the US to engage and see for itself the benefits this agreement continues to bring,” added Fihla.
