Opinion: Renewing the US African Growth Act is a Strategic Imperative

By Ed Royce and Dan Runde | August 30, 2024

As the 118th United States Congress enters its final phase of work over the coming months, we urge House and Senate leaders to take up and pass a long-term renewal of the African Growth and Opportunity Act, with a focus on increasing the use of the program and on dramatically increasing two-way U.S.-Africa trade and investment flows.  

Africa is a focal point in rising geopolitical competition, as China and Russia seek advantage on the continent through investments, trade, and military cooperation, while undermining democratic governments. In the face of this growing malign influence, it is imperative that the U.S. strengthen our relationships with partners on the continent to safeguard our foreign policy interests and promote our values of free market economics, democratic governance, and protection of civil liberties. Renewing the African Growth and Opportunity Act, or AGOA, is essential to this strategy.

AGOA is a trade preference program that provides eligible sub-Saharan African countries with duty-free access to the U.S. market for certain products in exchange for adherence to eligibility criteria including respect for human rights, labor protections, rule of law, anti-corruption efforts, and removal of barriers to trade.

It is set to expire on Sept. 30, 2025, but work in the U.S. Congress toward a long-term renewal of the program is underway. We were grateful to see the introduction of the AGOA Renewal and Improvement Act earlier this year by senators Chris Coons, a Democrat from Delaware, and James Risch, a Republican from Idaho, which would renew AGOA through 2041. And we were further encouraged by recent activity in the Senate and House committees that are key to AGOA’s future.

Yet despite these encouraging signs from Congress, we remain concerned that congressional delay on renewal will have negative impacts as capital remains on the sidelines due to uncertainty surrounding the program.

As chair of the House Foreign Affairs Committee and as a leader at USAID during the Bush administration, we witnessed firsthand AGOA’s transformative impact on trade with Africa. AGOA helped drive economic growth, foster stability, and strengthen bilateral ties on the continent. AGOA has been the foundation of the economic relationship between Africa and the U.S., and extending it well beyond 2025 must be a central tenet of our strategy in the region.

The international challenges we face coincide with an underperforming U.S. economy, making the economic ties with Africa, a continent of approximately 1.4 billion people and a rapidly growing middle class, vital to our national interests. This burgeoning middle class is driving demand for goods and services, contributing to economic diversification, and shaping the future economic and political landscape of the continent.

Following AGOA's initial passage in 2000, Africa experienced substantial economic growth for a decade, with real gross domestic product growing at an average rate of 5.1% annually from 2000-2010, up from 2.5% in the previous decade. Although growth slowed to 3.3% per year between 2010 and 2019 and was further hampered by global events like the COVID-19 pandemic and the Russian invasion of Ukraine, AGOA’s renewal is essential to restore and build upon these gains.

In addition to economic progress, AGOA has encouraged governance reforms and political stability. By linking trade benefits to adherence to the rule of law, respect for human rights, and market-based economic policies, AGOA has incentivized positive governance changes in various countries on the continent. We have seen how these reforms have fostered environments conducive to democratic growth and mutual trust, enhancing the foundation for long-term collaboration.

However, much potential remains unrealized. Many African countries still face significant barriers such as inadequate infrastructure, limited access to finance, and challenges in meeting U.S. market standards. To address these issues, we believe that we need to leverage innovative tools and strategies that complement AGOA by prioritizing economic growth in Africa while unlocking the power of the free market as the only lasting solution to eradicate extreme poverty and assist our AGOA partners in transitioning from aid to trade.

The Millennium Challenge Corporation and the U.S. International Development Finance Corporation, or DFC, are crucial in spurring investment, trade, and economic growth in low- and middle-income countries and must be at the forefront of our efforts in Africa. Economic diversification is a priority for many African countries and a pillar of the African Union’s Agenda 2063, which aims to transform Africa into a “global powerhouse of the future.”

Manufacturing growth, in particular, has the potential to move large numbers of workers from agriculture and informal sectors into higher-paying jobs. The export of labor-intensive manufactured goods is central to economic growth, and AGOA has helped accelerate African exports in sectors such as apparel in Kenya and automobiles in South Africa. However, only 13% of U.S. investment in Africa is in manufacturing, and AGOA benefits remain highly concentrated in the energy sector. We must explore ways to further incentivize the growth of the manufacturing base in Africa by leveraging U.S. development tools like DFC.

The apparel industry, historically key to developing countries looking to boost export diversification, has seen significant growth under AGOA, with apparel imports from AGOA beneficiaries rising from $939 million in 2001 to $1.4 billion in 2021. Despite this growth, competition from other producers, particularly China, slowed initial export booms. Now, with China’s global market share in apparel exports in decline, Africa’s apparel sector has a real opportunity to capitalize on AGOA benefits.

DFC must update its approach to leverage the development impact of the apparel sector and other high-potential industries like pharmaceuticals and critical minerals. DFC should partner with U.S. brands and retailers to support AGOA partner countries and invest in sectors that would catalyze sustainable growth.

Two other tools we have to increase AGOA utilization and trade and investment flows between the United States and Africa are the U.S. Trade and Development Agency, or USTDA, and Prosper Africa.

For nearly 30 years, USTDA has connected African project sponsors and U.S. companies, bringing innovative private sector solutions to development challenges. USTDA has supported project investments across Africa in critical sectors, such as health, transportation, energy, and technology. 

Prosper Africa is a presidential-level national security initiative to catalyze two-way trade and investment between the U.S and Africa. The initiative draws on and supplements the resources of 17 U.S. government agencies and departments to drive new commercial transactions at scale — connecting Africa to the U.S. deep capital markets and dynamic supply chains. Prosper Africa represents the evolution toward a more partnership- and private sector-led relationship between Africa and the United States.

Economic growth in Africa aligns with U.S. strategic interests. A prosperous and stable Africa contributes to global economic stability, provides new markets for U.S. goods and services, and fosters a more secure international environment. Economic growth can also mitigate the root causes of conflict and migration, promoting peace and stability regionally and globally.

While AGOA has laid a strong foundation for U.S.-Africa relations, it is crucial to recognize and address the unrealized potential that remains. By utilizing new tools and strategies, we can build on AGOA's successes and create a future of shared prosperity, security, and mutual respect.

We urge Congress to support the continued evolution of AGOA and complementary initiatives to enhance its impact by passing a long-term AGOA renewal this year. Expanding efforts like DFC investment in key industries and targeted infrastructure investments will empower more African countries to maximize AGOA's benefits, unlocking further economic growth and deepening our ties with the continent.

The renewal of AGOA is not just about trade; it is about building a future of shared prosperity and mutual respect between the United States and Africa. The time to act is now, and the benefits of doing so will resonate for generations to come.

Ed Royce is a co-chair of the Consensus for Development Reform and policy director at the Brownstein Hyatt Farber Schreck law firm. He served as chair of the U.S. House Foreign Affairs Committee from 2013-2019.

Daniel Runde is a senior vice president, William A. Schreyer chair, and director of the Project on Prosperity and Development at the Center for Strategic and International Studies in Washington, D.C. He is also the author of “The American Imperative: Reclaiming Global Leadership Through Soft Power” (Bombardier Books, 2023).