The multilateral trade pact freeing up tariffs for 6 500 products that was struck between 39 sub-Saharan countries and the United States in 2000 has, with the exclusion of South Africa, failed to live up to expectations of sparking industrial growth across the continent. That was the sentiment expressed by Constance Hamilton, assistant US trade representative for Africa, at the 18th forum of the African Growth and Opportunity Act (Agoa) held in Côte d’Ivoire earlier this month. His comments were stark and to the point: “Agoa has not led to the trade diversification for which we originally hoped.” Hamilton said only 1% of US imports originated in Africa, and therefore it was fair to say that the agreement was not the game-changer it was initially intended to be. Commentators closer to home have since added weight to his sentiments, adding that the general lack of industrialisation in Agoa countries did not bode well for the recently implemented African Continental Free Trade Area (AfCFTA). One of the thought leaders FTW spoke to, Africa House director Duncan Bonnett, echoed Hamilton’s sentiments. “To be honest, not a lot has changed since it started – and that is not surprising. “Our sense at Africa House back then was that many of the countries didn’t have a lot to offer. Also, it required a lot of structural changes and reforms to be made to some economies for Agoa to work.” To be fair, a fall in commodity prices meant that initial peaks were followed by sharp troughs as graph data by the US Agency for International Development (USAID) confirms. According to one set of USAID data incorporated in an Agoa report-back after Hamilton’s Ivorian visit, African trade outflows to the US peaked at $100 billion between 2002 and 2008, but by 2017 had fallen right back to $39 billion. Said Bonnett: “If you look at the top-line numbers, obviously exports have declined simply because commodity prices have declined and commodities account for the bulk of Agoa exports.” Sadly, with commodities ruling the roost – and Hamilton confirmed that “petroleum products continued to account for the largest portion of Agoa imports, with a 67% share” – the lack of sufficient African industrialisation doesn’t fill the void when the minerals market dips. “A lot of Agoa countries are slowly developing an industrial base but it remains very small. Iron and related industries, even South Africa’s, are simply too small to compete in the States.”
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To be honest, not a lot has changed since it started. – Duncan Bonnett