AGOA 2.0 needs reform, not just renewal – Nigeria's Olele

LAGOS - A short-term renewal of the Africa-U.S. AGOA trade deal would deepen uncertainty for African exporters and instead the pact should be reformed to spur investment in strategic sectors, like critical minerals, a Nigerian business leader said.

The African Growth and Opportunity Act was signed under President Bill Clinton's administration in 2000 to boost economic ties with African countries, but it expired at the end of September with no clarity on its future.

President Donald Trump's administration has said it supports a one-year extension, but with the U.S. government partially shut down since Oct. 1, the pathway to renewal is unclear. 

AGOA grants duty-free access to the U.S. market for thousands of African products, including motor vehicles and parts, textiles and clothing, minerals and metals, agricultural products and chemicals exported by eligible African countries.

African governments and investors began lobbying for a one to two-year extension after efforts to secure a longer-term renewal did not reach a vote in Congress.  

Margaret Olele, chief executive officer of the American Business Council in Nigeria, said only a long-term and reformed pact could protect millions of African jobs and build a balanced U.S.-Africa partnership.

She told Context that African leaders should now seize the moment to negotiate a deal that extends beyond oil, textiles, and agricultural products. 

How do you see U.S.–Africa trade relations evolving?

As the U.S. imposes new tariffs and moves toward more reciprocal tariff measures on countries, this will ultimately affect preferential trade agreements like AGOA.

This is why African countries are pushing for more stability and clarity in trade access. Some are exploring bilateral trade with the U.S. to mitigate any losses if programmes like AGOA are not renewed.    

The uncertainty among African leaders is driving a growing effort for countries to diversify their trade partners and increase inter-regional trade under the African Continental Free Trade Area.

However, U.S. engagement with Africa is going to be more strategic with focus on sectors that are critical to global supply chains such as critical minerals and energy (cobalt, lithium, and rare earths for EV batteries), agribusiness (both exports and technology transfer for food security), and the digital economy (fintech, data centres, and AI-enabled services).    

How are Trump's new tariffs hitting Nigeria's AGOA exports?

Nigeria's oil and gas exports to the U.S. were duty-free under AGOA. With the U.S. imposing a 15% tariff on its oil exports, this has reduced the competitive edge of those goods and affected (Nigeria's) trade surplus with the U.S.

Many businesses in Nigeria have built their models around AGOA preferences; the new tariffs may erode their margins or force them to absorb costs, which many small businesses cannot easily afford.

In many cases, this could lead to reduced export volumes to the U.S., or prompt U.S. buyers to shift their business to other countries that enjoy duty-free status or lower tariffs. 

    
   

What efforts is Nigeria making to renew AGOA?

The major obstacles have been the uncertainty about when, how, or if AGOA will be renewed.

AGOA eligibility requires specific standards regarding human rights, the rule of law, transparency and other key principles, which can sometimes become points of contention. 

Also, Nigeria has been criticised for not fully taking advantage of AGOA. However, the Federal Ministry of Industry, Trade and Investment has mapped out export strategies to maximise it and increase non-oil exports. The private sector has privately engaged some members of Congress to suggest ways that will make AGOA a win-win for both countries.    

If AGOA is renewed, what changes would make it more stable and useful for Nigerian exporters?

Predictability is critical for trade arrangements like AGOA. Extending its renewal period, ideally, for more than 10 to 15 years would give exporters the confidence to scale production, invest in quality control and enter into longer-term supply agreements.

Currently, AGOA's benefits are concentrated in a few sectors, such as apparel; however, it should also cover value-added products like processed foods to widen Nigeria's export base and encourage industrialisation.

Importantly, the emphasis should not just be on trade, but also on encouraging U.S. firms to invest in African markets.

This could unlock new U.S.-backed investments in sectors such as construction, logistics and energy, which directly facilitate trade.    

This interview has been edited for length and clarity.    

(Reporting by Bukola Adebayo; Editing by Jon Hemming)