In Africa, AGOA uncertainty sparks jobs fears, hopes for new deals

• Uncertainty over AGOA trade deal renewal
• Roughly 1 million indirect jobs on the line
• New trade pathways embraced by union leaders

JOHANNESBURG/NAIROBI - A cloud of uncertainty hangs over an Africa-U.S. trade deal set to expire by the end of September with African unions warning that more than a million indirect jobs could be on the line if it is not renewed. 

But some trade experts and economists say the possible end of the 25-year-old African Growth and Opportunity Act (AGOA) could allow African countries to seek potentially beneficial deals with other partners, or boost trade with each other. 

Last-ditch talks on the future of AGOA have been taking place in Washington, but the fate of the deal is still unclear, although Lesotho's trade minister said last week that the U.S. plans to extend it by a year.

"AGOA is the breadbasket of many people in very critical sectors," said Hod Anyigba, chief economist at the International Trade Union Confederation (ITUC) Africa, which has 17 million members. 

"(But it) is not the only way to prosperity. It was one of the ways ... but there could be other, better ways of trading," he told Context.

U.S. President Bill Clinton's administration passed AGOA in 2000 to deepen trade with sub-Saharan Africa and boost economic development.

It 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.

But President Donald Trump's tariff trade policies have plunged the fate of the AGOA into doubt. However, African governments, manufacturers and unions have been lobbying the U.S. administration for a last-ditch temporary extension.

"Across both houses of Congress, both parties are keen on AGOA, but it's a new U.S. politics where the president is very much ... the key decision maker," said Matthew Parks,  parliamentary coordinator for the Congress of South African Trade Unions (COSATU), South Africa's largest union federation.

This uncertainty means that if exporters find new markets, they need to "take the gap and run with it" to protect jobs, Parks said. 

'Our competitive edge'

From car factories in South Africa, to horticultural producers in Kenya, some 300,000 direct and 1 million indirect jobs are on the line if AGOA ends, said Anyigba.

Protecting these jobs is critical to halt mass migration into countries where migrants often face growing xenophobia, he said.

In Lesotho, a tiny, impoverished, landlocked country in southern Africa, union workers said an end to AGOA would see a spike in sex work and sexual abuse in workplaces as workers are forced into precarious situations by exploitative employers.  

"Many women feel they have no choice. Ending AGOA will give them even fewer options," said Solong Senohe, general secretary of the United Textile Employees Union (UNITE), which represents more than 5,000 garment worker in Lesotho.

"AGOA means a lot to those workers, especially in a country with an unemployment rate of about 38% for youth," he said. 

In Kenya, the textile and horticultural sectors have benefited greatly from AGOA: Kenya's exports to the U.S. grew from about $110 million in 2000 to approximately $570 million by 2020.

The East Africa nation has emerged as a leading exporter of textiles and apparel, which constitute more than 90% of its exports under AGOA.

This sector has been vital for Kenya's export processing zones, creating more than 66,000 jobs directly, primarily benefiting women and young people. 

AGOA has also facilitated market access for Kenyan horticultural products such as flowers, nuts and coffee.  

"AGOA has been our competitive edge," Pankaj Bedi, chair of the Apparels Manufacturers and Exporters at the Kenya Association of Manufacturers, wrote in the Business Daily newspaper. 

"AGOA is not only a trade agreement, but a driver of jobs, stability and growth, supporting workers, cotton farmers and logistics operators. Without it, jobs will vanish and the shock will ripple far beyond export zones," he added.    

Trade done differently

Like many other countries, Kenya is pursuing a dual strategy - lobbying for renewal, but also seeking other trade deals in case AGOA expires.

Kenyan President William Ruto last week said while he was seeking a five-year extension of AGOA, he also hoped a bilateral trade pact with the U.S. would be signed by the end of 2025. In April, Trump imposed a 10% tariff on Kenyan goods.

If a deal is reached, it would be the first of its kind between a sub-Saharan African nation and Washington.

Another focus for African countries is the African Continental Free Trade Area (AfCFTA) agreement, which was launched in 2021 to unify all 1.4 billion people into a single market, but implementation has been slow.

"(AfCFTA) is in creche, not even at university," said Parks.

"That's going to take long beyond the next three months. It'll take five, 10 years."

Africa also needs to look beyond its own borders to buffer its businesses against AGOA uncertainty, Parks added. 

"The South African agriculture sector has been working frantically, getting other markets ... in the Philippines, in Thailand, China."

ITUC-Africa's Anyigba said any new trade deals should engage with Africa as a bloc, in the same way the European Union engages in cross-continent trade deals. 

The AGOA uncertainty could also push African countries to take more advantage of global demand, especially from China and the U.S., for its vast reserves of critical minerals, needed to power the transition to clean energy, Anyigba said. 

This is the moment to ensure that "value is created on the continent", Anyigba said. "We (must) not become net exporters of raw materials, but also manufacturers, processing goods so we can retain value on the continent."

A new deal that fills the AGOA void could "make this dream possible by not taking countries apart".

(Reporting by Kim Harrisberg and Nita Bhalla; Editing by Jon Hemming.)