• Wednesday, February 28, 2024
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Nigeria missing as Kenya, Ghana tap AGOA opportunities to boost FX

Nigeria missing as Kenya, Ghana tap AGOA opportunities to boost FX

Africa’s biggest economy is still failing to tap the opportunities that the African Growth and Opportunity Act (AGOA) present to boost its foreign exchange, amid acute dollar shortages.

The AGOA has been on for over twenty-three years as it was enacted in 2020. In 2015, the program was modernised and extended to 2025, implying that there are only about 15 months before the window closes.

Some countries have taken advantage of the AGOA more than others, Kenya and Ghana have been identified as countries with worthy experiences to share from their trade interactions on the AGOA platform.

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“Currently, Kenya exports about $900 million worth of products to the US, and on the converse, imports about $600 million,” said Isaac Otolo, advisory Partner, Transactions PwC based in Nairobi, but covering the East African region.

He added that “20,000-25,000 direct jobs have been created to take advantage of the AGOA opening and window, with over 100,000 indirect jobs.

“Kenya’s tea, coffee, and certain gemstones also go out through the window.”

AGOA, a US initiative essentially opened the window to allow for imports from Africa into the United States through a preferential window, but with the exports first meeting certain conditions, and according to Otolo, Kenya was one of the first countries to take advantage.

“Kenya’s main exports out of the AGOA window are from the apparel space and a lot of those goods are produced and processed in Kenya.

“Majority of these goods are processed in export processing zones where primarily foreign investors have been able to access,” Otolo said.

In the Ghana context, Albert Kassim Diwura, deputy CEO of the Ghana Export Promotion Authority, has said that a core mandate for the Ghana Exports Promotion Authority, amongst other things, is to provide current and reliable trade information to its exporters, constantly updating them about the AGOA.

“Another thing we prioritise is the capacity building of our exporters. We have an export school (virtual), though our plan is to have one in brick-and-mortar.

“As part of our delivery at the export school, we make AGOA top priority, telling people the products, the opportunities, how much we’ve made going by data, etc.,” Diwura said.

Ghana also has seen remarkable growth in its apparel and clothing sector. The nation’s ability to produce trendy, affordable clothing has made it a favoured supplier for American retailers, contributing to Ghana’s increased share of AGOA exports.

Nigeria’s non-oil AGOA exports have remained stagnant, primarily comprising a few agricultural products and handicrafts.

Though, “Nigeria was the top supplier of energy products in 2022 ($3.4 billion)”, experts have said that it is increasingly important for African nations to diversify their economies and expand their non-oil export sectors.

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The AGOA was introduced as a transformative initiative designed to catalyse economic growth and foster trade between the United States itself, Nigeria, and other eligible African countries.

It is a testament to international collaboration and embodies a time-sensitive opportunity that requires strategic and swift actions, stakeholders have said.

However, Femi Boyede of Femi Boyede Consulting opines that the opportunity is far gone now, and more emphasis should be on maximising the opportunities that the AfCFTA offers.

“If we are talking about a race against time, then what time are we racing against? The twenty-three previous years that we have wasted or the 15 months thereabout that are left?

“It’s important to ask this question now because another time has started again, two years ago; the AfCFTA.

“Are we going to be racing against this or the same things that clipped our wings for the twenty-three plus years of AGOA (with Nigeria being credited only with the proceeds of oil sales to the US when we can export 6,700 other products under the Africa Growth and Opportunities Act) will resurface?” Boyede remarked.