What's Happening?
President William Ruto of Kenya has expressed his intention to sign a trade deal with the United States by the end of the year, while urging Washington to extend the African Growth and Opportunity Act (Agoa) for at least five more years. Agoa, a key trade agreement that allows certain African goods duty-free access to the US market, is set to expire soon. The potential lapse of this agreement has raised concerns among African nations, including South Africa and Kenya, which rely heavily on the US market. The uncertainty surrounding Agoa has already impacted businesses like Shona EPZ, a garment factory in Nairobi, which has seen a decline in production due to the lack of long-term orders.
Why It's Important?
The expiration of Agoa could have significant economic repercussions for African countries that have benefited from the agreement. In Kenya, the apparel industry, which exported $470 million worth of clothing to the US in 2024, supports over 66,000 jobs, predominantly held by women. The potential loss of Agoa could lead to job losses and economic instability in these regions. Moreover, the situation highlights the broader issue of African countries' reliance on the US market and the need for diversification. The ongoing negotiations and lobbying efforts by African leaders underscore the importance of maintaining and potentially expanding trade relations with the US.
What's Next?
Kenya and other African nations are actively seeking to negotiate an extension of Agoa while also exploring new markets to reduce dependency on the US. President Ruto's push for a bilateral trade deal with the US reflects this strategy. Additionally, African countries are encouraged to leverage the African Continental Free Trade Area to boost intra-African trade, which could lead to the production of higher-value goods. The outcome of these negotiations will be crucial for the future of US-Africa trade relations and the economic stability of the involved countries.
