Industry News
Apparel Sourcing from Africa: Uncertain Future of AGOA Casts Concerns
By Yvonne Heinen-Foudeh, Senior International Correspondent
On September 30, the African Growth and Opportunity Act (AGOA) expired. For the apparel sector alone, AGOA significantly contributed to the growth of African apparel exports to the U.S. from modest beginnings in 2000 to over US$1 billion annually by the 2020s, creating substantial employment and industrial investment opportunities.
Hopes for the U.S. Congress to act in a timely manner for a renewal or reform, worth considering on several detailed aspects, have not yet been fulfilled (as of the editorial deadline for this issue of The Needle's Eye). Should no extension nor a considerable replacing agreement come into force, significant challenges await the trade relations between the USA and African markets. Thirty-two Sub-Saharan nations, having been the last eligible, out of a possible 49 potential beneficiaries, to leverage duty-free exports, would face a highly negative impact on their exports, with serious repercussions for employment and investment. And from the perspective of the U.S. economy?
Chart displays main African countries exporting apparel goods to the US in 2021 vs. 2020. South Africa leading until recently with its strong reputation for the industry’s diversified portfolio, supporting a significant domestic workforce in the garment sector.
- In 2024 Madagascar with exports worth ~ US$366 million moved up the top exporters to the U.S. for woven and knit apparel. - Garment exports surged from Ethiopia were projected to surpass US$500 million by 2025, supported by industrial parks. - Among the strong suppliers to the U.S.: Lesotho with apparel exports worth ~US$237 million in 2024, heavily reliant on that business, having created thousands of jobs in the South African inland.- Small but mighty: Mauritius apparel exports worth around US$42 million in 2024, with a reputation for premium garment production.
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Tool to pursue U.S. strategic interests.
In light of the pivotal role AGOA has played since its enactment in 2000, having transformed the U.S.-sub-Saharan African relationship from one that is primarily aid-based to a mutually beneficial business partnership, key policymakers in the U.S. have publicly raised concerns about the risks of AGOA's expiration. Besides Senator James Risch (R-ID) and Senator Chris Coons (D-DE), other trade-relevant members of the House Appropriations Committee also dread that the lapse would negatively affect U.S.–Africa relations.
The continent presents a massive business opportunity for U.S. companies, as it is the world’s most rapidly growing market. With its current population of 1.3 billion expected to nearly double within the next 25 years, it represents the world’s largest free trade area. Further indicators of Africa catching up with the global economy, defining strategic interests for the U.S. throughout the region, include ample natural resources, such as critical minerals, and progressive foreign commercial investment from Asia, the Middle East, and Europe.
Chances for Africa to shape an intercontinental trade strategyBesides the expiration of the legislation, which has developed as the cornerstone of US-African trade relations, recent shifts in trade policy have caused dysfunction. For example, early in July this year, Lesotho declared a state of economic disaster after a 50% tariff on exports for apparel and other goods was imposed, and support from USAID (United States Agency for International Development) was withdrawn. “Rather than waiting for an unlikely official decision on AGOA’s renewal, African governments have the chance to proactively shape a trade strategy that is regionally integrated, digitally enabled, and geopolitical informed”, stresses the World Economic Forum in a recent statement. The internationally acting organization for public-private cooperation considers the African Continental Free Trade Zone (AfCFTA) as the foundation for implementing an overall transformative path for regional integration. While Africa moves toward a pivotal force in global trade, attracting diverse partners – from China’s Belt and Road to the EU’s Global Gateway, as well as Gulf State investments chances are for much more effectiveness to be achieved by AfCFTA down the road. To accelerate implementations accordingly, African governments will need to transition from broad commitments to targeted national action, while developing and executing AfCFTA strategies. “Developing and executing AfCFTA strategies aligned with each country’s trade priorities will be essential.”
The continent presents a massive business opportunity for U.S. companies, as it is the world’s most rapidly growing market. With its current population of 1.3 billion expected to nearly double within the next 25 years, it represents the world’s largest free trade area. Further indicators of Africa catching up with the global economy, defining strategic interests for the U.S. throughout the region, include ample natural resources, such as critical minerals, and progressive foreign commercial investment from Asia, the Middle East, and Europe.
Chances for Africa to shape an intercontinental trade strategyBesides the expiration of the legislation, which has developed as the cornerstone of US-African trade relations, recent shifts in trade policy have caused dysfunction. For example, early in July this year, Lesotho declared a state of economic disaster after a 50% tariff on exports for apparel and other goods was imposed, and support from USAID (United States Agency for International Development) was withdrawn. “Rather than waiting for an unlikely official decision on AGOA’s renewal, African governments have the chance to proactively shape a trade strategy that is regionally integrated, digitally enabled, and geopolitical informed”, stresses the World Economic Forum in a recent statement. The internationally acting organization for public-private cooperation considers the African Continental Free Trade Zone (AfCFTA) as the foundation for implementing an overall transformative path for regional integration. While Africa moves toward a pivotal force in global trade, attracting diverse partners – from China’s Belt and Road to the EU’s Global Gateway, as well as Gulf State investments chances are for much more effectiveness to be achieved by AfCFTA down the road. To accelerate implementations accordingly, African governments will need to transition from broad commitments to targeted national action, while developing and executing AfCFTA strategies. “Developing and executing AfCFTA strategies aligned with each country’s trade priorities will be essential.”
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