Notwithstanding that the United States extended the tenure of Africa’s Growth and Opportunity Act (AGOA) up to 2025, Nigeria is yet to tap into the window for robust growth, writes SAM NWOKORO
Nigeria under the Presidency of Muhammadu Buhari has made expansion of its economy topmost priority. The challenges confronting the economy which the government has made public include over-reliance on crude oil exports for revenue generation, shackled exchange rate that rendered the naira weak against international currencies, and uncompetitive real sector.
The volatile exchange rate has made the country unable to sustain its import bills and the dearth of competitive products to challenge foreign goods make the naira weaker, by putting needless strain on foreign exchange.
Other problems it has identified include: improving infrastructure to drive economic activities, improving electricity generation and expanding Nigeria’s trade and exchange rate mechanism closer to China and other Asian developed economies whose trade relations with Nigeria has been robust over the years.
There seems to be efforts by the present administration to shift economic relations a bit from the Western which harbours much of Nigeria’s looted wealth and whose currency exchange rate policies towards the naira has not helped the economy.
However, some scholars who have been monitoring Nigeria’s economic and political relations with the West in the past few decades attest to the fact that successive Nigerian leaders had failed to tap from the economic growth opportunities created for the benefit of African governments, both at official and private levels, to advance the wellbeing of Nigeria’s teeming population and zestful youths who graduate from her tertiary institutions. The blame is laid on fixation to oil revenue which in recent times has been less attractive in Nigeria’s fiscal calculations. Thus the new emphasis nowadays is on the expansion of the productive base of the economy and re-invigoration of the inward-looking policy to encourage consumption and export of local produce, and consequently create employment opportunities.
The thrust of the present administration’s policies obviously benefits from the United States of America (U.S.A.) legislation on Africa’s Growth Opportunity Act (AGOA).
AGOA is a U.S. Trade Act, enacted on May 18, 2000 as Public Law 106 of the 200th Congress. The legislation significantly enhances market access to the U.S. for qualifying Sub-Saharan African (SSA) countries. Though it expired in 2015, after much lobby from African governments and sympathetic congressmen, the Barack Obama administration renewed it to run till 2025.
What’s in AGOA?
It was the U.S. Government’s intention that the largest possible number of SSA countries are able to take advantage of AGOA. President Bill Clinton issued a proclamation on October 2, 2000 designating 34 countries in SSA as eligible for the trade benefits of AGOA. Nigeria was declared eligible from day one. The proclamation was the result of a public comment period and extensive inter-agency deliberations of each country’s performance against the eligibility criteria established in the Act.
Eligible countries
On January 18, 2001, Swaziland was designated as the 35th AGOA-eligible country and on May 16, 2002 Cote d’Ivoire was designated as the 36th. On January 1, 2003, The Gambia and the Democratic Republic of Congo (DRC) were designated as the 37th and 38th AGOA eligible countries. The DRC, however lost its eligibility on January 1, 2011. On January 1, 2004, Angola was designated as AGOA eligible.
Effective January 1, 2004, however, President George W. Bush removed the Central African Republic (CAR) and Eritrea from the list of eligible countries. On December 10, 2004, he designated Burkina Faso as AGOA-eligible. January 1, 2005, the President removed Cote d’Ivoire from the list of eligible countries. On January 1, 2006, Bush designated Burundi as AGOA-eligible and removed Mauritania from the list. December 29, 2006, he designated Liberia as AGOA-eligible. Togo joined on April 17, 2008 and Comoros on June 30, 2008.
Mauritania was listed as eligible on December 23, 2009 and delisted Guinea, Madagascar and Niger.
In October 2011, President Obama restored eligibility to Cote d’Ivoire, Guinea and Niger. On December 20, 2012, South Sudan was announced to be AGOA-eligible while Mali and Guinea-Bissau were delisted. Mali’s AGOA benefits were restored on January 1, 2014. On June 26, 2014, President Obama reinstated Madagascar’s AGOA-eligibility.
Significance of eligibility
The U.S. government will work with eligible countries to sustain their efforts to institute policy reforms, and with the remaining SSA countries to help them achieve eligibility.
The Act authorises the President to designate countries as eligible to receive the benefits of AGOA if they are determined to have established, or are making continual progress towards establishing the following: market-based economies, the rule of law and political pluralism, elimination of barriers to U.S. trade and investment, protection of intellectual property and efforts to combat corruption.
Others include policies to reduce poverty, increasing availability of healthcare and educational opportunities; protection of human rights and workers’ rights; and elimination of certain child labour practices.
These criteria have been embraced overwhelmingly by the vast majority of African nations, which are striving to achieve the objectives, although none is expected to have fully implemented all.
AGOA provides duty-free market access to the U.S. for qualifying SSA countries by extending preferences on more than 4,600 products eligible under the U.S. Generalised System of Preferences (GSP), in addition to a further 1,800 tariff lines added by the AGOA legislation. The legislation also provides duty-free access to all clothing (as well as certain textile) exports from countries that qualify under the Act’s ‘wearing apparel provisions’, subject to the Rules of Origin (RoO) being met.
Why Nigeria failed to exploit AGOA
The President of the Nigerian-American Chamber of Commerce (NACC), Sam Ohuabunwa, says Nigeria has yet to enjoy the benefits of AGOA.
Ohuabunwa made the statement at the 54th Annual General Meeting (AGM) of NACC in Lagos late last year when the first phase of AGOA expired. He warned that Nigeria risked not tapping the growth opportunities in the legislation due to lack of effective support for the export sector of the economy.
It was this that led the immediate past Goodluck Jonathan administration to institute series of bail-out funds aimed at improving the general sectors of the economy. But observers are of the view that much of those bailouts were not tailored to the specifics.
He said the incentives provided on the AGOA platform were not substantial enough to balance trade volume deficit between Nigeria and the U.S.
“The United States of America remains Nigeria’s biggest trading partner. Bilateral trade between both countries has risen to $36 billion just as President Goodluck Jonathan has called for more U.S. investments in Nigeria.
“We have exported more crude oil to the U.S. than manufactured goods.
“There is a need for capacity building in customs regulations and operations and policy reforms that will develop the private sector to produce products that meet international trade and export standards,” Ohuabunwa had said.
However, according to an industrialist, Chief Gregory Egbe, “AGOA was a good initiative. Nigeria failed to tap from it substantially as it ought because our productive base was nothing and our export commodity was mainly oil and gas. The oil madness and the easy money that was coming from it made us not to develop the industrial base, especially exportable commodities listed under AGOA in a competitive manner, despite series of workshops and export tutorials for other non-oil commodity exporters who wanted to participate in the AGOA trade window. Some other African countries that did not have oil did well unlike Nigeria.”
He however posited that Nigeria still has another AGOA tenure to make up for its deficiencies.
“AGOA has graciously been extended. That gives Nigeria another opportunity, especially now that the present government’s new agenda is to ginger productivity and re-create import substitution. What the government should do is to vigorously implement the Export Credit Guarantee Scheme (ECGS) which implementation has not efficiently helped product exporters, especially in the area of standard.
“Nigeria’s present quest to deepen commerce with China which automatically results from the currency swap arrangement between the two countries should not blind us to the opportunity that still exists in AGOA,” he added.
Why products fail to meet AGOA’s rules
Investigations by TheNiche reveal that most of the items Nigerian businessmen tried to export included primary commodities such as garri, vegetables, rubber products, local fabrics, packaged beef, cassava, and other essential local produce, most of which did not meet the health and safety regulatory standards of competing countries.
It has been suggested that with the present government’s new emphasis on creating an export-based economy, the country should try to tap into the remaining window of AGOA. Probably, the United States Agency for International Development (USAID) could probably be thinking in the same direction when recently it restated commitment to help Nigeria benefit more from AGOA.
USAID’s West Africa Trade and Investment Hub (Trade Hub) disclosed recently that it had trained coordinators from seven West African countries to assist businesses with the processes and documentation required for exporting to the United States under AGOA.
The two-day training, which was conducted between April 12 and 13, 2016, saw coordinators from AGOA Trade Resource Centres (ATRCs) in Nigeria, Benin Republic, Burkina Faso, Cameroon, Cote d’Ivoire, Ghana and Senegal convene to learn new skills on how to deliver services in trade intelligence, export development, business promotion and trade facilitation to existing and potential exporters.
A statement issued by the United States Embassy in Nigeria, and made available to newsmen, explained that the participants also learnt from best practices across the region, and shared experiences in supporting exporters.
Hosted within local institutions, the statement indicated that the ATRCs assisted over 2,700 businesses seeking to export to the U.S. under AGOA, which waives duties and quotas on thousands of goods made in eligible SSA countries.
USAID/Nigeria Director, Michael T. Harvey, said that since 2005, the agency has provided grants to build the sustainability of the ATRC network and the host institutions that provide trade-related services to private sector companies.
He noted that the grants cover training and the costs of building a database of exporters, further enabling ATRCs to develop exporters’ capacity, market linkages, and sector-specific strategies to boost trade.
According to the statement, “Each ATRC is expected to undertake activities that enhance the export potential of companies seeking to take advantage of AGOA.
“These activities include: developing and providing trade intelligence services through trade and business associations or directly to individual businesses; promoting trade and export development advisory services by providing hands-on assistance directly to companies to help them understand market requirements and regulations, packaging/labelling, costing, and finance; providing business promotion services with trade show/fair participation and facilitation of regional and international business linkages; and providing customs documentation assistance to businesses.
“This support is building a solid and sustainable network of local institutions that can tailor services to the private sector to enhance their capacity to trade regionally and export to international markets,” it added.