Editorial: Calls for AGOA extension

In view of the on-going global war of tariffs, government has been impressed upon to push for extension of the African Growth and Opportunity Act (AGOA) or prepare for a wave of mass job-losses and collapsing export businesses.

Member of Parliament for Okaikwei Central, Patrick Boamah, notes that some companies are purposefully structured to benefit from AGOA and cites garment and textile manufacturers, particularly within the Free Zones enclave.

Without a push for an extension, the MP is strongly convinced there will be a lot of job losses and revenue shortfalls for government.

AGOA, a U.S. trade initiative that gives duty-free access to American markets for African products, has been a lifeline for several Ghanaian export firms. Sadly, the country has not been effectively able to take advantage of this tariff-free, quota regime – and oftentimes has not been able to meet import volumes required by supermarket chains in the United States.

Ghana’s ability to fully utilise benefits of the African Growth and Opportunity Act (AGOA) is constrained by its limited productive capacity, making it unable to meet the demand requirements for exports to the US.

Compared to peer-countries, Ghana’s exports to the US under AGOA have not been significant. In 2012, the country exported US$24million under AGOA to the US, which was              only one-quarter of Côte d’Ivoire’s exports of US$995million; and Kenya, an economy that is about the same size as Ghana’s, exported US$355 million in the period.

FAGE explains that Ghana’s inability to take full advantage of AGOA has been due to it not being able to build productive capacity to meet demand requirements under AGOA.

The AGOA legislation has been renewed on different occasions, most recently in 2015 when its period of validity was extended to September 2025. The legislation significantly enhances market access to the US for qualifying sub-Saharan African (SSA) countries.

It does so by allocating a special programme indicator to approximately 6,800 tariff lines in the US tariff schedule, which allows US importers to clear such goods – sourced from eligible African countries – duty-free under AGOA.

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