The Death of AGOA and the Future of AfCFTA

Business strategiesTrade
Écrit par Nelly Wandji

The End of AGOA: An Opportunity to Rethink African Economic Sovereignty

In July 2024, during a visit to Washington as part of the International Visitor Leadership Program (IVLP), which I had the honor of participating in, I took part in discussions at the Department of State on initiatives to strengthen American diplomacy in Africa. Among the topics discussed, creative industries held a central place, considered a strategic lever to consolidate bilateral relations and promote sustainable cooperation.

These ambitions are now confronted with a concerning reality. The announcement by the Trump administration to increase tariffs on imports to the United States calls into question a valuable achievement: the African Growth and Opportunity Act (AGOA).

Between 2001 and 2024, the total value of African exports to the United States amounted to a significant number under the African Growth and Opportunity Act (AGOA). The growth reflects the impact of AGOA, which has facilitated duty-free access for thousands of products from eligible African countries. The program not only opened trade doors but also supported key sectors such as textiles and crafts, while creating thousands of jobs on the continent.

With the new tariff measures, the preferential access is under threat. The high tariffs imposed by Trump are not just an economic adjustment: they represent a real wake-up call for Africa. Forcing authorities to rethink priorities and consider structural solutions to reduce dependence on external markets.

If you are like me, committed to developing creative industries and promoting heritage in the textiles & crafts sector, these events resonate deeply. They raise an essential question :
how can we turn this crisis into an opportunity to build a more resilient and sovereign Africa ?

A Blow to Industries Solely Based on Exports to the Global North

The end of AGOA would mark a major turning point for African countries that have structured their textile industries around exports to the United States. The strategies adopted by Rwanda, Kenya, Benin, and Lesotho offer valuable lessons on resilience and vulnerabilities in this scenario.

Kenya: Prioritizing Exports to the U.S. and Europe
To maximize AGOA's benefits, Kenya has directed its textile exports toward the U.S. With a $40 million investment by Young one Corporation in a textile factory in Athi River and support from USAID to modernize the sector, the country exported $544 million in 2024 with an ambitious goal of reaching $1 billion in 2025. However, only 5% of Kenyan textile exports targeted the African market. If AGOA ends, this dependence on US markets could weaken its textile industry. Kenya will need to redirect part of its production toward Europe or AfCFTA, encouraging intra-African trade to reduce its vulnerability.

Benin: Local Cotton Processing for Export
The Glo-Djigbé Industrial Zone (GDIZ) represents an investment of nearly $2 billion to locally grow industries, process its raw cotton and increase its export revenues. With a long-term goal of creations many jobs, this strategy is primarily outward-focused on exports. However, the regional market offers a great potential of $2.4 billion in textile imports in West Africa. If AGOA ends, Benin should accelerate efforts to capture a larger share of the continental market via AfCFTA while consolidating its industrial infrastructure for serving Europe.

Rwanda: A Resilient Strategy Focused on Domestic Markets
Rwanda stands out with its strategy focused on import substitution and local development. By banning second-hand clothing ("mitumba"), it has stimulated its local textile industry with direct support for 85 SMEs and reduced imports. With an ambitious goal of creating 250,000 jobs annually, this approach centered on domestic and regional markets is a model of resilience against fluctuations in international agreements like AGOA.

Lesotho: Critical Dependence on U.S. Exports
As one of Africa's most taxed nations with 50% duties under Trump's policies, Lesotho is described as "a country no one has ever heard of." Yet is arguably the most exposed country if AGOA ends. With 75% of its textile exports destined for the U.S., valued at $237 million, and very little investment in diversification or regional markets, this model relies almost entirely on AGOA's preferential access. If AGOA disappears, nearly 50,000 direct and indirect jobs would be at risk, exacerbating social and economic inequalities in the country. Lesotho must urgently consider industrial restructuring focused on regional and local markets to avoid economic collapse.

Case Study: African Textiles vs. Second-Hand Clothing

The textile sector is at the heart of this debate because massive imports of second-hand clothing – known as "mitumba" – stifle local industries while creating economic dependency.

But the solution isn't simple: these cheap clothes meet real demand on the continent. I believe public policies must courageously address this issue head-on:

  • Should we tax these imports more heavily? Rwanda has shown that it can work by increasing duties on mitumba to stimulate local production. However, this requires a coherent regional strategy to prevent some countries from becoming uncontrolled "entry points."

  • How can we encourage local innovation? Supporting African creators in circular fashion (upcycling) could be a sustainable solution that enhances talent and local resources while meeting market needs and creating new wealth through job creation.

Rethinking Economic Models Around AfCFTA

The anticipated end of AGOA could be a historic opportunity to rethink economic models around more robust and inclusive regional trade sovereignty by:

  1. Diversifying Trade Partners: Strengthening ties with China or Europe while further exploring South-South trade through initiatives like Development Reimagined, led by Ms. Hannah Ryder, who helped 22 designers from the continent participate in Shanghai Fashion Week.

  2. Investing in Creativity and Heritage: Africa is brimming with incredible talent in fashion, crafts, and other sectors; it's time to empower them locally and globally.

  3. Strengthening Regional Infrastructure: Modern roads, efficient ports, and energy networks are essential for boosting intra-African trade.

  4. Adding Value Locally: Processing raw materials locally rather than exporting them raw is key to creating strong value chains.

The End of AGOA: A Challenge for African Brands

The lack of strong African brands limits the continent's ability to circumvent US taxes by opening distribution branches in the United States. This strategy, used by international brands, helps reduce the impact of tariffs on end consumers. However, African companies face several obstacles: low global awareness, insufficient infrastructure, and high logistics costs. A €10 increase upstream in the supply chain represents an increase of between €25 and €50 in the final price.

This model is difficult to sustain for African products, which already face fierce competition in international markets. Without established brands and appropriate strategies, the continent remains vulnerable to fluctuations in trade policies.

Nevertheless, I am convinced that this challenge can become a catalyst for true economic renewal in Africa. But it will require political courage, a clear vision, and above all collaboration among all stakeholders – governments, private companies, regional institutions, and local communities.

The continent has everything it needs to succeed: abundant resources, dynamic youth, and rich cultural heritage. It's time to realize this collective potential and act together to build an inclusive and prosperous future.

Nelly Wandji

With a luxury retail background managing top European heritage brands, my ventures aim to elevate African Heritage. I have collaborated with 150+ creatives, generating 7 figures revenue. Post-pandemic, I lead our branding agency, empowering African brands globally through innovation and heritage preservation.

https://www.nellywandji.com
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