The African Growth and Opportunity Act (AGOA) is at risk due to the protectionist shift. If AGOA is allowed to lapse, it could slowly erode U.S. geopolitical influence in Africa, at a time when China and Russia are deepening their footholds, and Gulf states are emerging as powerful new players.
- President Trump froze USAID’s $43 billion annual budget, impacting Africa’s development assistance.
- The African Growth and Opportunity Act (AGOA) is at risk due to the protectionist shift.
- The United States’ influence in Africa could erode if AGOA is allowed to lapse, impacting its geopolitical position.
On January 20, President Donald Trump shocked the international community by announcing a sweeping freeze on USAID’s $43 billion annual budget.
While the shockwaves rippled globally, nowhere were the tremors felt more acutely than across Africa, a continent long reliant on American development assistance and preferential trade programs.
Weeks later, Trump escalated tensions by imposing reciprocal tariffs on several African countries, including Lesotho, which faced a 50% tariff, a move that could severely impact its cost-sensitive apparel exports.
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The pause has since been lifted, following intense diplomatic pressure and public backlash. However, the episode revealed just how precarious Africa’s trade and aid relationship with the United States has become.
This protectionist shift now casts a long shadow over one of the continent’s economic lifelines, the African Growth and Opportunity Act (AGOA).
A trade lifeline under threat
The African Growth and Opportunity Act (AGOA), launched back in 2000, gives eligible sub-Saharan African countries duty-free access to the U.S. for over 1,800 products, on top of 5,000 already covered by a separate trade program called the Generalized System of Preferences (GSP).
The idea was to boost trade, attract investment, and support economic growth in Africa, while also helping the U.S. maintain some soft power and influence on the continent.
Some sectors took off under AGOA, especially apparel and autos. Within five years of the law being passed, African clothing exports to the U.S. jumped by 150%. Countries like Kenya, Lesotho, and Mauritius saw new factories pop up and jobs created.
For example, Lesotho’s textile industry, which accounts for 16% of its GDP and employs tens of thousands, mainly women, is almost entirely dependent on AGOA. Today, more than 80% of the country’s exports are destined for the U.S. market. So any pause or disruption to the program would hit the economy hard.
“For countries that used AGOA as a foundation for industrial policy, the risks are profound,” Amma Gyampo, CEO of the Ghana Venture Capital and Private Equity Association (GVCA), told Business Insider Africa.
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However, some analysts say the program’s benefits are overstated. According to Capital Economics, AGOA exports made up just 0.5% of sub-Saharan Africa’s GDP in 2023. Nigeria and South Africa, two of the biggest users, only exported around 1% of GDP’s worth to the U.S. under AGOA last year.
AGOA trade peaked in 2008 when U.S. imports from African countries hit $82 billion. By 2024, that number had dropped to $29.1 billion, AGOA’s website shows.
Now, the AGOA legislation, which has been renewed twice since its inception, is set to expire in September 2025. African leaders are advocating for a 10-year extension, but the Trump administration’s shift toward economic nationalism makes the renewal uncertain.
Cost of walking away from AGOA
On the cost side, AGOA currently costs the United States about $250 million per year in foregone tariffs. However, pulling the plug on the program isn’t as straightforward as it might seem.
The U.S. has traditionally held strong economic sway across Africa’s 54 countries, using trade and investment as tools to advance its strategic interests.
Africa’s growing importance to Washington isn’t just about diplomacy, it’s also about resources. In 2023 alone, the U.S. imported $7.3 billion worth of crude petroleum and $4.7 billion in precious metals from sub-Saharan Africa, a sign of the region’s value in global supply chains.
If AGOA is allowed to lapse, it could slowly erode U.S. geopolitical influence in Africa, at a time when China and Russia are deepening their footholds, and Gulf states are emerging as powerful new players.
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“The U.S.’ moves in recent times have been great for Beijing. We’ve seen some BRICS players offering tariff-free wheat to AGOA-vulnerable nations like Nigeria, swapping trade for UN votes. Venture firm Partech reports a 40% surge in Chinese VC deals in African health tech this year, exploiting the U.S. uncertainty,” Gyampo said.
Africa’s bargaining chips
Despite the uncertainties, Africa holds strong bargaining chips. The continent boasts a youthful population, booming creative industries, and abundant critical minerals essential for the global energy transition.
According to Gyampo, these assets are in high demand globally, yet Africa has historically failed to fully capitalize on them. “it’s a good moment to renegotiate trade deals in Africa’s interest, based on what Africa has to offer the world,” she said.
There are growing calls for AGOA’s renewal to include technology transfer clauses to build local manufacturing and skills capacity across the continent.
Alice Usanase, former EMEA lead at AFC, pointed out a major gap in the current framework, “Digital services Africa’s tech sector is growing at 10.8% annually, but AGOA had no provision for software, fintech, or digital content. Future frameworks must include data governance rules, IP protections, and cloud infrastructure financing.”
Amma Gyampo echoed that view, saying “Venture capital investors are keen on the creative and tech sectors as well. We need to look at how we emulate what India has done in Tech and leverage Africa’s youth talent to boost our contributions to the global tech and business outsourcing sectors for example.“
Rethinking regional AfCTA trade
Intra-African trade among the continent’s 54 countries has historically remained low. While the African Continental Free Trade Area (AfCFTA) was established to unlock vast economic potential, its impact so far has been limited. Despite offering access to a combined market of 1.4 billion people and a total GDP of $3.4 trillion, the agreement’s promise remains largely underutilized.
Gyampo noted that in the venture capital and small business sectors, there’s a strong push for businesses to pivot toward AfCFTA-driven regional trade.
“There is a phrase I hear a lot nowadays, that “AfCFTA isn’t Plan B, it’s Plan A”. We need to diversify everything and reduce our reliance on any one market or trading partner,” Gymanpo noted.
Usanese added that Africa must strengthen its trade diplomacy with emerging markets like India, Brazil, Southeast Asia, and the Gulf states. “These partners are offering co-investment and market access without the heavy conditionalities that often characterize North-South relations,” she said.
