The AGOA and MCA Modernization Act Is A Step Towards Expanding U.S.-Africa Trade

Categories: Advocacy , Featured

 

 

By Omolara Abiona

The House of Representatives unanimously passed on January 17 the African Growth and Opportunity Act (AGOA) & Millennium Challenge Act (MCA) Modernization Act to strengthen the hallmark U.S.-Africa trade law by promoting greater regional trade opportunities and capacity building training for African companies. The bill will move to the Senate for passage before it becomes a law.

The bill, introduced by Rep. Ed Royce (R-CA) House Foreign Affairs Committee Chairman with co-sponsors Rep. Karen Bass (D-CA), Rep. Eliot Engel (D-NY), and Rep. Chris Smith (R-NJ), aims to expand investment and export opportunities and make AGOA more effective by directing the White House to establish a comprehensive website highlighting information on AGOA and  encouraging embassies in AGOA-eligible countries to promote export opportunities to the United States.

Signed into law in May 2000, AGOA was enacted to expand U.S. trade and investment with eligible sub-Saharan African countries to fuel economic growth and promote economic integration into the global economy.

The proposed act will also provide capacity building training for African private sector leaders and trade associations on production strategies, quality standards, market research, and market development.

Dr. Mima S. Nedelcovych, IGD President and CEO, said strengthening the capacity of Africa’s private sector will enable more African companies to take advantage of AGOA.

“A decade or more ago, foreign investors dealt primarily with governments to do business in Africa. There wasn’t a strong, well-developed African private sector,” said Nedelcovych.  “Today, the continent has experienced an emergence of homegrown African businesses, so the engagement for investors has shifted from dealing with governments to working directly with African born and bred companies.”

Today, there are some 40 AGOA-eligible African countries. AGOA has enhanced market access to the United States for almost two decades and represents 55% of total US-bound exports from AGOA beneficiaries, totaling $12.39 billion. More  than 6,500 products have duty-free access to the United States under AGOA.

The bill also included Rep. Bass’s MCORE Act of 2015, allowing the Millennium Challenge Corporation (MCC) to authorize more compacts for eligible countries. Specifically, if a country has demonstrated remarkable progress with an existing MCC Compact, the agency can simultaneously allow up to two compacts to help boost the country’s economic competitiveness and regional economic integration. Compacts are five-year grants for selected countries that meet MCC’s eligibility criteria.

“People, goods, and services move across borders—and so should MCC’s investments,” said MCC Acting CEO Jonathan Nash. “Developing countries can grow faster, create more jobs, and attract more investment when they are part of dynamic regional markets.”

Given the recent alleged disparaging comments about African countries from the White House, Nedelcovych said U.S.-Africa trade policy must evolve to align with the realities of doing business in Africa. Failing to do so, IGD president emphasized, the United States risks being left even further behind other regions of the world.

Nedelcovch urged the Senate to swiftly pass the African Growth and Opportunity Act (AGOA) & Millennium Challenge Act (MCA) Modernization Act.

 

Learn more about IGD’s Africa Investment Rising roadshow, which will launch in mid-April, to showcase Africa’s trade and investment opportunities in key growth sectors.

 

Omolara Abiona is Communications Assistant at the Initiative for Global Development (IGD).