Don’t AGOA away: Letting the African Growth and Opportunity Act Expire Could Limit Critical Manufacturing Options for Key Industries

The African Growth and Opportunity Act (AGOA), enacted in 2000 by President Bill Clinton is, after 25-years, in danger of not being renewed. The potential lack of a renewal could spell trouble not just for African nations, but also for companies seeking additional cost-effective manufacturing options outside of China.

 The crux of the problems that could arise from AGOA’s conclusion lies in manufacturing. AGOA, which is set to expire on September 30, 2025, provides African countries with duty-free access to U.S. markets. Allowing this program to expire could have devastating effects because it would not only disrupt supply chains, but it would also further limit manufacturing options for businesses that are desperately trying to find ways to keep costs and prices down.

“AGOA has not only helped spur investment, but it has also created a viable manufacturing destination where labor costs are competitive with China and Southeast Asia,” said Anthony Fullbrook, president of OEC Group’s North American region. “For companies exploring manufacturing alternatives, the fate of this piece of legislation is critical to their long-term viability and growth.”

While AGOA impacts the entire continent of Africa, reciprocal tariffs have made life post-AGOA a drastically different proposition for some nations than others. For example, Ghana, Kenya, and Tanzania are only being assessed the nominal baseline tariff, which still makes them an attractive manufacturing option because tariffs and labor costs are low.

On the other hand, there are nations like Lesotho, where the tariffs are significantly higher. In those high-duty nations, the end of AGOA could spell disaster; and disaster in one nation’s economy could have a ripple effect throughout the supply chain.

“The logistics industry is all about having as many options as possible. While China will continue to dominate global manufacturing, having additional lower cost manufacturing sources available will give businesses more viable options to source their goods, while at the same time helping African economies grow. It is a win-win for everyone,” said Peter Hsieh, Vice President of Sales, and Marketing for OEC Group. “Needless to say, everyone loses if AGOA is not renewed.”