The nation’s economy experts say they fear Nigeria will remain a mono-culture economy since it has failed to tap into the African Growth and Opportunity Act (AGOA) launched by the United States since year 2000.

The much touted AGOA, launched by the US aims at facilitating a two-way trade arrangement between US and sub-Sahara Africa and by extension, allow for economic growth in the continent.

Nigeria, stakeholders and experts lament, has continued to lose so much in terms of the huge revenue it should have earned from export of non-oil products.

The country incidentally is yet to fully milk from the Act because its AGOA trade is largely dominated by oil.

Olajumoke Familoni, CEO, International Centre For Leadership Development, argues that tariff and non-tariff barriers in developed countries pose a significant obstacle to developing country exports. According to her, “While developed countries generally maintain relatively low average trade barriers, their highest trade barriers tend to apply to goods that developing countries export.”

The World Bank and Oxfam estimate that trade barriers erected by developed countries cost developing countries $100 billion a year. Non-tariff barriers also pose significant problems. For instance, agricultural subsidies encourage production and put downward pressure on agricultural prices.

Michael Moore, former director-general of the World Trade Organisation, estimated that removing all tariff and non-tariff barriers “could result in gains for developing countries in the order of $182 billion in the services sector, $162 billion in manufacture and $32 billion in agriculture.”

“The U.S. has partially addressed these trade distortions through AGOA and should commit to eliminating all remaining tariffs on goods from eligible nations and unilaterally, phasing out agricultural subsidies,” said Familoni.

BusinessDay investigations reveal that AGOA covers 6,500 product items, after the extension of Generalised System Preferences (GSP) to a further 1,800 product lines, including numerous food products, handbags, gloves, footwear, iron and steel items, automotive components and vehicles. Countries meeting the Apparel Provisions also qualify for duty-free access for apparel.

An analysis of the trade data reveals the distribution of exports into the U.S. under AGOA. It shows that there are three sectors, namely - energy-related products, textiles and apparel and transportation equipment that account for the vast bulk (over 90 percent) of exports, currently qualifying for AGOA benefits. Agricultural products and minerals and metals have also been successfully exported by other African countries to the U.S. under AGOA, while AGOA-eligible exports in the remaining product categories are still insignificant.

At a media lunch meeting with the US Consul-General in Lagos, it was revealed that in 2010 U.S. exports to sub-Sahara Africa exceeded $17 billion while US imports from the region were greater than $65 billion.

Nigeria ranks only high in the energy-related products sector. The country has failed woefully in the textiles and apparel, agricultural products and mineral and metals sectors where it has potentials to excel.

“This looks good on the surface, but when you are confronted with the details, you will find out that export of petroleum products accounts largely for the AGOA trade progress,” the US Consul General in Nigeria, Joseph D. Stafford said. He corroborated this when he added: “My overall perception of AGOA in Nigeria is that it is doing an excellent job with Nigeria benefiting from AGOA principally in respect of export of oil. But we want to see the imprint in the export sector beyond oil.”

For him, there are many opportunities for development in the export area in Nigeria and America looks forward to Nigeria participating more robustly in AGOA.

“Nigerians are dynamic people. They are entrepreneurial. Nigerian SMEs may not have the capacity to market products in the US, but they can get empowered with information on how to meet export requirement from AGOA Resource Centre. And we provide opportunities for training,” he said.

Muda Yusuf, director general, Lagos Chamber of Commerce and Industry, meanwhile opined that, “Export business is about global competitiveness, from both quality and price perspectives. The poor showing of Nigeria in AGOA is a reflection of the fundamental weaknesses in the economy, as reflected in the high cost of doing business. For as long as operating cost remains high, no significant progress can be made in the non oil export sector.” Yusuf added that, “The tragedy of the Nigerian economy is that domestic firms cannot even access the domestic market. The market has been taken over by products from other parts of the world, especially Asia. Our major attraction to the world is that we offer robust market opportunities. Not much value can be created in an economy that has weak infrastructure. Yet, value creation has a lot to do with competitiveness. The way forward is to address the fundamental barriers to competitiveness of Nigerian firms.”

Femi Boyede, country facilitator on trade and enterprises, ECOWAS Ten, said “The situation could be said to be unfortunate only to the extent that we have made deliberate efforts based on specific strategy to break into the AGOA market and have failed. “The fact is, we have not the capacity,” he declared, arguing that, “The Obasanjo administration made some administrative blunders in the past, regarding the administration of the Nigerian Export Promotion Council (NEPC).

“For AGOA, Nigeria’s ‘fate’ can still be salvaged. It is a matter of strategy. It is a matter of developing new exporters, specifically for that market. I hope the appropriate authorities will see this need,” he said.

Strong issues in the industry are the inability of SMEs to meet huge contracts individually and poor packaging.

According to further BusinessDay investigations, from 2009 to 2010, U.S. imports from sub-Sahara Africa (SSA) increased by 39 percent to reach $65 billion. This increase was mostly due to a 40 percent jump in crude oil imports (accounting for 81.4 percent of total U.S. imports from SSA with both price and quantity increasing. This growth closely parallels the large increase in total crude oil imports from virtually all oil producing trading partners (including non-AGOA eligible countries).

U.S. imports from Nigeria increased by 60 percent, from Angola by 28 percent, from the Democratic Republic of Congo by 60 percent, and from Gabon by 80 percent. U.S. imports from South Africa also grew by 40 percent driven mainly by increases in diamonds imports. U.S. imports from Ghana rose by 103 percent due to an increase in cocoa imports (gained from Ivory Coast’s political instability and negatively affected cocoa industry).

In 2010, AGOA imports were $44 billion, 31 percent more than in 2009, mainly due to a 33 percent increase in AGOA petroleum product imports. Petroleum products continued to account for the largest portion of AGOA imports with a 91 percent share of overall AGOA imports.

With these fuel products excluded, AGOA imports were $4 billion, increasing by 18 percent. U.S. imports of AGOA chemical and related products increased by 39 percent, AGOA minerals and metals by 94 percent, AGOA agricultural products by 44 percent, and AGOA transportation products by 15 percent. AGOA textiles and apparel imports decreased by 20 percent and AGOA machinery related products by 44 percent.

The top five AGOA beneficiary countries included Nigeria, Angola, South Africa, Republic of Congo, and Chad.

Other leading AGOA beneficiaries, included - Gabon, Democratic Republic of Congo, Lesotho, Kenya, Cameroon, and Mauritius.

BusinessDay also gathered that U.S. total trade (exports plus imports with SSA) increased by 32 percent from 2009 to 2010, as both exports and imports increased. The expansion in trade is consistent with the overall growth in U.S. trade with the world (a 22 percent increase in 2010). U.S. exports to SSA increased by 13 percent to $17 billion (mostly due to increases of vehicles exports).

Of the top five African destinations for U.S. products, exports to Nigeria rose by 10 percent, to South Africa by 26 percent, to Ghana by 37 percent, and to Gabon by 42 percent. Exports to Liberia increased by 101 percent. Exports to Angola decreased by 9 percent and to Kenya by 45 percent. Exports of electrical machinery (including telecommunications equipment) to SSA continue to decrease (-8 percent).

Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Nigeria's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on AGOA.info include: (click each link to view)