How Africa can shape its trade future beyond AGOA

The African Growth and Opportunity Act (AGOA) is set to officially expire on 30 September, meaning that African policy-makers face a pivotal decision.

Since its inception in 2000, the legislation has been a cornerstone of US-Africa trade relations, granting eligible African countries duty-free access to the US market for thousands of products.

However, recent shifts in US trade policy have made it defunct. For instance, in early July, Lesotho declared a state of disaster after the US imposed a 50% tariff on its exports and withdrew United States Agency for International Development (USAID) support.

Rather than waiting for an unlikely official decision on AGOA’s renewal, African governments have the chance to proactively shape a trade strategy that is regionally integrated, digitally enabled and geopolitically informed.

Building on Africa’s commitment to regional integration through the African Continental Free Trade Area (AfCFTA), this approach calls for deeper implementation alongside financial market development and digital trade expansion.

In its lifetime, AGOA has made more than 6,500 product lines eligible for tariff-free access to the US. More than 30 African countries have benefitted, particularly in the apparel, agriculture and automotive sectors.

However, utilization has been uneven. In 2021, sub-Saharan Africa accounted for less than 1% of total US imports. While countries like Kenya, Ethiopia, and Lesotho made strong use of AGOA, many others underutilized its benefits.

Meanwhile, the global trade landscape has shifted. Rising protectionism, supply chain disruptions and the reshoring of manufacturing are reshaping trade policy.

Africa is becoming a pivotal force in global trade, attracting diverse partners – from China’s Belt and Road to the EU’s Global Gateway and Gulf state investments. Internally, the AfCFTA offers a transformative path for regional integration.

The recent US tariffs have effectively signalled the end of AGOA in practice, forcing Africa to adapt to a new era of global trade shaped by economic nationalism and geopolitical competition.

To navigate a post-AGOA world, African governments, businesses and regional institutions can focus on three strategic pathways:

The AfCFTA is the world’s largest free trade area by number of participating countries. However, progress since its 2021 launch has been uneven, with both promising developments and persistent challenges. Challenges include asymmetrical political commitment, limited market access, and security concerns.

Moreover, the mixed track record of Africa’s regional economic communities – which were intended to boost trade within sub-regions – raises concerns about the AfCFTA’s potential effectiveness. Nonetheless, if fully implemented, the AfCFTA could transform Africa’s economic landscape by reducing dependence on external partners, fostering regional value chains, and promoting local manufacturing.

To accelerate implementation of the AfCFTA, African governments must move from broad commitments to targeted national action. Developing and executing AfCFTA strategies aligned with each country’s trade priorities is essential.

The AGOA experience shows the impact of coordinated planning. Countries like Mozambique, Mali, Togo, and Zambia that adopted national AGOA strategies and in some cases, saw exports to the US grow by over 3,000%.

However, strategy alone is insufficient. Without effective implementation, progress can stall due to institutional weaknesses, lack of coordination or limited follow-through. Strengthening the technical capacity of national implementation committees is therefore essential. These bodies must be equipped to coordinate across government agencies, engage the private sector and monitor progress systematically to translate policy into results.

Additionally, to avoid repeating the shortcomings of regional economic communities, the AfCFTA should enforce stricter penalties for non-compliance. Development funding and infrastructure support should be tied to compliance, in collaboration with major funders like Afreximbank and the World Bank.

Persistent violators should lose voting rights in AfCFTA decision-making bodies. A public compliance scorecard could also increase transparency. These steps would strengthen trust and accountability across the bloc.

Trade thrives on capital. Yet AGOA did little to develop Africa’s financial backbone. For Africa to be self-reliant, deeper capital markets and harmonized financial regulations are essential.

Africa should shift from reliance on trade preferences toward building resilient, self-sustaining economic systems. The AfCFTA can support this transition by harmonizing financial regulations, promoting regional investment and fostering deeper capital markets.

To make this actionable, governments should take specific steps: adopt regional regulatory standards to reduce compliance costs for cross-border financial services; modernize financial infrastructure to improve access and transparency; and create incentives for institutional investors, such as development finance institutions and regional investment funds, to allocate capital to productive sectors.

Strengthening credit rating systems, improving financial literacy, and facilitating cross-listings among African stock exchanges can also deepen integration.

Equally vital is the development of integrated payment systems. The launch of the Pan-African Payment and Settlement System (PAPSS) is a significant step forward, enabling real-time, cross-border transactions in local currencies. To maximize its impact, PAPSS must be widely adopted, interoperable with national systems and supported by strong regulatory coordination.

Africa’s digital economy is expanding rapidly, opening new export frontiers beyond traditional goods. Sectors such as fintech, software development, digital services and creative industries are growing across the continent. Between 2016 and 2021, internet users in sub-Saharan Africa increased by 115%, and more than 191 million people adopted digital payment systems between 2014 and 2022.

In 2021, fintech startups attracted about $2 billion, making up around 60% of all venture capital deployed in African startups. Nigeria, Kenya, and South Africa emerged as the dominant hubs in fintech funding that year.

To sustain this momentum, governments should invest in digital infrastructure, develop regulatory frameworks, and build digital skills. Initiatives like the World Bank’s Digital Economy for Africa and the African Union’s Digital Transformation Strategy 2020–2030 provide a roadmap.

By engaging in global digital trade forums such as the World Trade Organization, Africa can ensure its interests are reflected in the rules governing the future digital economy.

AGOA’s sunset is not an end but a strategic inflection point. Africa can transition from being a beneficiary of trade preferences to a co-designer of global commerce. By accelerating the AfCFTA, deepening financial markets, and championing digital innovation, the continent can build a trade system that is inclusive, resilient, and future-ready.