Mozambique National AGOA Utilization Strategy: 2018- 2025
The African Growth and Opportunity Act is a U.S. trade act that provides duty-free import to goods produced in qualifying Sub-Saharan African (SSA) countries. AGOA came into force in 2000 and was most recently extended to 2025 through the AGOA Extension & Enhancement Act (AEEA). Mozambique has been eligible for AGOA since 2000. One of the additions to AGOA through the AEEA is language in the legislation that states countries should produce “AGOA Utilization Strategies” to take advantage of the benefits. Accordingly, this AGOA Utilization Strategy is intended to identify strategic sectors and goods for exports to the U.S. under AGOA by Mozambique, to provide guidance on increasing the awareness and expertise of AGOA among Mozambique’s relevant public and private stakeholders and to elaborate a set of strategic actions that, if implemented, could help Mozambique to better utilize the AGOA.
Despite AGOA eligibility Mozambique has arguably not taken full advantage of the duty-free preferences. Mozambique’s exports to the U.S. in 2016 were just over $100 million or approximately 3% of total exports. Further, exports under the AGOA program were just over $1 million which is less than 2% of total exports to the U.S. This low value of export under AGOA is composed of just 5 products out of the 80 product lines that Mozambique exported to the U.S. in 2016. Finally, of the small export to the U.S., multiple product categories that would otherwise qualify for duty-free import under AGOA did not claim such preferences.
In spite of the low volume of export to the U.S. and low utilization of AGOA, Mozambique does have a viable export sector with at least 20 product lines that would be eligible for AGOA if exported to the U.S. Of these goods, several are highly demanded in the U.S. suggesting ample opportunity for Mozambique to export to the U.S. Through a rigorous 4-level analysis of Mozambique’s exports measured against U.S. demand and AGOA eligibility 5 sectors and at least 13 goods were identified for high AGOA potential and for focus in this strategy.
Among the key opportunities for Mozambique is to collaborate and take advantage of the numerous forms of U.S. resources in support of AGOA. Specifically, the “Southern Africa Trade and Investment Hub (SATIH)” funded by the U.S. Agency for International Development (USAID) is a program wholly dedicated to helping SSA countries become more competitive and export to the U.S. under AGOA. Another significant opportunity for Mozambique is to seek regional trade opportunities, especially with its largest trading partner South Africa, to develop regional value chains to exploit AGOA. Immediate opportunities appear to exist for goods such as agro-processed products and Upland Cotton.
This strategy includes 21 recommendations on improving awareness of AGOA, competitiveness of specific sectors, and exploiting the benefits granted to goods made in Mozambique for the U.S. market. Each recommendation includes identification of implementing entities as well as a recommended timeframe. As readers will note, there are a range timeframes from immediate to long term for Mozambique to better utilize AGOA and grow exports.