While other African countries are taking up opportunities provided by the duty-free exports to the world’s largest consumer market, The United States, Nigeria has witnessed a shrink in the first eight months of 2020, recording $300.48m from January to August. However, South Africa, Kenya, Ethiopia, Lesotho, Ghana and Madagascar are among the leading non-oil AGOA exporters. Kenya, Ethiopia and Madagascar dominate the apparels sector.
This was made known by the latest African Growth and Opportunity Act policy trade statistics which shows that exports to the US under the duty-free policy fell by 88 per cent from $2,502.86m in the first eight months of 2019 to $300.48m in the corresponding period in 2020.
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African Growth and Opportunity Act (AGOA) which was established by the United States 20 years ago to facilitate a duty-free trade between exporters from sub-Saharan Africa and the United States has seen many African countries not taking full advantage of the opportunities therein. Annual trade data showed the largest contribution towards AGOA-eligible trade commodities is usually oil exports mainly from Angola and Nigeria, and to a lesser extent, Chad and the Republic of Congo.
For instance, oil export under the policy accounted for 99.7 percent of Nigeria’s AGOA exports to the United States in 2019. According to the statistics, oil and gas products valued at $3.12bn were exported to the US under the policy in 2019. Following the coronavirus-induced crash in oil prices earlier this year and declining demand, Nigeria has been struggling to sell its crude oil cargoes.
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Prior to the lockdowns and collapse in crude oil demand caused by the coronavirus crisis, the production of US shale oil had led to a significant reduction in the exportation of Nigerian crude oil. The United States’ import of Nigeria crude oil plunged by 63.03 per cent in the first quarter of this year, compared to the last quarter of 2019.
Data from the US Energy Information Administration showed that the country imported 5.53 million barrels of crude oil from Nigeria in Q1 2020, down from 15.07 million barrels in Q4 2019.
According to the Executive Director and Chief Executive Officer, Nigerian Export Promotion Council, Mr Olusegun Awolowo, only a few Nigerian exporters had benefited from the duty-free trade opportunity despite a series of sensitisation carried out by the council. He explained that an assessment of the impact of coronavirus on agricultural exports showed that the pandemic would lead to a fall in export of cocoa beans, cashew nuts and sesame seeds this year. According to him, the crash in oil prices as a result of the pandemic is an indication that a mono-product economy is not sustainable and that there is an urgent need to develop non-oil export.
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“We cannot rely on crude oil export as both our major source of government revenue and foreign exchange generation. We must diversify our export base,” Awolowo said. He identified the export of services as a rapidly growing export industry that could generate more revenue for the government. To ease the burden on non-oil export during the coronavirus pandemic, Awolowo suggested the realignment of the exporters’ foreign exchange window with the prevailing foreign rate.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry