Africa in the News: Swaziland Loses and Madagascar Regains AGOA Status, African Union Summit, and U.S. Export Import Bank Debate Could Impact U.S.-Africa Trade

Swaziland’s AGOA Status Revoked; Madagascar Reinstated as Beneficiary

On Thursday, President Obama issued a proclamation removing Swaziland from the list of sub-Saharan African beneficiaries that receive duty-free access to U.S. markets under the U.S. African Growth and Opportunity Act (AGOA). The termination of Swaziland’s AGOA status, effective January 1, 2015, reflects the U.S. government’s growing concerns over Swaziland’s insufficient progress toward certain democratic standards, as stipulated in AGOA’s eligibility criteria. In an official statement, the Office of the U.S. Trade Representative (USTR) cited several factors affecting this decision, including: “Swaziland’s use of security forces and arbitrary arrests to stifle peaceful demonstrations, and the lack of legal recognition for labor and employer federations.”

Some observers fear that Swaziland’s exit from AGOA will have a profound impact on the country’s economy, which is already experiencing close to 40 percent unemployment. A number of experts have credited AGOA with helping to boost the Swazi garment industry; however, without preferential U.S. market access, the industry is expected to contract, resulting in the loss of approximately 17,000 jobs, according to one official from the Federation of Swaziland Employers.

Meanwhile, Madagascar’s AGOA status, which was suspended after the country’s 2009 coup, was reinstated on Thursday after peaceful, democratic elections were held in late 2013. Losing its preferential trade arrangement with the U.S. dealt a huge blow to the country’s economy as, an IRIN report highlights, “[e]xports from Madagascar to the US fell by around 70 percent, and over 26,000 jobs were lost between 2008 and 2010.” For more analysis on the implications of these announcements, as well as insight on the potential for Swaziland’s reform and AGOA reinstatement, please see the May 2014 Africa in Focus blog: Swaziland’s AGOA Status Revoked: Madagascar All Over Again?

AU Summit Addresses Agriculture, Food Security and Growing Instability

The 23rd African Union (AU) Summit hosted in Malabo, Equatorial Guinea concludes today, after a week of meetings centered on the theme of agriculture and food security. In the summit’s opening remarks, AU Commission Chair Nkosazana Dlamini Zuma called on heads of state to promote sustainable agricultural development by reinvigorating their support for “efforts in irrigation; seed development; access by women to land, markets and farms; infrastructure and improved trade within and outside the continent.”

The summit also touched on regional responses to the growing threat posed by militant Islamist groups, such as Boko Haram in Nigeria and al Shabaab in Kenya. Following another suspected Boko Haram attack on Wednesday, which left 21 people dead in the Nigerian capital of Abuja, senior AU officials remarked that progress has been made toward establishing an African Standby Force (ASF) to deal with regional instability, with five brigades expected to be operational by 2015. U.N. Secretary General Ban Ki-moon also pledged to provide support to the AU as it works to strengthen its security institutions.

With Future of U.S. Export Import Bank in Doubt, Questions Arise over U.S.-Africa Trade

The future of the U.S. Export Import Bank, a federal agency that finances U.S. exports abroad, remains uncertain as Congress continues to debate the extension of its charter, which expires in September of this year. As noted by The Guardian, the debate is largely fractured along ideological lines within the Republican Party: while supportive factions consider the agency critical in promoting U.S. exports, critics are keen to let the charter expire, unless serious reforms are made to what they call its “crony-based lending practices.”

According to a June 2012 Africa Growth Initiative report, the U.S. Export Import Bank finances approximately 8 percent of U.S. exports to Africa. At the U.S.-Africa Energy Ministerial earlier this month, the Bank announced that it would authorize an additional $1.1 billion for the first 7 months of the 2014 fiscal year to support the expansion of U.S. exports to strategic markets in sub-Saharan Africa. If the Bank’s charter is not reinstated, it will continue to service the loans it has already has made and backed, but will not authorize new loans, according to the Wall Street Journal. Some observers have argued that failing to reauthorize the Bank will allow other exporters in Europe and Asia—who receive considerable financial support from national Export banks—to gain a competitive edge over American companies exporting to Africa.