Trading Terms: Africa’s Strategy in a (Maybe) Post-AGOA World

Article by: Jeanah L. - Trade Policy Expert | Senior Leader in Trade & Investment Strategy, Policy Reform & Team Management | Proven Success in Leading High-Impact

As the African Growth and Opportunity Act (AGOA) edges closer to its 2025 expiration, a fundamental question looms: what comes next for U.S.-Africa trade relations? The uncertainty surrounding AGOA’s renewal coincides with a broader recalibration of U.S. foreign economic policy—one that may leave preference-based frameworks behind in favor of transactional, bilateral deals.

Recent signals from the Trump administration suggest a revival of “America First” trade logic: a shift toward reciprocity, bilateralism, and value for U.S. firms above all. For African economies, this could mean navigating a future where preferential access gives way to deal-by-deal arrangements, with fewer safeguards and more pressure to deliver strategic returns to Washington.

But this transition doesn’t mean Africa is out of options. A combination of retooled U.S. development finance tools and strategic African policymaking could forge a new path—one that blends investment, infrastructure, and trade into bespoke partnerships that align with national priorities and industrial ambitions.

From AGOA to Asymmetry

For over two decades, AGOA has provided eligible African countries with duty-free access to the U.S. market on thousands of products. The results have been mixed: while oil dominated early exports, sectors like apparel (Lesotho, Kenya, Ethiopia), automotive (South Africa), and specialty agriculture (Ghana, Ethiopia) have shown promise. Kenya’s apparel sector, for instance, has grown under AGOA, but scale remains limited and supply chains underdeveloped.

Yet the program has been hampered by its unilateral nature, limited uptake beyond a few countries, and its vulnerability to U.S. domestic politics. With Congress divided and trade policy increasingly shaped by executive branch discretion, AGOA’s future is politically fragile—and no longer aligned with the strategic calculus now driving U.S. trade engagements.

The Trump team’s emerging trade vision appears more skeptical of broad trade preference programs. The emphasis is on bilateral deals that deliver measurable benefits to the U.S. economy—whether in the form of nearshoring, energy access, or strategic competition with China. In this framing, AGOA may seem inefficient or overly generous.

The U.S.-Kenya FTA talks launched under Trump—though largely stalled under Biden—offer some insights on this new approach: focused, one-on-one negotiations targeting specific sectors (digital trade, standards, logistics) rather than sweeping liberalization. A future U.S.-Kenya bilateral framework—still hypothetical at this stage—could mirror the structure of recent U.S. deals in Vietnam, where commercial diplomacy has delivered a cascade of sector-specific partnerships—gas-fired power generation, LNG infrastructure, biofuels, and minerals—backed by U.S. government agencies and firms.

As a forward-looking example, African governments might consider bundling strategic sectors and high-impact projects into similar deal structures:

• Clean energy: U.S. firms like Ormat Technologies (operating Kenya’s Olkaria III geothermal plant with past OPIC support) and Cyrq Energy (planning the $1.3 billion Suswa geothermal project) could be candidates for expanded U.S.-Kenya clean energy partnerships under a future bilateral framework.
• Digital economy: Microsoft and G42’s 2024 announcement of a $1 billion investment in Kenya’s digital infrastructure—including a geothermal-powered data center—offers a model of how tech, energy, and development goals could align in the absence of AGOA.
• Financial services: JPMorgan Chase’s entry into Kenya in 2023 via a new representative office reflects growing U.S. interest in the country’s financial ecosystem, especially as a base for regional fintech and trade finance innovation.
• Agriculture: Companies like Kahawa 1893, which has built direct U.S. retail supply chains for Kenyan coffee, show the potential for bilateral agricultural trade that transcends preference programs and delivers more inclusive, traceable value.

These are not formal components of any revived U.S.-Kenya deal today—but they serve as a blueprint for what next-generation trade and investment frameworks could look like: practical, sectoral, and supported by U.S. public finance and private capital.

Rather than a single, comprehensive FTA, this approach bundles strategic projects and commercial deals into a bilateral framework—creating economic linkages that serve both development and U.S. strategic interests.

The Rise of Bilateral Toolkits

Without AGOA as a guaranteed legal backbone, the future of U.S.-Africa trade could increasingly rest on how both sides mobilize a transactional, project-based engagement model. While AGOA’s full expiration is possible, there are also signs that a revised version could emerge—one that emphasizes stronger conditionality, performance metrics, and closer alignment with bilateral or sector-specific engagements. In either case, U.S. trade policy is trending away from open-ended preferences and toward deals that deliver measurable strategic and commercial returns.

This evolution is already visible elsewhere. In Vietnam, the U.S. has favored commercial diplomacy over broad trade agreements—securing sectoral MOUs and investment partnerships tied to gas-fired power, LNG infrastructure, biofuels, and digital infrastructure. The message is clear: access and attention follow the deals.

A similar logic could apply in Africa, where U.S. institutions are increasingly oriented around the delivery of high-impact, investable projects. For African countries, this opens up strategic space to proactively position themselves as deal-ready partners—not only through political alignment but through regulatory preparedness, institutional coordination, and investable project pipelines.

1. The U.S. International Development Finance Corporation (DFC) has emerged as a leading mechanism for deal-based engagement. With authority to provide equity, political risk insurance, and concessional loans, DFC enables U.S. firms to invest in commercially viable African projects: In West Africa, a $250 million capital facility (2021) to the Africa Finance Corporation expanded its infrastructure investment reach. In Angola and the DRC, DFC’s $553 million (2023) backing of the Lobito Atlantic Railway reflects the U.S. interest in resource corridors and critical minerals. In Southern Africa, DFC’s $40 million investment (FY2024) in the Energy Entrepreneurs Growth Fund supports distributed energy solutions.

African governments could replicate these models by preparing shovel-ready infrastructure, mineral, or energy projects—and aligning with U.S. commercial and strategic interests in supply chain diversification and energy transition.

2. Revamped trade and development models may replace legacy programs with more targeted, investment-oriented instruments. These future initiatives could reward countries that advance commercial policy reforms—whether on digital trade frameworks, special economic zones, or procurement transparency.

African policymakers could shape this engagement by streamlining trade procedures, enhancing public-private coordination, and developing sector strategies that align with U.S. investor needs.

3. The Millennium Challenge Corporation (MCC) continues to offer performance-based partnerships. Its compacts now commonly include infrastructure, workforce, and policy reforms: In Benin, MCC supported customs reform and port modernization. In Côte d’Ivoire, road and education investments support trade corridor competitiveness.

African countries could position themselves for MCC compacts by meeting selection criteria (governance, investment in people, economic freedom) and proposing trade-enabling projects tied to national development goals.

4. USTDA (U.S. Trade and Development Agency) plays a catalytic role in early-stage deal structuring. It funds feasibility studies and pilots that help governments prepare bankable infrastructure projects: In Nigeria, aviation modernization. In South Africa, broadband feasibility. In Senegal and Mozambique, clean energy and logistics studies.

African agencies could capitalize by submitting well-defined, technically sound project concepts to USTDA—especially in sectors like transport, energy, and digital infrastructure where early U.S. interest exists.

Together, these tools form a "deal-first" model—not reliant on sweeping trade agreements, but focused on outcome-driven, mutually beneficial partnerships. Whether operating alongside a redesigned AGOA or serving as its successor, this evolving U.S. approach favors countries that show capacity to deliver bankable deals, uphold policy commitments, and position themselves as credible economic partners.

Risks of a Fragmented Trade Architecture

While some African countries may benefit from this deal-based approach—especially those with strong investment climates, regulatory readiness, or strategic assets like ports and minerals—many others risk being left behind.

A bilateral model tends to favor the politically connected, commercially visible, or geographically strategic. Smaller economies, landlocked states, or countries with fragile institutions may lack the leverage or visibility to secure deals, deepening disparities across the continent. The loss of AGOA—if not replaced by an inclusive alternative—could further fragment Africa’s trade relationship with the U.S., undermining decades of momentum toward regional integration under frameworks like the African Continental Free Trade Area (AfCFTA).

Moreover, asymmetry in negotiating power remains a real risk. Without the backing of a regional or multilateral bloc, individual African countries may face pressure to accept terms that compromise their digital sovereignty, regulatory autonomy, or industrial policy space. Digital trade, intellectual property, and standards regimes are all emerging fronts where African negotiators will need both technical capacity and shared principles to avoid locking into unfavorable precedents.

If African countries do not proactively shape the terms of engagement, the future of U.S.-Africa trade could become fragmented, extractive, and unbalanced—leaving the region as a supplier of resources rather than a partner in value-added trade.

Strategic African Responses

This emerging landscape demands a clear-eyed, coordinated response from African governments, regional bodies, and the private sector.

• Invest in deal readiness: Countries should build institutional capacity to identify, structure, and promote high-quality projects that can attract U.S. financing tools like DFC or USTDA. That includes legal frameworks, transaction support units, and strategic project pipelines.
• Enhance trade intelligence: Governments and industry should track U.S. agency priorities, deal-making patterns, and policy trends to engage with clear, tailored value propositions—especially in sectors like energy, logistics, critical minerals, and digital infrastructure.
• Leverage MCC-style reform pathways: Countries that align domestic policy reforms with MCC’s criteria—governance, economic freedom, and human capital—could unlock grant-based support for trade-enabling infrastructure and public services.
• Use sub-regional blocs strategically: ECOWAS, EAC, and SADC may not negotiate with Washington directly, but they can harmonize standards, pool trade facilitation initiatives, and ensure that national-level deals align with broader regional priorities.
• Strengthen AfCFTA as a platform for coordination: AfCFTA may lack direct negotiating authority vis-à-vis the U.S., but it can still act as a norm-setting hub—particularly around rules of origin, digital trade, and investment policy. A continental position on digital governance, for example, could give African states greater leverage in one-on-one negotiations.

The key is coordination: no single African country can win this game alone. But with shared intelligence, aligned standards, and a clear narrative of mutual interest, African governments can shape U.S. engagement on more equitable terms.

Conclusion: A Different Kind of Deal

The post-AGOA future isn’t necessarily bleak—it’s just different. The era of blanket preferences may give way to a more strategic, transactional, and differentiated model of U.S.-Africa trade engagement.

Success will depend on how effectively both sides use the tools at their disposal. For the U.S., that means deploying finance and policy tools in ways that align commercial goals with development impact. For African countries, it means moving from a passive recipient model to an assertive, opportunity-driven stance—not just accepting deals, but shaping them.

The challenge ahead is not just to preserve market access—but to define the terms of engagement in a way that reflects Africa’s industrial ambitions, regional integration goals, and future competitiveness.