MCC and the African Growth & Opportunity Act (AGOA)

Stronger U.S.-African private-sector engagement is good for the African people, especially women, and it is good for American builders and producers.

Congressman Ed Royce

A Cornerstone of U.S.-Africa Economic Engagement

Enacted in May 2000 and re-authorized by Congress in June 2015, the African Growth and Opportunity Act (AGOA) is the cornerstone of U.S. economic engagement with the countries of sub-Saharan Africa. By providing duty-free access to the U.S. market, AGOA helps eligible nations diversify their exports to the United States and ultimately create jobs and inclusive economic growth.

Since its implementation, AGOA has encouraged new investments, trade and job creation in Africa and the United States. In 2015, total AGOA trade (including U.S. Generalized System of Preferences) was $9.3 billion. And since AGOA was established in 2000, non-oil exports have increased almost 200 percent, rising to $4.1 billion in 2015. The growth of these non-oil industries has spurred an estimated 300,000 direct jobs in beneficiary countries.

Benin's Port of Cotonou is a pillar of Benin’s economic growth and serves as a gateway to international trade for the landlocked West African countries of Burkina Faso, Mali and Niger as well as a central pathway for international trade with Nigeria. MCC's $188 million investment in Benin aimed to expand port capacity, improve port security, and increase port efficiency.

Trade and Investment in AGOA Countries

Trade, infrastructure and development go hand-in-hand in helping to achieve widespread and lasting reductions in poverty. But in many countries, transport, power and water infrastructure are not only major constraints to economic growth, but also to regional connectivity and trade.

MCC is a leading contributor to the U.S. Government’s trade capacity building assistance to AGOA-eligible countries. Since its founding in 2004, MCC has invested more than $5 billion in trade-related assistance to developing countries. Of that, MCC has provided more than $3 billion in trade-related assistance to AGOA countries to support trade-related infrastructure like roads, ports and electricity, and to improve the productivity of export-oriented industries such as agriculture and small- and medium-sized enterprises.

African countries are the largest recipients of MCC’s development assistance, both in the number of partnership agreements and in the amount of assistance provided. Of MCC’s 33 signed compacts, or grant agreements, 18 are with sub-Saharan African countries, totaling about $6.2 billion. These partnerships span the continent and have included expansions to critical sea ports in Benin and Cabo Verde and roads used for commerce in Ghana, Senegal, Tanzania, and Mozambique.

Private Sector Partnerships

MCC and U.S. global development efforts are committed to an investment-led development model that leverages additional sources of financing, including domestic resources and the private sector.

As part of MCC’s efforts to drive growth and reduce poverty around the world, MCC committed $70 million to support public-private partnerships in partner countries through its Public Private Partnership (P3) Platform. African countries alone will receive grants totaling $52 million. These investments are expected to generate $1 billion in private-sector investments through 2020, with $750 million of that expected to be invested in Africa.

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Photo: MCC

The $498 million Ghana Power Compact, signed by MCC and the Government of Ghana in 2014, seeks to reduce poverty and open Ghana’s energy markets to private investment by supporting the transformation of Ghana’s power sector. General Electric credits MCC’s engagement with the Government of Ghana and the private sector on power sector reform as a key factor in its decision to build a power plant in Ghana valued at $1.5 billion that will provide 1,000 megawatts to the national grid.

Regional Integration

Regional integration helps create economies of scale, strengthen value chains, and ease the movement of technology and people. People, goods and services move across borders, and MCC’s investments should too. Regional MCC investments could be a significant U.S. Government tool to increase trade capacity and improve the uptake of AGOA preferences. With regional authority, MCC could design programs that significantly improve trade and investment between and among MCC partner countries by promoting economic growth and cross-border engagement – which could result in larger and more harmonized markets for trade and development, and new opportunities for American companies.