AGOA benefited Chinese entrepreneurs more than Africans, says Mboweni

Former South African Reserve Bank governor Tito Mboweni has slammed the African Growth and Opportunity Act (AGOA), claiming that the US trade pact has benefited Chinese business owners and stymied African manufacturing capacity.

“Chinese entrepreneurs benefited from AGOA […] very few African entrepreneurs benefited,” said Mboweni, speaking at the Global Expo conference in Gaborone, Botswana on Thursday 24 November. AGOA, first introduced by the administration of former US president Bill Clinton and later signed by George HW Bush, gives African manufacturers tariff-free access to the US market.

Supporters of the act have credited it with creating some 350,000 direct jobs on the continent in industries as diverse as vehicles, garments and metalwork. Yet Mboweni, now a board member of the Shanghai-headquartered BRICS Development Bank, believes that the act simply handed control of African manufacturing to Chinese owners while doing little to assist home-grown industries. 

“Why is that the case? They say it’s not a nice thing to say […] but we have to tackle that question of supporting our African entrepreneurs when an opportunity like this arises,” he said. “And for our governments to build many shell factories and literally hand them over to Chinese entrepreneurs is actually an embarrassment for all of us,” Mboweni added. 

AGOA is currently facing an uncertain future following the election of Donald Trump, the protectionist US president-elect who has threatened to tear up international trade deals. Yet criticism of the act in African quarters has been rare, while countries recently threatened with suspension from the programme – including South Africa in a March dispute over US farm imports – have been keen to avoid losing their benefits.

Meanwhile, speaking to African Business Magazine, Witney Schneidman, senior international advisor for Africa international law firm Covington & Burling, and a key player in the passage and reauthorisation of AGOA, said that the act was under threat by the unpredictable Trump.

“Not only does Trump reject free trade but AGOA is a unilateral preference agreement that gives African countries duty-free access to the US in return for making progress on economic and political reform,” he said. “It is hard to see how AGOA is sustained in a Trump administration.”

David Thomas