Businessday Ng –
In 2020, Herbal teas and food preparations worth $3.5 million were exported to the US from Nigeria, and identified as Nigeria’s largest agricultural export product under AGOA preference.
AGOA, short for the African Growth and Opportunity Act, forms part of United States trade legislation, and was signed into law in May 2000 as Public Law 106. It offers special access to the US market for Sub-Saharan African beneficiary countries like Nigeria, but also provides a framework for other US support to, and engagement with, African countries. Originally set to expire in 2008, AGOA has been extended a few times, most recently in 2015 and for a period of 10 years (now to 2025).
A fact sheet on trade between Nigeria and the US, updated for 2020, noted that US-bound exports have grown rapidly over the three years prior, off a low base, and increased more than three-fold in value between 2018 and 2020. Demand for herbal, medicinal and aromatic plants (HMAP) is generally considered to be increasing due to its use in alternative medicine, and other health care products.
The opportunity exists for Nigerian businesses to attract more business from the US, as products exported under AGOA would enjoy duty waivers making it more attractive
Agricultural products combined in 2020 were valued at $63 million in exports to the US from Nigeria, accounting for a significant share of Nigeria’s non-oil exports to the US. Nigeria, according to AGOA’s fact sheet, exports a diverse number of agricultural products to the US, led by cocoa beans ($12m in 2020), cereal bran ($9m), plants used in perfumery ($8m), nuts ($6m). While most enter the US duty-free on a Most-Favoured-Nation (MFN) basis, $11m worth of agricultural exports (representing 17% of the total) benefited from AGOA preferences in 2020.
Nigeria’s exports to the United States have, overall, declined significantly in recent years; this is due to the large component of crude oil exports (and fluctuations in value and demand). But apart from oil, various agricultural products (cocoa beans, bran, nuts, oil seeds etc.), fish (crustaceans) and others (unwrought lead, fertilizers, wigs etc.), as well as art and antiques are exported by Nigeria to the US, according to AGOA.
While few of Nigeria’s exported products to the US are subject to US import duties, 2020 US importers paid $2m in duties on US imports, three quarters of which related to certain crude oil (HTS 2709.00.20) that was not cleared under the AGOA provisions or where origin status and proof of origin could not be established.
Other products on which duties were levied include unwrought lead, synthetic fibers, sheep skins, certain milk products, certain textile articles and others. Obtaining preferential entry into the US always depends not only on the AGOA status of a product, but complying with the Rules of Origin criteria.
The largest exports from Nigeria, Mineral oils accounted for $1.4 billion of exports to the US in 2020. The majority of Nigeria’s US-bound exports are noted to be mineral fuels (mostly crude oil under HTS 2709.0020). The US tariff on this amounts to 10.5c/bbl; approximately one third of US imports within this tariff line claimed AGOA preferences in 2020 (in previous years the AGOA ratio often exceeded 80-90%). Trade in oil is impacted by (oil) commodity prices, the state of the US economy, supply conditions, alternative supply sources and other factors.
The United States exports to Nigeria on a non-preferential (MFN) basis. While US exports to Nigeria are highly diversified across many sectors, its imports from Nigeria are concentrated in mineral resources (mainly oil), and therefore far more impacted by international commodity price movements. Exports of motor vehicles (passenger and goods) accounted for a third of US exports to Nigeria in 2020. Two-way trade was $4.2 billion in 2020 and increased to $7.2 billion in 2021. The highest on record was $42 billion in 2008.
BusinessDay had recently reported Nigeria’s exports to the United States recorded the third annual growth in 10 years, following an increase in 2021, which is also the first of such since 2017. BusinessDay’s review of data from the African Growth and Opportunity Act (AGOA) portal, had shown exports have been declining every year since 2011, but for an increase in 2016, which bucked the trend. It grew again in 2017, before the declined restarted in 2018 until the 2021 figures showing a third growth in 10 years.
While there is now data on trade between the US and Nigeria, especially exports, analysis to understand the most recent trade pattern is limited to 2020 as AGOA has not updated the fact sheet for Nigeria, for 2021.
However, broad data on exports shows there was $95.7 million worth of agricultural products from Nigeria to the US in 2021, higher than 2020 ($64.4mn) and 2019 (55.47 million) but out of this, only $5.2 million worth of the 2021 exports got AGOA preference.
Read also: Nigeria’s exports to US record 3rd growth in 10yrs but still slow
Also, forest products worth $529,000 were exported from Nigeria but only $14,000 got AGOA preference. There was $5.3 million worth of textiles and apparel exported from Nigeria to the US, but only $15,000 worth got AGOA preference.
For footwear exports from Nigeria, the total value was $32,000 with only $1,000 done under AGOA.
The opportunity exists for Nigerian businesses to attract more business from the US, as products exported under AGOA would enjoy duty waivers making it more attractive for an American business for instance, to do business with a Nigerian. However, the opportunity as far as data shows remains largely underutilised.
Sola Obadimu, DG, Nigerian-American Chamber of Commerce (NACC) had told BusinessDay, “Under AGOA, there is a continual attempt to educate people, particularly on the issue of packaging and also in terms of supporting SMEs that are into exports in the areas of finance, quality issues, keeping to timelines and whatever letters of contracts they have with their clients.
“We hope things will get better particularly as we are on the final home lap to 2025, which is the terminal date for AGOA unless there is any form of extension.”
BusinessDay had also previously reported calls for the country to take advantage of the opportunity to increase exports to the US under the AGOA program over the years, but data till date, has shown the opportunity remains largely untapped, and mostly even declining.
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