AGOA Renewal Hangs in the Balance, Local Firms Brace for Impact in 2025

A high-level delegation from the US Congress recently conducted a two-day official visit to Mauritius to discuss the renewal of the African Growth and Opportunity Act (AGOA), which is valid until September 2025.

The AGOA is a US trade law that was enacted on May 18, 2000, and has been renewed several times, most recently in 2015, extending its validity until September 2025.

This legislation significantly improves market access for eligible sub-Saharan African countries, including Mauritius, to the US market.

The delegation that visited Mauritius last week included eight congressmen and members of the House Committee on Ways and Means, both Democrats and Republicans.

The purpose of this official visit was to assess Mauritius’ level in terms of values and impacts regarding the renewal of the AGOA. “Currently, we are a middle-income economy moving towards a high-income economy.

With Mauritius’ economic growth, there is a risk of the country exceeding the Gross National Income (GNI) threshold set by the World Bank and therefore exiting AGOA.

This progression in level could work against Mauritius for the renewal of the AGOA,” a Government insider was cited as telling Defi Media anonymously.

The AGOA is granted to sub-Saharan African countries in need of support and better visibility in the US market.

The goal is to assist developing countries that are considered more “vulnerable” compared to larger economies.

However, the same insider was cited as adding that while Mauritius is moving towards a high-income economy, but the country still facing challenges, particularly in terms of competitiveness and visibility in the US market.

“Therefore, we have expressed our concerns to members of the US Congressional delegation, and they have taken note of our situation,” he said.

He added that the AGOA is crucial for Mauritius, and if it is not renewed next year, several local companies exporting to the US will suffer financial losses.

“We should not be penalised because of our economic success,” he insisted.

At the Mauritius Export Association (MEXA), the importance of renewing the AGOA as soon as possible, well before the expiration date set for September 2025, was emphasized during their meeting with the delegation.

“Local businesses are already feeling the impact of the uncertainty surrounding the renewal of the AGOA, with a significant slowdown in buyer orders,” said MEXA director Lilowtee Rajmun.

The MEXA emphasised the urgent need for a swift and long-term renewal of the African Growth and Opportunity Act (AGOA) for a period of 20 years to ensure industry stability, facilitate long-term planning and investment, and support regional economic integration efforts.

Exporters also expressed concerns about the potential impact of Mauritius leaving AGOA.

Jean Claude Ip Man Pun, director of Mac’Allan Ltd, said that without AGOA, he risks losing his only American buyer.

His company exports leather and faux leather bags to the U.S., and a lack of AGOA renewal could make his products less competitive due to high import duties.

Ajay Beedassee, director of GNP Wear, highlighted the significance of the American market for his company’s survival, with 30% of total production being exported to the U.S.

He warned that many export-oriented companies depend on the American market, and without AGOA, they may struggle to operate and compete with other producers in countries like India and Vietnam.

Manoj Juddoo, director of Chemiserie Bellvill & Co Ltd, noted that uncertainty surrounding AGOA renewal has already affected exports, as American buyers are hesitant to place orders with Mauritius knowing the agreement may end soon.

40% of his company’s exports are destined for the U.S., making it a crucial market.

AGOA has been instrumental in the Mauritian economy, accounting for 13% of total exports and benefiting various sectors such as textiles, fishery products, jewelry, and medical equipment.

The agreement has also led to the establishment of five spinning mills in Mauritius and has strengthened regional integration efforts between Mauritius and Madagascar, with Madagascar becoming the largest clothing exporter under AGOA.

Source: Defi Media