According to the latest African Growth and Opportunity Act policy trade statistics, exports to the US under the duty-free policy fell by 88 per cent from $2,502.86m in the first eight months of 2019 to $300.48m in the corresponding period in 2020.
The AGOA, a United States’ trade policy, enacted in 2000, is a legislation that facilitates a duty-free trade between exporters from sub-Saharan Africa and the United States.
Annual trade data showed the largest contribution towards AGOA-eligible trade commodities is usually oil exports mainly from Angola and Nigeria, and to a lesser extent, Chad and the Republic of Congo.
For instance, oil export under the policy accounted for 99.7 per cent of Nigeria’s AGOA exports to the United States in 2019.
According to the statistics, oil and gas products valued at $3.12bn were exported to the US under the policy in 2019.
However, South Africa, Kenya, Ethiopia, Lesotho, Ghana and Madagascar are among the leading non-oil AGOA exporters.
Kenya, Ethiopia and Madagascar dominate the apparels sector.
Following the coronavirus-induced crash in oil prices earlier this year and declining demand, Nigeria has been struggling to sell its crude oil cargoes.
Prior to the lockdowns and collapse in crude oil demand caused by coronavirus crisis, the production of US shale oil had led to a significant reduction in the exportation of Nigerian crude oil.
The United States’ import of Nigeria crude oil plunged by 63.03 per cent in the first quarter of this year, compared to the last quarter of 2019.
Data from the US Energy Information Administration showed that the country imported 5.53 million barrels of crude oil from Nigeria in Q1 2020, down from 15.07 million barrels in Q4 2019.
He explained that an assessment of the impact of coronavirus on agricultural exports showed that the pandemic would lead to a fall in export of cocoa beans, cashew nuts and sesame seeds this year.
According to him, the crash in oil prices as a result of the pandemic is an indication that a mono-product economy is not sustainable and that there is an urgent need to develop non-oil export.
“We cannot rely on crude oil export as both our major source of government revenue and foreign exchange generation. We must diversify our export base,” Awolowo said.
He identified the export of services as a rapidly growing export industry that could generate more revenue for the government.
To ease the burden on non-oil export during the coronavirus pandemic, Awolowo suggested the realignment of the exporters’ foreign exchange window with the prevailing foreign rate.