The Democratic Republic of Congo (DRC) has recently been reinstated as a beneficiary of the trade preferences under the African Growth and Opportunity Act (AGOA). Congo DRC was suspended from the African Growth and Opportunity Act (AGOA) some ten years ago because of alleged human rights violations under former President Joseph Kabila.
The reinstatement is a recognition of the country’s progress in improving the business climate, improving the ease of doing business and improvement in human right affairs. In 2019, the US established the U.S.-DRC Privileged Partnership for Peace and Prosperity in 2019 to combat corruption, protect human rights, strengthen democratic institutions, confront potential pandemics, promote peace and security, build a stronger bilateral relationship, and deliver results for the U.S. and Congolese people.
AGOA provides eligible Sub-Saharan African countries with duty-free access to the US market for over 1,800 products. That adds up to more than 5,000 products eligible for duty-free entry under the Generalized System of Preferences program. Congo DRC main exports, copper and cobalt, are included in the agreement but are already tariff-free under the System of Preferences.
Why is this important for your organisation?
The AGOA is a vital trade agreement which provides African countries with an opportunity to export goods to the US markets duty-free; there are at least thirty-six countries which are beneficiaries of AGOA. The reinstatement of Congo DRC, therefore, increases the options available for foreign investors who are considering investment opportunities on the African continent. However, to make the most of these investment opportunities, investors need to consider the following:
Recommendations
- Prioritise Environmental, Social and Governance Issues as part of investment strategies. ESG issues have started gaining prominence in many African countries, and the pandemic has only accelerated their importance, as shown by the recent Transparency International’s Corruption Perception Index (CPI).
- Keep us to date with relevant rating agencies such as Moody’s, Fitch who have a presence on the African continent to understand the nature of risks investors may be exposed to. However, this is not enough; investors need to partner with reputable due diligence agencies such as the EBII Group who have strong local knowledge and are aware of the economic realities of African countries.
Learn more here.