The African Growth and Opportunity Act (AGOA) is a unilateral U.S. trade preference programme that has allowed eligible sub-Saharan African countries to export more than 6,500 products to the United States duty-free since 2000. It is a non-reciprocal arrangement; the eligible African countries are not required to remove their tariffs on USA goods and services to qualify. Nevertheless, they are required to remove non-tariff trade barriers on USA products and services. As of today, 32 African countries are eligible for the AGOA.
The Current Status: A State of “Trade Limbo”: As of February 2026, the AGOA has been extended for one year; it is to expire on December 31, 2028, yet Ethiopia remains on the suspended list. Ethiopia was suspended on January 1, 2022, as a result of gross violations of internationally recognised human rights in the northern part of the country during the conflict in the Tigray region, as alleged by the US government. The US Trade Representative has renewed this suspension, claiming that the criteria for reinstatement have not yet been met.
Analysis of Eligibility Criteria: The eligibility requirements of AGOA include requirements that the country establish or be making continual progress toward establishing, inter alia, a market-based economy; the rule of law, political pluralism, and the right to due process; the elimination of barriers to U.S. trade and investment; economic policies to reduce poverty; a system to combat corruption and bribery; and the protection of internationally recognised worker rights. The US requires countries to maintain their security interests and foreign policy goals, and protect human rights, which belong to all people, to build enduring diplomatic connections with America. All eligible countries are reviewed annually based on the eligibility criteria.
Ethiopian status remains unchanged because the US president and trade representative are not satisfied with improvements in Ethiopia to meet reinstatement criteria on one hand, and the Trump administration policy shifts for Africa, which is from aid to trade, on the other. To rejoin AGOA, Ethiopia has to get rid of the conditions that triggered its initial 2022 removal.
Ethiopia is not losing in all aspects of the eligibility criteria. The current regime is making continual progress toward establishing a market-based economy and eliminating barriers to U.S. trade and investment, which is one of the criteria for eligibility. Enactment of the new laws, which allow foreigners to participate in almost all export and import business, foreign banks to participate in domestic banking business, and reform in foreign exchange, which is changed from fixed exchange to floating exchange, are some areas of continual progress to attract USA investment and lead to a market economy.
Impact on the Investment Regime: Loss of duty-free access to the US market (which covered ~6,500 products) had an overarching effect on Ethiopia’s investment and trade regime. Investors who invested in Ethiopia by targeting the duty-free USA market alone were directly affected by the suspension. The suspension has resulted in the exit of foreign direct investments in industrial parks and a loss of revenue and jobs.
Strategic Alternatives for Investors
What should investors do now?
- Leveraging AfCFTA: As AGOA remains uncertain, the African Continental Free Trade Area (AfCFTA) is the primary alternative for regional value chains.
- The Ethiopian Securities Exchange (ESX): With the 2025-2026 rollout of the ESX, it is mentioned that capital market opportunities are opening up for foreign participation, providing new avenues for liquidity.
- Market-Based FX Reforms: Acknowledge that the 2025 liberalisation of the foreign exchange regime has improved the ease of doing business for those seeking to repatriate profits.
- World Trade Organization (WTO): Ethiopia is in its final stage of accession to the WTO. The WTO’s membership benefits the country by giving it access to predictable global markets.
Firm Note: While the path to AGOA reinstatement requires continued compliance and diplomatic progress, the 2026 regulatory reforms in Ethiopia suggest a resilient shift toward a more diversified, private-sector-led investment regime.