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Is oil industry a threat to Africa's entrepreneurial progression?

Oil rig Eureka
Oil rig Eureka
Scott Gietler

How is Africa creating leaders and entrepreneurs out of its citizens? Are concentrating efforts working or is it a disappointing affair? At least from reports, it shows the trying efforts have been quite a success, and engagements have introduced hundreds of small business leaders and aspiring entrepreneurs throughout the continent to a much higher success rate.

Citizens who commonly share a unique kind of motivation and superior strong work ethic necessary to bring forth their dreams to fruition also share a lack of access to necessary resources and skills to make sure those dreams come true.

So in May of 2000, the United States enacted the AGOA (African Growth and Opportunity Act) to help and assist sub-Saharan African countries open their economies and build free markets. However, twelve years later, it seems to be that the only actors who have greatly benefited from the AGOA are the large corporations- mainly the oil industry, and not even the smaller companies the promising venture was envisioned to assist and help.

Huge question to the flabbergasting occurrence has been, “How has this happened?” People have questioned the legitimacy of the AGOA intentions, and many have asked, “Why hasn’t AGOA been more successful at helping small to medium enterprises succeed?” Leaders and citizens alike are wondering about a solution, and what can be done to make the AGOA work better for business owners and aspiring entrepreneurs is the top question pondering on everyone’s mind.

Many question the export and import industry, where in 2011 the industry totaled $74 billion dollars, of which $68 billion was used on energy (mostly crude oil), minerals, or chemical-related products. Products would have been exported to the United States regardless due to AGOA trade preferences, but with billions focused on the oil industry it raises high-profile questions.

Threatening to the development of local businesses are the fabric provision policies. The AGOA third country fabric provision allows African producers to source raw fabric materials from third countries that wouldn’t otherwise benefit under AGOA policies. The initial idea was that purchasing fabric from more affordable sources, such as China, AGOA textile exports would be competitive in the U.S. This hasn’t been the case, as results show that to remain competitive many African businesses were forced to buy fabric from third countries rather than from their own region. This provision effectively hinders any ability of the AGOA nations to develop a vibrant and diverse textile power industry.

Lack of transportation has hurt all efforts to strengthen initial efforts of strengthening Africa’s citizens who are a part of the program. AGOA fails to the challenge of transporting goods between Africa and the U.S. Due to Africa’s transportation already being expensive and time-consuming, without AGOA dealing with the issues of transport the challenge of aiding small and medium businesses will continue to be a problem because affordable shipping options won’t be attainable.

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