AGOA lapse exposes Ghana’s competitive fragility

Ghana’s exporters face the loss of U.S. duty-free access following the Sept. 30, 2025 expiry of AGOA, reverting qualifying lines to most-favored-nation treatment with effective tariffs in the low- to mid-teens. The shock lands as the macro picture steadies: real GDP grew 5.7% in 2024 and expanded 6.3% y/y in Q2 2025, while external balances strengthened on high cocoa and gold receipts.

Exports of goods and services equal roughly 27.5% of GDP, with the United States a key buyer for apparel, processed foods, aluminum products, wire harnesses, and specialty cocoa derivatives. Removing preferential access compresses margins where Ghana is a price taker and threatens volume attrition through 2026 unless firms reprice or re-route.

Transmission is mechanical. Under AGOA, qualifying goods cleared at zero duty; under MFN, importers pay ad valorem rates commonly around 10–15% on affected lines. Price-elastic categories cannot absorb that surcharge without discounting, so exporters either concede market share to competitors with bilateral deals or compress margins to retain shelf space.

The immediate macro effect is weaker U.S.-bound volumes, softer foreign-exchange inflows, and a higher probability of seasonal pressure on the Ghana cedi (USDGHS=X) as export receipts narrow and importers front-load dollar demand. Working-capital needs rise if U.S. buyers push longer payment terms to manage tariff risk, raising domestic credit costs.

Policy settings frame the market response. After cumulative policy-rate cuts of 650 basis points between July and September 2025, the benchmark stands at 21.5%. Local-currency bond auctions at 7–10 years have cleared with cut-off yields in the low- to mid-teens. A negative external shock can widen term premia unless offset by expenditure reprioritization, tax administration gains, or targeted donor inflows.

The current account posted a surplus of about 4.4% of GDP in 2024 on strong commodity receipts; that cushion now moderates as tariffs bite into manufactured and processed exports. Inflation printed 12.1% in July 2025; any FX pass-through from weaker receipts would slow the disinflation path and constrain additional monetary easing.

Sector impacts diverge. Cocoa remains the flagship; global cocoa futures (CC=F) remain elevated after the 2024–2025 spike, supporting primary export values. Yet processed cocoa lines now face renewed tariffs that erode profitability gains from high prices. Light manufacturing and agro-processing are more vulnerable, given thinner margins and tight buyer specifications.

Firms with EU market access under EPA provisions and established ECOWAS distribution can pivot part of capacity, but certification, logistics, and contract cycles slow substitution. Gold (GC=F) and tourism provide partial buffers to the external account, but they cannot fully neutralize lost value-added in U.S.-oriented manufacturing.

Markets will price three signals. First, FX: a steeper USDGHS=X forward curve would indicate liquidity stress if exporters delay repatriations or import bills rise. Second, rates: persistent auction cut-offs above 13–14% at 7–10 years would flag risk repricing and a wider fiscal risk premium. Third, trade volumes: sustained declines in U.S. intake of Ghana-origin apparel, processed foods, and cocoa derivatives would confirm a durable shock rather than a transitory adjustment. Equity exposure is limited by market depth, so price discovery will concentrate in FX and local rates.

Policy credibility will determine if the tariff shock becomes structural. A disciplined export-facilitation package—faster VAT refunds, duty-drawback acceleration, streamlined standards certification, port-time reductions—can recapture margin without blunt subsidies. Rapid uptake of EU market preferences and a focused AfCFTA push for processed foods and light industry would diversify demand.

Over the next 24 months, use four measurable tests: U.S.-bound exports hold at least 90% of 2024 volumes by end-2027; the current account is contained within a deficit not worse than 3.5% of GDP by 2027; cumulative cedi depreciation stays within 15% from October 2025 to end-2027; and average 7–10 year cut-off yields decline by 50–100 basis points from the post-shock peak, conditional on inflation.

Meeting at least two would signal that Ghana has absorbed the AGOA lapse and preserved macro stability; missing them would indicate a persistent external vulnerability requiring deeper structural adjustment.