By Lehlohonolo Lehana.
South Africa is to argue strongly that its participation in the Africa Growth and Opportunities Act (Agoa) benefits neighbouring countries through shared value chains, said trade, industry and competition minister Ebrahim Patel.
The argument will be made in November when the Agoa forum meets in Johannesburg, amid fears that SA could lose access to AGOA in 2024.
Patel was briefing Parliament on the African Growth and Opportunity Act (AGOA).
The trade deal allows 25% of SA exports to enter the US tariff-free, including around $1.5 billion (R28 billion) in vehicle exports.
“African countries seek the renewal of AGOA as a key means to promote African industrialisation and market access to the US. This also frames South Africa’s efforts to secure the renewal and extension of AGOA.
“Preferential access to the US market for sub-Saharan African goods, and indirect access through regional value chains, present opportunities for job creation and economic development and AGOA serves as a platform for companies to move up the value chain in manufactured products.
“AGOA allows the 34 participating African countries and South Africa to export 1 835 [types of] goods to a significant consumer market,” he said.
AGOA, meanwhile, helps the US to secure access to critical minerals, product value chains and investment opportunities; provides US consumers with cheaper products; and enables the US to contribute to African economic development as part of building a more inclusive global economy, Patel highlighted.
The benefits to South Africa from AGOA include job creation in agriculture and manufacturing, export earnings and economic development, which are crucial given the need to expand growth and job creation.
“AGOA provides an important opportunity and helps to ensure that we not only export raw materials in the form of minerals, but gain access to global markets for manufactured goods,” he said.
“South Africa’s participation in AGOA also supports and benefits economic development in the Southern African region, with neighbouring countries providing key inputs for finished products that are exported to the US from South Africa under AGOA, including wire harnesses for vehicles from Botswana, car seats and materials from Lesotho and rubber from Côte d’Ivoire,” he emphasised.
South Africa is working to secure a renewal and extension of AGOA, including through direct engagement between government and business representatives, and by lobbying members of the US Senate and Congress across party-political lines.
It was also working within regional and continental organisations to develop a common position for Africa on AGOA, and was working with South African Ministers and provinces to develop a common position on AGOA for the country, Patel detailed.
“South Africa values its economic relations with the US and it continues to be an important one for us, with the capability to be scaled up further. South Africa also provides the US with 25% of all its imports of nine critical minerals, including manganese and platinum,” he said.
“In many of our engagements with US industries and political leaders, we show how economic relations with the African continent are critical, as the US is dependent on critical minerals from other parts of the world, with a large portion from the African continent.”
Therefore, AGOA is not only a one-way economic relationship where African countries can access the US market, but also one where the US is able to rely on raw materials from Africa, he said.
“Additionally in our discussions, we focused on the need for African industrialisation and beneficiation, and on getting more US companies to invest on the continent for it to process its own raw materials.
“This is so that we have greater job creation, gross domestic product growth and broad-based development impacts that flow from balanced economies, which have large manufacturing bases and are not dependent on commodity price cycles.
“We also pointed out, in particular, that it is in critical minerals value chains where US companies can make an impact on the positive contribution of critical minerals to African economies,” Patel said.
The AGOA Forum will take place between 2 and 4 November at the Nasrec Expo Centre in Johannesburg.