Cape Town – President Cyril Ramaphosa says economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (Agoa) than notable trade statistics.
“Agoa enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods and services. This does and will continue to reduce Africa’s dependence on primary commodities and enhance its ability to participate in global value chains.
“Another important element of Agoa is that it has a capacity-building and technical assistance component that supports African countries in meeting the requirements for accessing the US market. This assistance helps improve Africa’s competitiveness by enhancing skills, knowledge and infrastructure, enabling African businesses to meet international standards,” Ramaphosa said in his weekly newsletter on Monday.
He said that the extension of Agoa beyond 2025 could significantly contribute to diversifying African economies and promoting the development of value chains across countries.
We have just hosted a successful 20th AGOA Forum in Johannesburg where we made a case for the extension, or reauthorisation, of AGOA beyond 2025. This would provide certainty for companies wanting to invest or expand their operations in eligible African countries.#AGOA2023… pic.twitter.com/rmSyRQ0Thq
— Cyril Ramaphosa 🇿🇦 (@CyrilRamaphosa) November 6, 2023
“If extended beyond 2025 for a sufficiently long period, and if used more effectively, Agoa can contribute significantly to the further diversification of African economies. It could enable countries to produce a wider range of products using the abundant minerals, metals and agricultural produce. The extension of Agoa could also encourage the further development of value chains across different countries.
“We have already seen this happening in South Africa’s automotive industry, for example. Local automotive companies source leather car seats from Lesotho, wiring harnesses from Botswana, copper wiring from Zambia, steering wheel components from Tunisia and rubber from Côte d’Ivoire, Nigeria, Malawi, Ghana and Cameroon. The vehicles are finally fully manufactured in South Africa, then exported to the US duty-free under Agoa.
“This is a great example of the resources and industrial capabilities of different African countries being brought together to produce finished goods that can be sold beyond our shores. This is contributing to the creation of jobs both in South Africa and in other African countries, and raising foreign exchange earnings,” said Ramaphosa.
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He said that South Africa, as the US’s largest trading partner in Africa, benefits greatly from Agoa, both in terms of trade and foreign direct investment.
“While [Agoa] may seem to many in our country to be a rather distant, even obscure topic, Agoa is an important instrument for growing and transforming our economy. The benefits of Agoa are felt in the lives of our people through increased economic activity and the jobs that such activity created.
“South Africa benefits a great deal from Agoa. Our country is the United States’ largest trading partner in Africa. The US exports more goods to South Africa and imports more goods from South Africa than any other African country.
“According to US Census Bureau data from 2020, South Africa was the largest destination for US foreign direct investment among Agoa eligible countries,” he said.
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Compiled by Betha Madhomu
