South Africa Faces Economic Disaster as AGOA Participation Nears Its End

Economists warn that South Africa’s likely exit from the African Growth and Opportunity Act (AGOA) is already negatively impacting the country’s economy, with recent unemployment figures rising to 32.9%.

Economic Slowdown Linked to AGOA Uncertainty

Frederick Mitchell, Chief Economist at Aluma Capital, attributes South Africa’s economic slowdown to global trade uncertainties, including:

• The ongoing US-China tariff war
• Concerns about AGOA’s future beyond September 2025
• Diplomatic tensions between the US and South Africa

“Many businesses are adopting a cautious ‘wait-and-see’ approach,” Mitchell noted, explaining the recent job losses.

AGOA Already “Dead” According to Analysts

Political analyst JP Landman declared AGOA effectively “dead” at the recent NAMPO Agricultural Expo, citing existing US tariffs that have already undermined the agreement’s benefits:

• 10% global tariff
• 25% automotive sector tariff

The Devastating Impact of Losing AGOA

AGOA has provided South Africa with:

• Tariff-free access for 6,500 product lines to US markets
• Significant job creation in textiles, apparel, and agriculture
• R300 billion in exports since 2019

In 2024 alone, 46% of South Africa’s US exports (R71.5 billion) flowed through AGOA channels.

Looking Beyond AGOA: New Trade Opportunities

Experts suggest South Africa must now:

• Diversify export partners
• Develop trade relations with China and Middle Eastern countries
• Focus on agricultural exports to alternative markets

However, analysts warn this transition will be neither quick nor easy, with significant short-term impacts expected for businesses currently benefiting from AGOA.

Source: BusinessTech