Although South Africa remains listed as an African Growth and Opportunity Act (AGOA) beneficiary for now, the imminent deadline emphasised by the South African Chamber of Commerce in the USA (SACCUSA) has created uncertainty for business interests between the two countries.

In commenting on the latest warning from SACCUSA that South Africa faces a credible imminent risk of losing its preferential trade benefits under AGOA, Prof. Raymond Parsons, an economist from the NWU Business School, says much is still at stake for specific key business sectors.

“The first prize remains for South Africa to be an active participant in AGOA. Every effort must therefore still be made through high-level diplomatic engagement and negotiation to avoid South Africa being denied AGOA trade access.”

He says although a new trade reality of cancelled AGOA benefits may ultimately affect only about 10% of total trade between South Africa and the United States and approximately 3% of total global exports by South Africa, specific vulnerable sectors like agriculture and motor vehicles will still take a bad knock.

“Looking at the overall economic impact, a small dent in the gross domestic product (GDP) growth of South Africa as a result of an AGOA setback may also be minimal and is manageable. Yet it comes at a stage in the South African business cycle when the recent medium-term budget reduced its 2026 growth forecast to 1,2% from the earlier 1,6%.”

Prof. Parsons explains that the economy still faces the challenge of breaking out of its present narrow 1% to 2% growth corridor, and without putting the jobs at risk which the loss of the AGOA preferences would pose. 

“Retaining the AGOA preferences would therefore be supportive. Nonetheless, United States-South African economic relations outside the AGOA framework still remain valuable for both countries.”

According to Prof. Parsons, South Africa is not without remedies or options. He says even if the current preferential access for South Africa through AGOA should continue, the uncertainty that continually surrounds it emphasises why South Africa must in any event accelerate its broad diversification strategy. 

This includes leveraging the Chinese zero-tariff scheme, expanding trade opportunities through the African Continental Free Trade Agreement, and negotiating trade deals with growing economies like India. 

“Any loss of competitive edge in the United States for certain key South African economic sectors must be offset by a vigorous diversification approach that exploits the wider opportunities emerging from a rapidly changing geoeconomic order,” he concludes.

Prof. Raymond Parsons