Africa-Press – South-Africa. While economists and analysts paint a dim view of South Africa’s continued participation in AGOA, the impact of the highly likely end of the Act has already been felt.
Employment data published this week showed a discouraging loss of hundreds of thousands of jobs in the country, pushing the unemployment rate up to 32.9%, surpassing lower consensus forecasts.
According to Aluma Capital chief economist, Frederick Mitchell, the slowdown can be attributed to ongoing international uncertainties.
This inlcudes the US tariff war against China and other nations, as well as concerns regarding the future of the AGOA agreement beyond September 2025.
“Diplomatic tensions between Washington and Pretoria related to various issues have also weighed on economic confidence,” he said.
“Consequently, many businesses appear to have adopted a cautious ‘wait-and-see’ approach regarding expansion and hiring in the short term.”
While the US and China have come to terms, temporarily initiating a 90-day suspension of their tariff war, this is unlikely to shift the dial in any meaningful way for South Africa regarding issues like AGOA.
Mitchell said the pause in the trade war could positively influence both local and global markets, potentially boosting employment figures in the upcoming quarters.
However, markets have broadly come terms with the fact that South Africa’s participation in AGOA is at an end, and this will have a negative impact on jobs in affected sectors.
Independent political and economic analyst JP Landman described the Act as “dead”, telling attendees of the NAMPO Agricultural Expo this week that the tariffs still in effect from the US have effectively negated it.
This includes the 10% global tariff, as well as the 25% tariff on the automotive sector.
He said that stakeholders who are worried about whether South Africa will still be able to partake in AGOA later this year should face the reality that it’s already over.
A disaster for South Africa
While the government and some market analysts have tried to downplay the impact of losing AGOA, the disastrous impact on key industries in South Africa cannot be overstated.
The Act gives South Africa enhanced market access, allowing approximately 6,500 product lines from South Africa to enter the US market without tariffs.
This promotes exports and boosts the local economy.
The Act boosted local job creation and stimulated economic growth, particularly in sectors like textiles, apparel, and agriculture, where export volumes have surged due to preferential access.
If South Africa loses access to AGOA, these benefits will disappear, and would likely result in reduced export revenues and job losses in affected sectors.
Previous data compiled by Aluma Capital showed that South Africa exported an estimated R300 billion of goods through AGOA since 2019.
In 2019, around R31 billion was traded under the Act. This shot up to R54 billion in 2022 and hit R64 billion in 2023.
R71.5 billion was traded through AGOA in 2024, accounting for 46% of total exports to the US that year.
A significant portion of trade under the Act consists of agricultural products like vegetables, prepared foodstuffs, mineral products, and precious metals.
Other major categories include vehicles, aircraft and vessels, and chemicals, which would also suffer a significant blow.
What remains for South Africa is for the country to diversify its export partners and shop around for countries who are willing to set up more agreeable trade relations.
This is a view shared by Mitchell, Landman and many others.
Various analysts and economists have pointed to China — particularly for agriculture — and the Middle East as alternatives for South African exports.
However, this will not be a simple or quick process, with Landman warning that companies and businesses that have been benefiting from AGOA and trade with the US will feel the impact of its end.
Source: businesstech
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