{"id":824435,"date":"2025-05-17T16:00:00","date_gmt":"2025-05-17T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=824435"},"modified":"2025-05-18T10:08:43","modified_gmt":"2025-05-18T08:08:43","slug":"disaster-for-south-africa-already-here","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/824435\/disaster-for-south-africa-already-here\/","title":{"rendered":"Disaster for South Africa already here"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

According to Aluma Capital chief economist, Frederick Mitchell, the slowdown can be attributed to ongoing international uncertainties.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

“Diplomatic tensions between Washington and Pretoria related to various issues have also weighed on economic confidence,” he said.<\/p>\n\n\n\n

“Consequently, many businesses appear to have adopted a cautious ‘wait-and-see’ approach regarding expansion and hiring in the short term.”<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Mitchell said the pause in the trade war could positively influence both local and global markets, potentially boosting employment figures in the upcoming quarters.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Independent political and economic analyst JP Landman described the Act as “dead”, telling <\/strong><\/a>attendees of the NAMPO Agricultural Expo this week that the tariffs still in effect from the US have effectively negated it.<\/p>\n\n\n\n

This includes the 10% global tariff, as well as the 25% tariff on the automotive sector.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

A disaster for South Africa<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

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.<\/p>\n\n\n\n

The Act gives South Africa enhanced market access, allowing approximately 6,500 product lines from South Africa to enter the US market without tariffs. <\/p>\n\n\n\n

This promotes exports and boosts the local economy.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Previous data compiled by Aluma Capital showed that South Africa exported an estimated R300 billion of goods through AGOA since 2019.<\/p>\n\n\n\n

In 2019, around R31 billion was traded under the Act. This shot up to R54 billion in 2022 and hit R64 billion in 2023.<\/p>\n\n\n\n

R71.5 billion was traded through AGOA in 2024, accounting for 46% of total exports to the US that year.<\/strong><\/p>\n\n\n\n

A significant portion of trade under the Act consists of agricultural products like vegetables, prepared foodstuffs, mineral products, and precious metals.<\/p>\n\n\n\n

Other major categories include vehicles, aircraft and vessels, and chemicals, which would also suffer a significant blow.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

This is a view shared by Mitchell, Landman and many others.<\/p>\n\n\n\n

Various analysts and economists have pointed to China \u2014 particularly for agriculture \u2014 and the Middle East as alternatives for South African exports.<\/p>\n\n\n\n

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.<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s employment data shows that companies are already reeling from the expected loss of AGOA – with some analysts calling the Act already dead.<\/p>\n","protected":false},"author":10,"featured_media":814678,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[21743,22000,22580],"class_list":["post-824435","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-aluma-capital","tag-frederick-mitchell","tag-jp-landman"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=824435"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824435\/revisions"}],"predecessor-version":[{"id":824513,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824435\/revisions\/824513"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/814678"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=824435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=824435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=824435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}