With uncertainty looming as we approach the end of the preferential trade terms SA enjoys with the US under the African Growth & Opportunity Act (Agoa), the stakes for Sub-Saharan African exporters could not be higher. Agoa, which has provided duty-free access to the US market for more than 1, 800 products, has been a cornerstone of SA’s trade relationship with that country.
SA’s potential loss of Agoa benefits, coupled with discussions around a universal 10% US import tariff, could severely disrupt sectors such as secondary agriculture, mining and manufacturing, which would affect pricing competitiveness for international trade both into and out of the US and force businesses to rethink their global strategies.
The concerns are justified. Sectors such as agro-processing, secondary mining and manufacturing (including automotive and textiles) have leveraged Agoa to capitalise on SA’s ability to sell and procure goods both from and to the US. However, the loss of duty-free access would reduce SA international traders’ price competitiveness. This would create ripple effects across supply chains and weaken the country’s balance of payments, which has an indirect effect on the rand-dollar exchange rate for exporters and importers alike.
To mitigate these risks SA must look beyond Agoa and embrace bilateral and multilateral trade diversification. The UK’s post-Brexit experience highlights the perils of relying on a single market and the importance of contingency planning and the need to seek alternatives.
Diversifying export markets through opportunities such as the African Continental Free Trade Area (AfCFTA) and partnerships with the EU is critical.
Agreements such as the EU-SA Trade, Development & Co-operation Agreement can help maintain export-import momentum while avoiding over-reliance on US markets. Additionally, bilateral trade agreements with emerging economies such as Brazil, India and China (under the Brics framework) offer further opportunities for SA to expand its global reach and enhance trade growth.
SA’s highest international global trading in respect of exports amounts to $20.6bn (R384bn) into Asia (32%) and imports out of Asia into SA amount to $22.4bn (49%).
Alternative trade agreements could help address challenges for the agricultural sector by improving sanitary and phytosanitary international standards. These measures enable Sub-Saharan African exports and imports to meet international standards more easily, increasing trade volumes and access to global markets.
In the automotive sector, such agreements could attract global investment and technology transfer, enabling modernisation of production capabilities and enhancing market access and/or foreign direct investment.
In addition, these agreements could provide an opportunity to revisit customs duties to ensure SA manufacturers remain globally competitive. For the textile industry, revisiting rules of origin and including favourable duties and tariffs in new agreements could create greater demand and improve access to markets such as the EU, China and India.
Manufacturers exploring new global markets can ease working capital pressures by exploring grants and incentives offered by the department of trade, industry & competition. Programmes within this, such as Primary Market Research and the Export Marketing & Investment Assistance schemes are beneficial as they help businesses cover the costs of market exploration while optimising their debt capital structures. These measures enable companies to remain efficient and competitive while pursuing new foreign markets and their opportunities.
However, diversification alone is not enough. Infrastructure constraints present a challenge to SA’s global trade competitiveness. Should SA invest further in creating more efficient port, rail systems and logistics networks, the improved infrastructure would increase trading volumes and increase economic growth.
Reducing dependence on freight operators and congested ports is crucial, particularly as looming price hikes threaten cross-border price competitiveness. Investments in alternative logistics routes, such as Mozambique and Saldanha Bay, and public-private sector partnerships (PPPs), are essential to address these bottlenecks and support growing trade volumes. The Mozambique logistic route can also reduce cost per kilometre for SA’s inland logistic solutions for cross-border traders.
On a broader scale, the evolution of trade policy itself presents opportunities to drive economic elasticity, which could increase trade volumes between countries with new or amended trade agreements to create alternative trading corridors.
Ongoing policy enhancements and targeted stimulus can foster larger-scale trading, which may create jobs and uplift lifestyle standards of lower-income segments. PPPs offer additional avenue for accelerating these efforts, enabling businesses to capitalise on expanded opportunities while driving local economic development.
When coupled with improved infrastructure, flexible trade agreements can unlock export and import-led growth in high-value sectors such as machinery, electronics and automotive.
As policymakers and businesses weigh their options, the focus must shift from reacting to a single policy framework or charter to building a trade ecosystem that thrives amid uncertainty.
SA’s export-import sectors are at a critical juncture. They must not only weather this storm but also position for sustainable growth in an interconnected, competitive global economy.
• Naidoo is global treasury and trade management services specialist for mid-corporate at Nedbank Commercial Banking
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