Many more South African companies could benefit from the African Growth and Opportunity Act (Agoa), which gives eligible countries access to US markets free of tariff barriers, business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter.

Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led businesses and small and medium-sized enterprises, to benefit, she posits.

“They may need support to build their export capacity, but the market is waiting for them once they do. This is, I think, an underexploited mechanism for small business development that those working to support small businesses should be exploring.”

South Africa’s continued eligibility for Agoa is not certain, but Mavuso avers that there were positive indicators at the Agoa Summit held two weeks ago in Johannesburg that the country will be on the list when it is published on January 1 next year. 

The US Congress also needs to extend the legislation when its current ten-year term expires in September 2024.

“There are good indications that that will happen, with a members’ bill currently proposing to extend it for 16 years. A long-term extension enables planning and investment, so companies can build capacity to benefit from Agoa over the long term,” Mavuso posits.

She avers that there are also opportunities for better regional outcomes, with the African Continental Free Trade Area potentially changing the dynamic of how Agoa and Africa engage.

“The trading block could allow better specialisation in comparative advantages on the continent, improving the offering to US markets. But planning could enable substantial further benefits – if we properly think about what the African export basket should look like in 2040,” Mavuso explains.

She points out that African markets are generally slow to take up opportunities created by free trade agreements and tariff-free access to markets, and calls for an analysis of why this occurs and how to rectify it.

“Network industries are part of it – if you can’t access ports to send goods out, it doesn’t matter how favourable the trading relations are. But there also needs to be promotion of the opportunities and support for the local business sector to develop capacity to take advantage of them,” she emphasises.