As South Africa awaits a decision on the renewal or expiry of its participation under the African Growth and Opportunity Act (Agoa) – a preferential trade agreement between select African countries and the US – local food producer DC Foods has highlighted how instrumental Agoa has been to its expansion.

DC Foods, which is located in the Coega Special Economic Zone (SEZ), in the Eastern Cape, manufactures a range of frozen fruit and ice cream products, including Island Way Sorbet, which are mainly exported to the US market.

Although the company also exports its products to other markets, including Japan, it is in the US that its business has experienced the biggest growth on the back of Agoa and DC Foods’ access to all Costco chain stores.

“It is this growth that saw the company needing to expand its factory to create more space for manufacturing. The company has also had to adopt a double shift production system, leading to a need for additional labour force,” says DC Foods financial manager Marc Larter.

Agoa allows 35 sub-Saharan African countries to export products to the US tariff-free. It is set to expire in 2025 after having been renewed for ten years in 2015.

South African delegations to the US and at the twenty-first Agoa Forum earlier this year have been advocating for the renewal of Agoa to ensure continued mutual benefits between the two regions.

There are concerns, however, about the future of US-Africa trade relations following the upcoming US election and the region’s increasing preference for bilateral trade deals under recent administrations, which could undermine regional programmes such as Agoa.

There are also concerns about South Africa being perceived by the US as “aligned” with China, Russia and other non-Western powers.

Larter concludes that while its location within the Coega SEZ has provided benefits of coordination on electricity supply, security and tax incentives, its business would be heavily affected if Agoa expires without renewal.