Automotive manufacturers must drive home the importance of AGOA to the economy
Prashirwin Naidu
The automotive manufacturing sector could be primed for more growth under South Africa’s trade alliance African Growth and Opportunity Act (AGOA) with the United States, according to Amith Singh, the Nedbank Commercial Banking National Manager for Manufacturing.
Ahead of the premier South African Auto Week conference, Singh said that despite a weaker currency, pessimism over rising fuel costs and ongoing economic challenges, South Africa's (SA) automotive manufacturing sector will continue to do well under AGOA, especially regarding exports.
This optimism is fuelled by SA being the continent’s most significant beneficiary of AGOA in 2022, exporting a wide range of products, including vehicles manufactured in the country, to the US.
AGOA is a preferential trade programme signed into law by President Bill Clinton in 2000, offering trade opportunities to 49 sub-Saharan African countries.
In 2022, South African exports to the US amounted to R178 billion and, showing that it is not a one-way street, US exports to SA amounted to R134 billion in 2022.
“Apart from ensuring a pipeline for American products, AGOA has mutual benefits for the export sector and gives a strong nod to investment in Africa,” Singh said.
This is supported by research on the AGOA by the Automotive Industry Export Council and the Automotive Business Council (naamsa), which showed that investment expenditure by original equipment manufacturers rose from R1,56 billion in 2000 to R2,08 billion in 2001 when AGOA was implemented.
According to the report, South Africa has accounted for more than 99% of the African automotive sector’s exports to the US since AGOA began in 2000. Last year, total automotive exports to the US amounted to R24,1 billion, while automotive imports from that country amounted to R18,3 billion.
According to the National Association of Automotive Component and Allied Manufacturers (NAACAM), recognised as the voice of the South African automotive sector, the manufacturing sector is a favourable window to unlock new opportunities – notably the emergence of the energy-efficient electric car.
Singh has warned that the current interest rate cycle and heavy fuel price increases will hurt consumers and, ultimately, the economy.
AGOA concludes on 30 September 2025. The Department of Trade, Industry and Competition will co-host the United States of America's African Growth and Opportunity Act (AGOA) Forum 2023. The summit takes place on 2– 4 November 2023 in Johannesburg.
This meeting is crucial in establishing the way forward for AGOA – with implications for the automotive sector.