By: Anna Majavu
The African Growth and Opportunity Act (AGOA) may offer more benefits for big corporations who can export large volumes of products to America, but duty-free access to the US market is also very important for SMMEs, say experts. The 23-year-old deal is set to expire in 2025, sparking concerns about how local businesses will survive after that if the 7000 South African goods currently exported to the US duty free have tariffs slapped on them. In a 19 June Parliamentary reply, Small Business Development Minister Stella Ndabeni-Abrahams conceded that her department had no idea how many SMMEs benefitted from AGOA, saying it had never done the research.
She added that the US International Trade Commission (USITC) was assessing how South Africa’s chemical and textile sectors and programmes supporting SMME exporters had benefitted from AGOA. SA Clothing and Textile Workers Union research director Simon Eppel said AGOA was only used for a portion of South African exports to the US. There were no textile SMMEs using AGOA for large scale exports, but that was “not to say it is not important”, he said. The US recently became the top export market for South Africa. “In a country where we have such high levels of unemployment, we really can’t afford to lose access to markets. We are not in a position to lose jobs,” Eppel said. “Our ambition should be to maximise our use of markets as much as possible to deal with the unemployment crisis.”.
In the automotive supply chain, which benefits the most from AGOA, “the largest number of the jobs created by AGOA are in indirect jobs which is probably where the largest number of SMMEs are possibly based”, he said. He added that with 30% of South African macadamia nuts exported via AGOA, SMMEs could potentially be affected if the deal was not renewed. Even when big corporations export to the US via AGOA, “it may be that SMMEs are not directly threatened but are indirectly threatened through their major customers losing some share of market access through AGOA”, Eppel added. Ubuntunomics owner and sustainability practitioner Sibusiso Nyathi said outside of the auto sector, “smaller enterprises whose production is labour intensive also benefitted from the access to US markets”.
He cited exports such as boats, beauty products, milk and cream, fruit concentrates and sweeteners, dried garlic, cane sugar, apricots, peaches and other fruit pulp, whose sales shot up after AGOA was signed in 2000. Nyathi said if AGOA’s duty free benefits were replaced with reciprocal tariffs, South Africa would “lose a wine-products market of approximately USD8.1 million (R324.0 million)” or 14% of wine export revenue. New small businesses breaking into the wine sector would lose out on the chance to export their products and there would also be employment losses among the 300,000 low-skilled direct and indirect jobs currently sustained by the wine industry, said Nyathi.