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Agoa extension would provide certainty for investment, expansion in African countries – Ramaphosa

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Agoa extension would provide certainty for investment, expansion in African countries – Ramaphosa

President Cyril Ramaphosa
President Cyril Ramaphosa

6th November 2023

By: Thabi Shomolekae
Creamer Media Senior Research Assistant and Reporter

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President Cyril Ramaphosa noted on Monday that if extended beyond 2025 for a lengthy period, and if used more effectively, the African Growth and Opportunity Act (Agoa) can contribute significantly to the further diversification of African economies.

Ramaphosa wrote in his weekly letter to the nation that Agoa is an important instrument for growing and transforming South Africa’s economy with the benefits felt through increased economic activity and the jobs created from this.

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The US trade initiative, which came to be in 2000, is set to expire in September 2025. It has been renewed twice since it came to pass.

Last week South Africa hosted the twentieth Agoa Forum, in Johannesburg, where the case for the extension, or reauthorisation, of Agoa beyond 2025 was made.

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Ramaphosa said the latest extension of Agoa, could enable countries to produce a wider range of products using the abundance of minerals, metals and agricultural goods produced.

“The extension of Agoa could also encourage the further development of value chains across different countries. We have already seen this happening in South Africa’s automotive industry, for example. Local automotive companies source leather car seats from Lesotho, wiring harnesses from Botswana, copper wiring from Zambia, steering wheel components from Tunisia and rubber from Côte d’Ivoire, Nigeria, Malawi, Ghana and Cameroon. The vehicles are finally fully manufactured in South Africa then exported to the US duty-free under Agoa,” he said.

Ramaphosa explained that the value of Agoa to African countries, however, extended beyond the impressive trade statistics. He added that Agoa could make an important contribution to the transformation of African countries from mainly being exporters of raw materials to producers of finished goods for both continental and global markets.

“By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods and services. This does and will continue to reduce Africa's dependence on primary commodities and enhance its ability to participate in global value chains,” he added.

Ramaphosa noted that another important element of Agoa is that it has a capacity for building a technical assistance component that supports African countries in meeting the requirements for accessing the US market. He said this assistance helps improve Africa's competitiveness by enhancing skills, knowledge and infrastructure, enabling African businesses to meet international standards.

“Africa has been advocating for the integration of continental economies for a long time. Agoa encourages regional integration among African countries. To fully benefit from Agoa, countries are finding that it is far better to work together to increase production capacities, harmonise standards and develop regional value chains. This is demonstrated by the experience of 10 countries, including South Africa, in the production of motor vehicles exported to the US. This promotes cooperation, economic integration and the growth of larger regional markets within Africa,” said Ramaphosa.

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