AGOA exclusion could hurt South Africa, but weak economy poses bigger concern – economist

Economist, Dawie Roodt, says South Africa’s possible exclusion from the African Growth and Opportunity Act (AGOA) could shave between 0.1 and 0.2 percentage points off economic growth.

However, he believes the bigger concern is the country’s already struggling economy.

The United States is expected to announce the outcome of its review of South Africa’s eligibility for AGOA benefits on 2 November. The decision will determine whether local exporters continue to enjoy preferential access to the American market in 2027.

Speaking to exclusively to YNews, Roodt warned that losing the trade benefits would hurt certain industries, particularly agriculture and manufacturing, although some exporters have already redirected their products to alternative markets.

He says the potential impact should be considered against the backdrop of South Africa’s weak economic growth, arguing that even a relatively small loss would add pressure on an economy already struggling to expand.

“It’s not the end of the world. But the main thing here is that the South African economy is hardly growing. And 0.2% of, say, 1% growth is a big deal,” Roodt said.

He argued that South Africa’s vulnerability to international pressures, including higher oil prices and possible trade restrictions, is compounded by domestic economic weaknesses and what he described as inappropriate macroeconomic policies.

The comments come as Trade, Industry and Competition Minister, Parks Tau, insists that government is preparing for either outcome.

Briefing social partners at the National Economic Development and Labour Council (Nedlac) on Thursday, Tau said government remained confident that the United States would respond favourably to proposals tabled during negotiations.

Tau said bilateral trade between the two countries reached 28.8 billion US dollars in 2025, with more than 600 American companies operating in South Africa and supporting approximately 234,600 jobs.

He added that US companies had made more than $5 billion in investment commitments over the past year.

However, the minister sought to put the potential loss of AGOA benefits into perspective, saying only about 10% of South Africa’s exports to the US entered under the programme in 2025.

These exports were valued at $1.7 billion, representing approximately 1% of the country’s total global exports.

He also pointed to existing US tariffs on vehicles and automotive parts, as well as steel and aluminium, saying these duties apply to all US trading partners and place additional pressure on local exporters.

The decision comes amid strained relations between Pretoria and Washington, with disagreements over land reform and foreign policy, as well as demands for greater access to the South African market.

Tau maintained that South Africa had tabled practical proposals to address US concerns, but said it would not be appropriate to disclose their details while negotiations remained underway.

He stressed that certain constitutional principles, including transformation and land reform, were not up for negotiation.

Meanwhile, International Relations Minister, Ronald Lamola, also urged government departments and businesses to prepare for any eventuality, citing uncertainty surrounding the current US administration.

Lamola said South Africa had spent the past two years diversifying its export markets to reduce its exposure to a possible exclusion.

He said the country had expanded trade with the African continent, Asia and the European Union, which he believes could cushion the impact should Washington withdraw South Africa’s AGOA eligibility.

Tau echoed that position, describing market diversification as responsible economic planning rather than a rejection of the United States.

#AGOA #RSA https://t.co/l1xL3MLZmw

— South African Embassy in Guinea (@SAEmbConakry) October 30, 2026

We must try to save South Africa’s participation in AGOA at all costs. This is part of the reason why I am currently in Washington – for the sake of our workers, entrepreneurs, and business enterprises in South Africa. https://t.co/qDzHgI8BJV

— Jaco Kleynhans (@JacoKleynhans) October 29, 2026