AGOA: 'Losing AGOA status would be disastrous for automotive sector'
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GUEST: Renai Moothilal - CEO of the National Association of Automotive Component & Allied Manufacturers.
The geopolitical fallout from Russia’s invasion of Ukraine is disrupting long-established relations and making the international economic and political landscape difficult to navigate. Such disruption could threaten the ability of SA manufacturers to compete globally. In particular, the possibility of exclusion from the US’s legislated Africa Growth & Opportunity Act (Agoa), or even economic sanctions, is causing consternation in many industries.
Agoa has been of significant value to SA. The automotive industry has benefited greatly from preferential access to the giant US market, exporting vehicles and components worth more than R24bn to the US in 2022 alone. Thanks in part to Agoa, the US remains one of the few major economies with which SA maintains a trade surplus.
Agoa has been one of the foundational blocks of SA’s automotive industry in the post-democratic era, with the sector regarded as a beacon of industrial hope in the country’s otherwise stagnant economy. Thanks to its strong multiplier effect, manufacturing has an outsized effect on employment and economic activity. That is why anything that could potentially lead to a decline in SA’s manufacturing activity is a cause for concern. The wider SA automotive sector is responsible for more than 300,000 jobs in the formal sector. According to the Automotive Industry Export Council the sector contributed 4.9% of the country’s GDP in 2022 and accounted for 21.7% of SA’s manufacturing output and 12.4% of its export basket.
The geopolitical fallout from Russia’s invasion of Ukraine is disrupting long-established relations and making the international economic and political landscape difficult to navigate. Such disruption could threaten the ability of SA manufacturers to compete globally. In particular, the possibility of exclusion from the US’s legislated Africa Growth & Opportunity Act (Agoa), or even economic sanctions, is causing consternation in many industries.
Agoa has been of significant value to SA. The automotive industry has benefited greatly from preferential access to the giant US market, exporting vehicles and components worth more than R24bn to the US in 2022 alone. Thanks in part to Agoa, the US remains one of the few major economies with which SA maintains a trade surplus.
Agoa has been one of the foundational blocks of SA’s automotive industry in the post-democratic era, with the sector regarded as a beacon of industrial hope in the country’s otherwise stagnant economy. Thanks to its strong multiplier effect, manufacturing has an outsized effect on employment and economic activity. That is why anything that could potentially lead to a decline in SA’s manufacturing activity is a cause for concern. The wider SA automotive sector is responsible for more than 300,000 jobs in the formal sector. According to the Automotive Industry Export Council the sector contributed 4.9% of the country’s GDP in 2022 and accounted for 21.7% of SA’s manufacturing output and 12.4% of its export basket.
