High-Net-Worth Individuals (HNWIs) and Investors

The African Growth and Opportunity Act (AGOA) has been a cornerstone of trade relations between the United States and sub-Saharan Africa since its enactment in 2000. Designed to provide eligible African countries with duty-free access to the U.S. market for a wide array of products, AGOA has majorly influenced economic arenas across the continent. As the current authorization of AGOA approaches its expiration in September 2025, discussions surrounding its renewal have intensified, particularly in light of recent geopolitical tensions and policy shifts.

The current state of AGOA
In December 2024, South Africa successfully secured its AGOA benefits for the year 2025,  resulting in continued duty-free access to U.S. markets for various sectors, including automotive, agriculture, and manufacturing. This extension was vital, as trade under AGOA accounted for approximately 21% of South Africa's total exports to the U.S. in 2022, with exports under AGOA increasing from $2.0 billion in 2021 to $3.0 billion in 2022.

However, the future of AGOA remains uncertain. The act is scheduled for review in September 2025, and recent geopolitical developments have cast doubts on its seamless renewal. Notably, U.S. President Donald Trump's administration has expressed concerns over South Africa's land reform policies and its legal actions against Israel, leading to a reduction in U.S. financial aid and raising questions about South Africa's continued eligibility under AGOA.

Geopolitical tensions and their impact
The geopolitical environment has become increasingly complex, with South Africa's foreign policy decisions attracting scrutiny from U.S. lawmakers. In February 2025, President Trump signed an executive order halting foreign aid to South Africa, citing disapproval of its approach to land reform and its genocide case against Israel at the International Court of Justice.

This move has sparked concerns that South Africa's preferential trade status under AGOA could be jeopardized. South African President Cyril Ramaphosa has expressed a desire to resolve these disputes through diplomatic engagement, proposing a comprehensive deal encompassing trade, diplomacy, and political matters. While specific details of such a deal remain undisclosed, the intention is to clarify South Africa's positions and maintain constructive relations with the U.S.

The economic implications for South African businesses
The potential loss of AGOA benefits poses major economic risks for South African businesses. A study by the Brookings Institution suggests that while the overall impact on South Africa's GDP might be modest, specific sectors could face substantial challenges. The transport equipment sector, for instance, could experience a 13% decline in exports to the U.S., while the food and beverages sector might see a 16% reduction. These contractions could lead to job losses and decreased competitiveness in key industries.

Adde to this, the agricultural sector, particularly citrus and wine producers, heavily relies on AGOA for market access. In 2022, citrus exports to the U.S. amounted to $134 million, representing 7% of South Africa's total citrus exports. The potential revocation of AGOA benefits could compel these producers to seek alternative markets, which may not offer the same favourable terms, thereby affecting profitability and employment within the sector.

Strategic considerations for businesses
Given the prevailing uncertainties, South African businesses should proactively assess their exposure to U.S. markets and consider diversification strategies to mitigate the potential risks. Some are explored below.

Market Diversification
Exploring alternative export destinations can reduce dependency on the U.S. market. Engaging with other international markets or strengthening intra-African trade through agreements like the African Continental Free Trade Area (AfCFTA) could provide viable alternatives.

Supply Chain Resilience
Assessing and improving the strength of the supply chain can help businesses adapt to potential disruptions. This may involve identifying alternative suppliers, and investing in local production capabilities.

Policy Engagement
Active participation in policy dialogues and trade negotiations can provide businesses with insights and a platform to advocate for favourable trade terms. Collaborating with industry associations and government bodies can amplify their influence in shaping trade policies. But the effectiveness of this approach remains an open-ended question, given the heightened tensions within the policy-making environment.

Final Thoughts
As the expiration of AGOA approaches, South African businesses face a landscape fraught with uncertainty.

Geopolitical tensions and policy shifts underscore the importance of strategic planning and more proactive risk management. But as tensions mount and uncertainty intensifies, the ability of the South African business sector to play a key role in affecting policy-making decision surrounding South Africa’s future role in AGOA remains a critical question going forward.