The duty-free export of quality products from South Africa is expected to create an economic boom in the country Glenda Daniels The watershed African Growth and Opportunities Act (Agoa) passed last year by the United States Congress is about to bear fruit in South Africa, signalling new hope for wealth and prosperity through trade and job creation.
The deal, to promote increased economic cooperation between the US and South Africa, enables the import into the US of quality products from South Africa duty free. Previous high tariffs and other restrictions will be removed. The legislation provides incentives for South Africa and other sub-Saharan countries to achieve political and economic reform, as well as to help strengthen relationships between US companies and firms in sub-Saharan Africa.
Business and government leaders from South Africa and the US said at a recent seminar at the Johannesburg Chamber of Commerce and Industries that export and trade investment are among the key solutions to economic growth and opportunity. In a process that will take place over the next eight years, duty-free export of high-quality South African products to the US will begin. This should result in billions of dollars in investment in trade, according to Robert Godec, economic affairs consul at the US Embassy. The US has a $10-trillion trade investment market. Godec spoke at a seminar organised by the National Productivity Institute and the Department of Trade and Industries. The seminar, aimed to popularise Agoa, will be followed by others in different provinces around the country. They aim to give current and potential exporters to the US an opportunity to meet international and local players who will be responsible for implementing the Act. Exporters who are new to international trading will also learn how to sell their products. The new Act is desperately needed by this country, especially after trade data released last week showed that exports are down by almost 14%. For South African businesses to survive they have to start exporting more aggressively to the US, and now with the new Act the door is wide open for this to happen, says Godec. “The Bush administration is fully committed to Agoa and to prosperity in Africa,” he says. The Act provides for duty-free and quota-free access for apparel (clothing, bags, shoes) and some textile products, hand-loomed, hand-made or traditional folklore goods, jewellery, plastics, stainless steel and wine, among other goods. In the apparel sector alone the new trade could create 66 000 jobs. Before a company can benefit from the Agoa package it has to register with the South African Revenue Service (Sars). Sars representative Pumza Lupuwana said application forms are available from all Sars offices. The new Act will dovetail with President Thabo Mbeki’s new Millennium African Plan and will be aimed directly at South African businesses taking advantage of US markets and opportunities, says the Department of Trade and Industries Basil van der Merwe. He says the government has faith that the Act will help job creation, increased opportunities for black empowerment and small and medium businesses, and the reduction of poverty. Van der Merwe says every sector of the community has to take advantage, with high priority placed on women’s small businesses. Grey van der Hoff, head of the consulting division of the National Productivity Institute, says South Africans have in the past made the mistake of giving up too easily on their products’ export potential. In his experience, after three to six months of trying many small businesses give up. He says it takes an average of two years to complete an export deal. Van der Hoff says: “The main constraints have been a lack of commitment and perseverance; you can’t expect results overnight. We have to get serious about quality and export, we can’t have a half-hearted response.” He says other barriers include a lack of capi-tal, a lack of knowledge, high protection or import tariffs and a lack of experience and international exposure in the export business. “You have to do your homework before embarking on the export trade. “Many companies will be closing their doors unless they get a foothold in the export market, but there is enormous potential in South Africa. Agoa is excellent news for us, but we need to address these barriers. We need to get the competitive edge and we need to look at niche marketing,” he says. Essentially, all products are eligible for export duty free and quota free if they meet Agoa’s rule of origin, which requires that a product be the growth, product or manufacture of a beneficiary sub-Saharan country. About 1 800 products will benefit from the new Act including: candles, soap, shampoos, cosmetic preparations, meat, lobster, flowers, vegetables, fruit, chocolate, olive oil, jam and corn. A complete list of Agoa products can be found at www.agoa.gov.