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Home News

Strained SA-US Relations Put AGOA at Risk

…But Business Must Retain Compliance for Future Trade Opportunities 

by Destiny Eseaga
April 1, 2025
in News
0
African Growth and Opportunity Act (AGOA)
African Growth and Opportunity Act - AGOA

African Growth and Opportunity Act - AGOA

UBA
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South Africa’s current relations with the US is at a crossroad. With fallout from the signing of the Expropriation Act into law, the withdrawal of USAID, and the expulsion of South Africa’s ambassador to the US, tensions have only simmered further, with much debate now around South Africa’s future participation in the African Growth and Opportunity Act (AGOA).

“South Africa cannot afford to make adversaries of any global economic power. Our economy has stagnated over the past 10 years, with the government essentially having run out of money.

Over the last financial year, our debt-service costs amounted to R389 billion ($21.1 billion), with our debt-to-GDP projected to reach 76.2 per cent in this financial year,” says Stefan Kritzinger, head of Compliance and Support at Govchain.

“AGOA, our largest trade agreement with the US, remains at risk. Several US political leaders have already called for South Africa to be removed from the programme, which would result in devastating consequences for our economy,” continues Kritzinger.

Since AGOA’s enactment in 2000, South Africa’s exports to the US grew at an average annual rate of 12.98% between 2002-22, while 70% of South Africa’s agricultural products to the US have been possible through the programme.

South Africa is rich in natural resources and quality agricultural products. However, for businesses to enjoy the financial benefits of the imports and exports business, there are several regulatory boxes they must tick.

A business needs to be registered with the CIPC to legally trade. The basic requirements for registering include a company name, a business registration number, as well as tax number from SARS.

“This should be followed by applying for an import and export license, bearing in mind that the license is only officially required when the total imported or exported cargo is R150 000 or more within a year, that there are more than three imports and exports in one calendar year, and that the business is import for resale or business purposes and not for personal use,” explains Kritzinger.

Without this license, a business cannot clear goods at customs, legally cannot trade across borders, especially because SARS tracks imported and exported goods for tax and compliance.

To apply for a license, a business would need to complete a DA 185 application form and submit its CIPC company registration certificate, tax clearance certificate, bank confirmation letter, as well as a certified copy of the applicant’s ID or passport with the completed form to SARS.

Upon approval, SARS will provide the company with an import and export code that will be used every time a business moves goods across the border.

Kritzinger added that. “understanding import duties, VAT and customs fees is also equally important. While VAT is charged on all imports, customs duties vary depending on the type of product. On the other side, most exports are zero-rated for VAT, meaning there is no charge, but businesses are encouraged to keep clear records of exports to qualify for tax exemptions.”

Lastly, businesses must remain cognisant of any product restrictions and trade agreements. For example, alcohol and tobacco require additional import permits, while fresh food and agricultural products require health and safety certificates. Trade agreements may also qualify certain products for lower custom duties.

“Despite the current rocky diplomatic dispute with the US, South Africa still enjoys trade relations with the country, as well as many other lucrative markets around the world. It is important for businesses to get the compliance correct so they avoid missing out on the benefits,” Kritzinger concluded.

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Tags: AGOAGovchainStefan Kritzinger
Destiny Eseaga

Destiny Eseaga

My name is Destiny Eseaga, a communication strategist, journalist, and researcher, deeply intrigued by the political economy of Nigeria and the broader world context. My passion lies in the world of finance, particularly, capital markets, investment banking, market intelligence, etc

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