Agoa and SA’s automotive future in the electric age

Thanks to the African Growth Opportunity Act (Agoa), somewhere in the US, an American is savouring an orange from the Western or Northern Cape, benefitting from a stable heart rate thanks to platinum from the North West in their pacemaker and using a coin that is partially made from one of Gauteng’s gold mines.

Since it was established in 2000, Agoa has provided eligible African countries with duty-free access to the US market for thousands of products and services.

Last year, two-way trade between South Africa and the US amounted to $25.5 billion (about R468 billion), as the US was SA’s second-largest national export market, after China.

Significantly, the Agoa export value for South Africa’s automotive industry amounted to just shy of $1.5 billion last year and, yet, it could have been so much more.

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The world, including the US, is making significant progress as it transitions from fossil fuel-powered vehicles to electric vehicles (EVs).

Vehicle manufacturers such as Nissan, Mercedes-Benz and BMW have built petrol- and diesel-powered cars on our shores for decades.

A significant amount of these cars have been exported to the US, under the Agoa agreement. So what will happen to South Africa’s automotive industry when the US enforces its goal to have 50% of all new vehicle sales be electric by 2030?

South Africa and other African countries that form part of Agoa, such as the Democratic Republic of Congo, Kenya and Rwanda, will be left out of economic development as they lack the political will to ensure that they produce EVs.

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The 2023 Agoa summit in Johannesburg concluded this week and the US is planning to extend the current agreement (which expires in 2025) to 2040, which presents African countries with more opportunities to provide employment for even more automotive workers.

If they get with the electric programme.

What is needed for Agoa to make even more of an impact for the automotive sector in Africa is for the likes of Toyota to invest in Africa’s EV future.

These car manufacturers need to construct factories that can build EVs in Africa, invest in charging infrastructure and to stop peddling hybrid cars (which use fossil fuels most of the time, instead of the secondary power source, like a battery) as EVs.

Only then can we say Agoa is being fully utilised to the advantage of the African automotive sector.

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