South Africa’s neutrality a cause for concern

South Africa’s diplomatic faux pas of late has certainly caught the attention of the international community.

The mystery of why Lady R docked in Simon’s Town last year, the entire blunder of arriving in Poland without the correct papers and permits and the need to remain “neutral” on Ukraine-Russia conflict has ruffled a few international feathers.

For a while there’s been talk of the United States kicking South Africa out of the African Growth and Opportunity Act (Agoa), although some experts believe should it happen, it won’t necessarily be a bad thing for us.

ALSO READ: It is not a disaster if SA is kicked out of Agoa

Rand Merchant Bank (RMB) published an interesting document on what exiting Agoa would mean for the country.

In his weekly podcast, Moneyweb’s editor Ryk van Niekerk spoke to Thomas Stamey, a student at the Cornell University in New York, who did this research on behalf of RMB to see if the impact of being kicked out of Agoa is as serious as people think.

“Essentially, South Africa represented 52% of all Agoa exports in 2022. So of the over 30 countries that participate in the programme, of all these exports, over half of them came from South Africa. So South Africa utilises the programme the most,” Stamey said.

ALSO READ: Kicking SA out of Agoa will hit hard

“It’s hard to be sure whether or not South Africa will be removed. But one thing that’s clear is that it really won’t be as damaging as has been stated. Agoa is a fraction of South Africa’s exports. The US represented 9.4% of South Africa’s exports in 2022 and Agoa exports were only 20.7% of US exports. So Agoa was 1.95% of South Africa’s total exports in 2022. Agriculture in South Africa had 66.6% of its exports to the US under Agoa.”

Agoa also benefits the US as it allows duty-free imports to them, Stamey said.

“Both parties in the US are uncomfortable with South Africa’s neutrality. Essentially, Republicans are uncomfortable with South Africa’s cosiness with China. Democrats are uncomfortable with South Africa’s cosiness with Russia,” he said. Watch this space.

ALSO READ: Agoa renewal: ‘Govt briefed Winde before his US visit to avoid embarrassment’