Trade is a foundation of any country or society that aspires to prosper. It is as old as human civilisation.
In ancient times, trade began as a barter system in which humans exchanged animal skins or services for food. In Mesopotamia (modern-day Iraq) and ancient Egypt, people used gold bars as currency, and later in other parts of the world metal coins were introduced as currency to facilitate and simplify trade.
Over time, people began trading goods over long distances, where local trade grew and became part of international trade, bringing more people together and creating prosperous societies in different regions of the world.
The importance of trade in producing global prosperity was highlighted by President Ramaphosa when he delivered a keynote speech recently at the U.S.-South Africa Trade and Investment Business Roundtable Dialogue, which took place in New York on the sidelines of the 78th session of the UN General Assembly (UNGA).
President Ramaphosa lamented the threat posed to global prosperity by the ongoing escalation in geopolitical tensions, increasing trade protectionism, and fragmentation.
This unfortunate turn of events has reversed gains made in recent decades by the international community to create a more open, rules-based trading system, which has helped to facilitate cross-border investments and supported global economic growth. Globalisation played a pivotal role in increasing employment in many countries and encouraging innovation and emergence of new technologies.
As an open economy with about 70% of its gross domestic product (GDP) linked to trade, South Africa has benefited immensely from globalisation. We trade with several countries and regions including the United States, European Union, United Kingdom, Middle East, East Asia, South America, and the BRICS group, of which South Africa is a member.
A fragmented and divided world will not put our country in good stead. World leaders must work together to reverse and put to an end to fragmentation and protectionism.
South Africa wants to see the continuation and expansion of international trade, but trade must be balanced and mutually beneficial amongst trading partners.
It is encouraging to note that the South African government and the U.S. administration are working together to explore extension of the African Growth and Opportunity Act (AGOA) for a further period of 10 years.
This is a welcomed development considering that AGOA, which expires in 2025, provides eligible sub-Saharan African countries including South Africa with duty-free access to the U.S. market for over 1,800 products. This is in addition to the more than 5,000 products that are eligible for duty-free access under the Generalised System of Preferences programme.
As part of the engagement to extend AGOA, South Africa will host the 20th U.S.-sub-Saharan Africa Trade and Economic Cooperation Forum (AGOA Forum) in Johannesburg from 2-4 November 2023.
The long-awaited AGOA Forum, which is expected to also feature the ‘Made in Africa Exhibition’, seeks to strengthen trade and investment ties between the United States and sub-Saharan Africa countries.
On the sidelines of the AGOA Forum, the U.S. Chamber of Commerce and Business Unity South Africa (BUSA), will also host the inaugural bilateral business and investment forum, where business representatives from South Africa and the United States will discuss plans to strengthen trade and investment between the two countries.
An extension of AGOA beyond 2025 will be a huge boon for Africa as it will help attract inward investment and support the implementation of the African Continental Free Trade Area (AfCFTA) that covers 54 countries and 1.4 billion consumers.
The first goods are expected to be traded under AfCFTA within the next six months and global multinationals including U.S. companies could benefit from the consolidation of 54 African markets into one continental market.
Africa is leading the way in showcasing that consolidation and solidarity is the future, not fragmentation.
The launch of AfCFTA is expected to support economic growth in Africa, where average growth is projected to stabilise at 4.1% this year and next year, higher than 3.8% growth registered in 2022.
African countries that will attend the AGOA Forum will have to make a strong case that Africa is not just a huge consumer market, but it is also a source of minerals that the world needs to sustain industrial growth. About 30% of the world’s mineral resources and 65% of the world’s uncultivated arable land are found in Africa.
From the South African perspective, AGOA and AfCFTA complement each other and thus an extension of AGOA will be beneficial for Africa and the U.S. in terms of promoting industrialisation and job creation on both sides of the Atlantic Ocean. AGOA has created over 62, 000 in South Africa and more than 100, 000 jobs in the U.S.
The upcoming AGOA Forum and the U.S.-South Africa bilateral forum, are important platforms that will give our country an opportunity to showcase itself as an attractive location for multinationals that want to operate in Africa. About 50% of multinationals that operate in Africa are based in South Africa, where they enjoy access to world-class logistics and digital infrastructure, skilled workforce, and large pools of investment capital.
As part of efforts to make our country an attractive investment destination, we are carrying out economic reforms to eliminate red tape and reduce the cost of doing business. This has led to an influx of new investment capital, reflected in the amount of capital we attracted in the first 5-year phase of the investment drive led by President Ramaphosa, which raised R1.5 trillion. The second phase of the investment drive aims to raise R2 trillion over the next five years.
President Ramaphosa will host the next annual South Africa Investment Conference in March next year, where the focus will be to attract new investment in energy, transport, water, and digital infrastructure. South Africa cannot wait to host the AGOA Forum in November. The future belongs to Africa.