BY Thoboloko Ntšonyane
MASERU- The recently held, eighth Summit of the Southern African Customs Union (SACU) has called for the extension of the African Growth and Opportunity Act (AGOA).
These developments transpired during the SACU’s Summit last week in Eswatini.
SACU Member States include Botswana, Eswatini, Lesotho, Namibia, and South Africa.
The oldest customs union in the world, having been established in 1910.
Scheduled to expire in 2025, the summit has adopted a resolution to call for the “extension of AGOA for the current beneficiary countries “.
This call for an extension could be seen as a move aimed at sustaining the mutually beneficial trade relationship with the US as well as the continued economic development in the region.
AGOA is the United States (US) trade law that provides eligible sub-Saharan African countries with duty-free access to the U.S. markets. It was signed into law by then President Bill Clinton on May 18, 2000.
One of its goals is to promote economic development and trade in sub-Saharan Africa by expanding exports from eligible countries to the US market. It strives to foster African countries to implement economic and governance reforms, improve labour practices, and attract foreign investment.
Initially, AGOA provided preferential access to the U.S. market until September 30, 2008, it has however been extended since then. In 2015, the AGOA legislation was extended until September 2025 and signed into law by then President Barack Obama.
AGOA has been an important mechanism for promoting trade between the United States and sub-Saharan African countries. It has contributed to the growth of exports from Africa to the United States, particularly in sectors such as apparel, textiles, and agricultural products.
Among the SACU members, the countries that have been eligible for AGOA benefits are Lesotho, Botswana, Namibia, and South Africa.
Although it was suspended, Eswatini has been reinstated from this facility.
Lesotho has been a notable beneficiary of AGOA. The country’s textile and apparel industry has benefited from duty-free access to the U.S. market, leading to increased exports and job creation. However, Lesotho needs to diversify products that it exports to the US as at the moment, we have seen many factories closing shop recently owing to lack of market.
There are over 6 700 products that can be exported to the US market under the AGOA facility.
Namibia has also utilized AGOA preferences for its textile and apparel sector. SA, the largest economy in the region and a contributor in the SACU purse, also exploited the AGOA’s benefits by exporting to the US market, particularly in the automotive sector.
AGOA has significantly fostered US-Africa trade and has enabled increased foreign direct investment (FDI) as well as employment opportunities in the beneficiary countries.
Meanwhile, it has also “noted with appreciation that all SACU Member States have ratified the Agreement establishing the African Continental Free Trade Area (AfCFTA), which includes products with a full tariff reduction (90 percent) over a ten-year period, was adopted on the 31st May 2023. Additionally, all Revenue Administrations in SACU have completed the necessary documentation of the AfCFTA”.
The Summit had also welcomed the appointment of Thabo Khasipe as SACU’s Executive Secretary earlier this year. Khasipe is a Mosotho national who was heading the Lesotho Revenue Authority (LRA) now Revenue Services Lesotho (RSL).
“The Summit commended His Majesty King Mswati III of the Kingdom of Eswatini for his exceptional leadership and guidance during his term as the Chair of SACU. Likewise, the Summit congratulated the Right Honourable Samuel Ntsokoane Matekane on assuming the Chairmanship of SACU from 15th July 2023,” reads the SACU’s communique.
The outgoing Chairperson urged the Member States to “assess and reflect” in light of the challenges facing the region as well as finding ways to address them.
He underscored the need to tap into opportunities for action and collaboration.
“We have seen this organisation grow from strength to strength, moving in the right direction. As members, we have an obligation to nurture this child of ours and where there are challenges we need to sit down and find amicable solutions.
“This is particularly important at this time as SACU works on the implementation of its recently approved strategic plan 2022-2027, in the midst of the recent global developments which are having a significant impact on our economies.
“The importance of SACU cannot be over-emphasised as it plays a major role in the development of our respective countries. We are pleased that we are currently experiencing positive developments in the collection of SACU receipts, which will contribute immensely to the social and economic development of our countries.”
Accepting the baton, the Prime Minister Matekane committed that Lesotho will build on the momentum of the gains and move with haste to implement the strategic plan.
“We come out of this Summit with renewed determination and vigour to build a more united and resilient SACU that will benefit its peoples,” he said.