Prof Bheki Mngomezulu
The African Growth and Opportunity Act (Agoa) is one of the most important economic bodies with prospects for contributing immensely to economic growth, investment and job creation. More than 5,000 African products are eligible for duty-free access to American markets under the Generalised System of Preferences Programme (GSPP).
Countries from sub-Saharan Africa have continued to participate in the initiative, with varying degrees of benefits that accrue from their membership.
While this is meant to be an arrangement focussing primarily on investment, trade, economic growth and employment, it also has political connotations. There are instances when the US uses Agoa as a bargaining tool to satisfy its political needs or push its political agenda.
This was the case, for example, when South Africa took a firm stance on the importation of US chickens. The political leadership in South Africa resolved that it was necessary to boost the economy by supporting the local poultry industry.
On the other hand, the US political leadership insisted that South Africa continue importing chickens from the US, failing which South Africa would be kicked out of Agoa.
The incident almost affected diplomatic relations between the two countries. Consequently, the South African government was forced to hold talks with its US counterpart to resolve this.
When it comes to multilateralism, countries are expected to work together to ensure global peace. In so doing, each country must maintain its political sovereignty. Intriguingly, whenever there is disagreement on certain issues, Agoa is used as a political tool to settle political scores.
Recently, South Africa’s neutral position on the Russian invasion of the Ukraine, created sour relations between the US and South Africa. This resulted in some US lawmakers demanding that the Agoa summit, scheduled for November 2-4, be moved elsewhere.
Although the call did not come to fruition, the incident demonstrated that the impact of Agoa transcends the development and economic growth mandate since it is sometimes used as a political bargaining tool.
Given this synopsis, there is no doubt that Agoa will have its life prolonged, not just for its primary mandate to assist sub-Saharan countries but to also settle political scores and/or serve as a bargaining political tool.
With the political dust having settled, the Agoa summit is scheduled to take place in Johannesburg this week. The big question which begs attention is: How will the summit lead to investment, economic growth and employment?
The questions may look simple at face value but they demand more sophisticated responses. The best way to respond is to be rational and realistic. The goal can be achieved by looking at immediate benefits and long-term achievements.
In the short term, before and during the summit, temporal jobs will be created in various ways. Those in the transport sector will benefit as they transport delegates to and from different places until the end of the summit.
The hospitality industry will also make some gains by providing their services to the delegates and their guests. Depending on the demand, prospects look good that additional temporary staff could be employed for the duration of the summit.
Holding a gathering of such stature augurs well for the country’s global political image. This has become clear in the recently concluded BRICS summit in Johannesburg.
By hosting the event, South Africa has a great opportunity to mend the walls with the US by closing the chapter of trust deficit occasioned by the Russian invasion of Ukraine and the invasion of Palestine by Israel.
Apart from the planned summit discussions, it would be advisable for South African businessmen and businesswomen to hold bilateral meetings with their counterparts from the US. Through such discussions, they stand a chance of considering possible business opportunities that would benefit both parties.
It is true that Agoa member states comprise the primary Agoa community. There is space for other non-member states to be invited. Moreover, other countries will be watching the discussions with keen interest. Where business opportunities become available, not only Agoa countries will grab them; everyone will do so. In the process, South Africa will benefit in terms of business opportunities, new markets, investments and job opportunities.
The summit is coming to South Africa at the right time. The country’s economy is not doing well. The unemployment rate has reached a crisis point. Other socio-economic challenges continue to paint South Africa in a bad light. The summit brings hope that things might change for the better.
The South African political leadership has a glorious opportunity to redeem itself from the challenges facing the country. Similarly, the business sector must assist the government. Working together, prospects look good.
*Prof. Mngomezulu is the Director of the Centre for the Advancement of Non-Racialism and Democracy at the Nelson Mandela University
**The views expressed do not necessarily reflect the views of Independent Media or IOL