Swazi to be in disadvantage position should SA lose its AGOA

The United States has threatened to suspend the duty-free status of South African agricultural products after the country was reported to have failed to resolve the outstanding issues necessary for it to meet President Barack Obama’s deadline and maintain all of its benefits under the AGOA. Therefore should South Africa end up losing its AGOA eligibility, the Swazi economy would be put in disadvantaged position.

According to Southern African Research Foundation for Economic Development (SARFED) Regional Co-ordinator George Choongwa , Swaziland, besides the fact that it has been importing close to 80 percent of its consumables from South Africa, has also been contributing to that country’s expanded export market.

However, in the event that South Africa is completely written off, it means Swaziland will have to reduce its production lines and this will subsequently result in many people losing their jobs amidst the existing economic challenge of high cost of living in the country. This will in turn greatly exacerbate the instability of this already volatile economy for a considerable period of time.

Choongwa said that the AGOA trade network has also subsequently benefited southern African economic development initiatives such as Southern African Development Community (SADC) and Southern African Customs Union (SACU) of which Swaziland is a member of both blocs. Swaziland also lost its AGOA eligibility after the decision that came into effect from January 1, 2015 after a grace period of almost six months to meet the deadline for its AGOA review elapsed and the country failed to comply with laid out provisions.

According to the International Monetary Fund (IMF) Article IV report, 2015, Swaziland’s loss of eligibility for trade benefits under the African Growth Opportunity Act (AGOA) has adversely affected exports and employment.

This has led to a drastic decline in textile exports to the US market, leading to layoffs, though its impacts on overall growth and exports are modest, given the relatively small size of the textile sector, and owing to increased exports to the South African market, as the weakening of the rand has made Swazi exports more competitive compared with dollar-priced exports from other countries.

In order for the country to survive the looming crisis it should start considering developing alternative development and investment strategies.