Economist Thembinkosi Dube says the retention of the African Growth and Opportunity Act means more emaSwati will still have jobs within the textile sector. The US intends to remove South Africa from the African Growth and Opportunity Act (AGOA), a program providing qualifying sub-Saharan African countries with preferential access to the US market. Dube said South Africa could face an oversupply of goods if it lost access to the US market under the program.
Eswatini could experience an influx of South African products in local shops if South Africa loses access to the US market. Dube said the potential impact would not be limited to Eswatini, as other countries importing goods from South Africa could experience similar developments. Eswatini's reliance on South African imports means changes in the neighboring country's export markets could affect local businesses and consumers.
Most shops in Eswatini are mostly owned in South Africa and definitely, the country will have an impact. Dube said an increase in the supply of South African goods could also lead to lower prices for similar products and substitutes in Eswatini. Under normal market conditions, increased supply could put downward pressure on prices.
University of Eswatini Economics Lecturer Sanele Sibiya said South Africa's possible exclusion from AGOA could bring investment and jobs to Eswatini but also threaten its economy. The country's close economic ties with South Africa mean any disruption to its neighbor's trade with the US could have consequences for local businesses.
Sibiya said Eswatini could benefit if South African companies moved some of their production to the Kingdom to retain preferential access to the American market. Eswatini could be among the destinations considered, particularly by South African companies already operating in the Kingdom. However, Sibiya cautioned that retaining AGOA eligibility would not, on its own, guarantee investment.
Companies would have to compare the cost of producing and transporting goods from Eswatini with the cost of continuing to export from South Africa under any new tariff arrangements. If production and transport costs in Eswatini were too high, relocating operations might not make commercial sense. Hence competitiveness is a critical factor in attracting this investment.
Sibiya also raised the possibility that South African multinational companies already operating in Eswatini could increase local production rather than establish entirely new factories. This could support exports, economic growth, and employment in the short term. However, he cautioned that such gains might not last due to uncertainty around US trade policy.
Key points
- Economist Thembinkosi Dube warns of potential oversupply of South African goods in Eswatini if South Africa loses US market access.
- University of Eswatini Economics Lecturer Sanele Sibiya sees potential for Eswatini to attract investment from South African companies.
- Eswatini's economy closely tied to South Africa's, making it vulnerable to changes in trade policies.
