The United States is a key investor in the South African economy thanks to important legislation like the African Growth and Opportunity Act (AGOA). First enacted nearly 20 years ago and valid through at least 2025, the AGOA “significantly enhances market access to the US for qualifying Sub-Saharan African (SSA) countries.”
Furthermore, the United States and the Southern Africa Customs Union also signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) back in 2008. This agreement, “establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.”
Together, these trade agreements have encouraged a bounty of healthy trade among the United States and South Africa—a clear benefit for investors seeking to break into the booming African market.
How Africa Benefits From U.S. Trade Policies
While all of Africa benefits from the AGOA, South Africa has been the largest beneficiary of the trade agreements. Trade figures from the Office of the United States Trade Representative record U.S. goods and services with South Africa at an estimated $16.1 billion in 2016 alone. That same year, exports were at $7.5 billion, while imports were $8.6 billion.
According to the U.S. Embassy, more than 98% of South African exports enter the United States duty free under various trade preference programs. These figures demonstrate the desire of the United States to continue investing in South Africa.
In 2016, South Africa’s foreign direct investment (FDI) in the United States (stock) was $3.1 billion, up 5.8% from the year prior. South Africa’s direct investment in the U.S. is led by wholesale trade, information services, and real estate.
A New Era: U.S.-South Africa Relations Under President Ramaphosa
For eight years, South African President Jacob Zuma’s corrupt regime wreaked havoc to the otherwise sound and growing economic opportunities of the country. But in 2018, the arrival of South Africa’s new President, Cyril Ramaphosa, was met with great optimism and excitement both at home and abroad.
Thanks to the fresh change in government, high net worth individuals from the United States, China, and other countries are investing more heavily in South Africa. With a legacy of positive trade relations, the United States is in a great position to benefit from the new leadership.
How U.S. Investors Can Take Advantage of South African Growth
As a result of trade legislation like the AGOA and TIDCA, the United States and South Africa have become heavily integrated, providing a stable bridge for other Americans to begin investing in South Africa, one of the prominent developing nations of the world. Currently the U.S. has over 600 firms with offices in South Africa, which generate more than 10% of the country’s annual GDP and employ over 200,000 South Africans. A specialist on the matter says this rich network provides both a strategic and stable platform for American investors to pursue more opportunities within the region.
With South Africa’s luxury real estate market outpacing most of the world in its growth, many sophisticated U.S. investors are seeking to break into South Africa by investing in private equity real estate.
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