AGOA impact on local auto component manufacturing industry

South Africa's automotive sector has the potential to become a hub for automotive component exports into other AGOA member states and to further grow exports into the United States. Renai Moothilal, the Executive Director of NAACAM, discussed the impact of AGOA on the local auto component manufacturing industry in a recent interview with CNBC Africa. Moothilal highlighted the progress that has been made in integrating African partner countries into South Africa's auto manufacturing narrative, emphasizing the importance of seizing the opportunities presented by AGOA. He cited examples of component manufacturing collaborations across the African continent, such as Autoglass production that involves inputs from Mozambique, Botswana, and Lesotho. These collaborations have already led to exports of components to the U.S., showcasing the potential for further growth in this sector. The South African auto sector currently contributes around 34 percent of the country's total manufacturing output and plays a significant role in the GDP. Moothilal emphasized the opportunities for growth in the sector, especially as the industry transitions to new technologies like electric vehicles (EVs). Component manufacturers have already begun supplying components for EV platforms in the U.S., tapping into markets that are not produced locally. Despite the shift towards new technologies, Moothilal stressed the importance of maintaining the U.S. as a key export destination for South Africa. He noted the substantial growth in exports to the U.S. since the inception of AGOA, highlighting the success of the trade agreement in expanding market access. Moothilal also discussed the potential synergies between AGOA and the African Continental Free Trade Area (AFCFTA) agreement. He outlined how the AFCFTA could enhance trade opportunities for South Africa by promoting duty-free interactions between African economies and supporting the development of infrastructure for intercontinental trade. By establishing production hubs across the continent, including in South Africa, Moothilal believes that regional value chains and component production can be strengthened, driving African industrialization and creating opportunities for increased exports. He emphasized the need for collaboration and coordination among African countries to leverage the potential of AGOA and the AFCFTA for mutual benefit. Moving forward, stakeholders in the auto component manufacturing industry will need to work together to unlock the full potential of these trade agreements and drive growth in the sector. By fostering partnerships and building regional value chains, South Africa can cement its position as a leading player in the global auto component manufacturing industry.