AGOA extended: Businesses should diversify or face significant exposure

Cross-border payments platform Verto has called on South African and African businesses to accelerate their transition toward a ‘post-AGOA’ trade strategy following US President Donald Trump’s signing of a one-year extension to the African Growth and Opportunity Act.

The legislation, signed into law on 3 February, extends the trade preference programme until 31 December 2026, with retroactive effect to September 2025. While providing a temporary reprieve for exporters, the short-term nature of the extension, coupled with a 30% tariff regime imposed on South African goods in 2025, signals a fundamental shift in the US-Africa trade relationship.

James Booth, head of Revenue at Verto, warns that the era of relying on unilateral trade preferences is ending.

“While any extension of AGOA is a welcome relief for the 500 000 South African jobs linked to this agreement, a one-year window is a signal, not a solution. This abbreviated extension perpetuates uncertainty, making long-term investment difficult.

“For South African businesses, the 30% ‘America First’ tariffs already in place have effectively neutralised many of the duty-free benefits AGOA once provided. We are now in a ‘bridge year’, and the message to businesses is clear: diversify or face significant exposure.”

Verto’s recent analysis highlights that the real threat to South African small to medium enterprises isn’t just the headline tariff, but the resulting currency instability.

“When trade agreements hang in the balance, the South African rand often bears the brunt,” Booth explains. “For many exporters, a sudden swing in the rand or a delayed settlement can wipe out thin profit margins faster than a 30% tariff. We are seeing a ‘rewiring’ of trade corridors where businesses are forced to absorb costs to remain competitive in the US, making efficient, low-cost cross-border payments more critical than ever.”

Verto is urging businesses across the continent to use this 12-month extension to pivot toward three strategic pillars:

1. Market diversification: Reducing reliance on the US by tapping into the African Continental Free Trade Area and expanding into high-growth corridors in the Middle East and Southeast Asia.
2. Payment redundancy: Moving away from traditional banking rails that are susceptible to political shocks. Verto advocates for multi-route payment mechanisms that allow businesses to settle in alternative currencies and secure liquidity during periods of heightened volatility.
3. Digital transformation: Leveraging fintech to bypass logistical and regulatory bottlenecks that have historically made intra-African trade more expensive than trading with the West.

“South Africa is at a critical juncture,” adds Booth. “The uncertainty of the last year has exposed the fragility of global trade flows. Whether it is settling with partners in Nairobi, Dubai or Hong Kong, businesses must build the resilience to thrive in a world where trade preferences are no longer guaranteed.”

Image credit: Freepik/tawatchai07