The United States’ decision to extend the African Growth and Opportunity Act (AGOA) for one year has eased immediate pressure on South African SMEs embedded in export-linked value chains, but business owners and industry bodies warn that the short-term reprieve does little to resolve deeper structural risks facing the SME economy.
Signed into law this week, the extension preserves duty-free access to the US market for eligible goods until the end of 2026.
While AGOA is often discussed in the context of large exporters, its impact is felt most acutely among SMEs that supply exporters with packaging, logistics, components, cleaning services and processing support. For these businesses, the extension reduces the risk of sudden order cancellations that could threaten cash flow and jobs.
In Gauteng, Mandla Radebe, owner of a small metal fabrication workshop supplying an automotive exporter, said the extension stabilised production planning.
“When uncertainty peaked late last year, we were warned volumes could drop immediately. This decision gives us breathing room to keep staff employed and maintain output,” he said.
In the Eastern Cape, where export-oriented manufacturing plays a significant role, Kelly Adams, who runs a transport and warehousing SME servicing textile factories, said the announcement prevented further contract reductions.
“When exporters hesitate, transport is hit straight away. The extension doesn’t guarantee growth, but it keeps our fleet moving for now,” she said.
According to the Department of Trade, Industry and Competition, the continuation of AGOA supports employment and industrial activity beyond direct exporters. The DTIC noted that the agreement “sustains production ecosystems across provinces, many of which rely on small and medium enterprises as suppliers and service providers”.
The department said it is using the extension period to engage with US counterparts on longer-term trade arrangements while strengthening local supplier development programmes.
However, SME owners say access to finance remains a major constraint. Despite the reduced policy risk, banks remain cautious about lending to businesses tied to export-dependent industries without longer-term certainty. Several SMEs said they have delayed equipment purchases and hiring plans due to uncertainty around funding approvals beyond the next twelve months.
In KwaZulu-Natal, Siyabonga Khumalo, who operates a small agro-processing business supplying exporters, said lenders remain risk-averse.
“Even with AGOA extended, financiers want guarantees that don’t match the realities of small business. We’re expected to absorb risk without support,” he said.
The provincial impact of AGOA-linked activity varies. The Eastern Cape remains highly exposed due to automotive and textile manufacturing, while KwaZulu-Natal’s port-linked logistics and agro-processing SMEs depend on stable export flows. In Gauteng, smaller engineering, packaging and services firms form the backbone of supply chains supporting export industries.
SME associations warn that repeated short-term extensions encourage defensive business behaviour. Without long-term certainty, businesses prioritise cost containment over expansion, limiting job creation and investment. They argue that the current extension should be used to improve access to working capital, strengthen domestic procurement and help SMEs diversify into alternative export markets.
While the AGOA extension has prevented an immediate shock, SMEs say time alone is not a solution. As February begins, the focus is shifting to whether government and financial institutions can convert temporary stability into lasting resilience for small businesses operating at the most vulnerable end of South Africa’s export economy.
https://www.sars.gov.za/customs-and-excise/registration-licensing-and-accreditation/exporters/
lazola@vutivibudiness.co.za
