AGOA pays off for local company

Thanks to the African Growth and Opportunity Act (AGOA), a local company is finalising its expansion refurbishments – given the massive growth in its exports to the United States of America.

DC Foods is housed at the Coega Special Economic Zone (SEZ) in Gqeberha, where it manufactures a range of frozen fruit and ice cream products, which it exports mainly to the USA market.

According to the Department of Trade, Industry and Competition (the dtic) – DC Foods was established in 1996, initially earmarking Japan as an export destination for its products, with a modest staff complement of 160 workers. 

As the company grew and needed bigger facilities, it settled for the Coega SEZ as the new home for its manufacturing plant.

The company’s Financial Manager, Marc Larter, says it is the benefits derived from AGOA that have put the company on an upward trajectory. 

AGOA is a trade agreement that provides eligible sub-Saharan African countries with duty-free access to the USA market for over 1800 products, in addition to the more than 5000 products that are eligible for duty-free access under the Generalised System of Preferences programme.

In September, President Cyril Ramaphosa called on US businesses to deepen their investment ties with South Africa, highlighting the country’s renewed focus on economic recovery and structural reform. 

Speaking at the SA-US Interactive Business Forum in New York, the President emphasised the progress made under South Africa’s Government of National Unity (GNU) and the vast opportunities available to foreign investors.

He said this is a “timely intervention” – referencing his first visit to the US since South Africa’s general elections in May, which led to a coalition government of political parties committed to inclusive growth and job creation.

READ | President Ramaphosa urges US business to invest in SA’s growing economy

The President’s visit followed the visit of Trade, Industry and Competition Minister, Parks Tau, who concluded a successful visit to the USA where he and a delegation participated in the 21st AGOA Forum that ran from 22-26 July 2024.

READ | Tau concludes United States visit

Larter said that although the company  exports to other markets, it is in the US that their business has experienced the largest growth.

“AGOA is a very important part of our business because it allows us to export our products into North America without duties. In essence, if it did not exist, that would have been a major hindrance to our operations. 

“We are currently supplying our product to Costco chain stores. Initially we had access to 35% of their stores, and a social media marketing campaign led to a massive demand for our sorbets, and now we supply all Costco stores in the US,” Larter explained.

It is this growth that saw the company needing to expand their factory to create more space for manufacturing.  The company has also had to adopt a double shift production system leading to the employment of more staff. 

Larter says in addition to other benefits, including tax incentives, security, coordinated systems of managing challenges like electricity supply, the location of the Coega SEZ in the Eastern Cape has afforded the company access to workers in the nearby Motherwell township.

The presence of the company has led to the creation of 3 500 jobs for this community.

SEZs have become an important policy tool of choice for the Department of Trade, Industry and Competition to accelerate industrialisation, development and growth.

According to the dtic, Special Economic Zones (SEZs) are geographically designated areas of a country, set aside for specifically targeted economic activities, supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country. –SAnews.gov.za