MPIYAKHE DHLAMINI: Foreign policy should be driven by imperatives of trade and investment

Trading with people across the world is crucial for a country such as SA. We need markets for what we produce and we also need to be able to buy what we do not produce with minimum friction. There is no path to escaping our crippling poverty without enormous growth in both exports and imports.

It is also true that governments control access to the markets of their countries, so SA’s foreign policy has to reflect the imperative of boosting trade in ours. 

According to the World Bank, as of 2021 China was SA’s biggest trading partner, making up 11.2% of exports and 20.6% of imports. The next biggest export trade partner was the US at 10.7% of exports (and 7% of imports). Of SA’s top five export trading partners, four are the US and its allies, making up 32% of exports. Unlike trade with China, SA is able to export more than it imports from these four countries. 

While all trade is important, exports determine how much foreign currency a country can earn and this ultimately determines how much the country’s people can buy. Put simply, a positive trade balance (more exports than imports) boosts GDP and helps lower inflation because citizens of the country are able to use their export earnings to pay for their imports.

If exports are priced in rand, increases in exports mean an increase in demand for rand; if exports are priced in a currency like the dollar, South Africans can sell dollars to buy rand — this also increases the demand for rand. 

This means we have to treasure all of our trading partners. We cannot put all our eggs in the China or Brics basket. It most certainly means we should think twice about aligning with Russia on foreign policy, since it doesn’t even register in the top 20 of our trading partners. Russia makes up a measly 0.34% of our exports and 0.67% of our imports. SA also has a trade deficit with Russia. 

Even within Brics, trade with Russia is minuscule. China dominates SA’s Bric trade at 72.7% according to the Trade Law Centre, followed by India (21.1%), Brazil (3.9%) and lastly Russia (2.3%).

In fact, when it comes to SA’s top export, platinum group metals, Russia is a trade competitor due to its palladium reserves. A credible case could be made that SA should be positioning itself as an alternative source of some of the minerals Russia produces now that Western sanctions on Russia are in place.

Geopolitics is about interests, not feelings, and the SA government owes it to the people of the country to pursue their best interests, and not simply maintain relationships with the governing party’s Cold-War allies. 

During the Cold War the USSR supported the ANC because it was in its best interests to do so, and this support played a decisive role in turning the ANC from a more centrist organisation to a left-leaning one. 

Cold War policy on both sides of the divide was not just driven by ideology or sentiment. It was primarily driven by cold, hard self-interest. Mature governments govern in the best interests of their people, not to please the foreign government leaders they like. 

SA can learn from this today. We need major trading blocs such as the EU, China, the US, India and Brazil, trade partners that will not throw South Africans into further poverty by jeopardising their existing trade relationships. 

We should also be willing to learn from countries like Germany (SA's third biggest export partner and second biggest import partner, and the biggest economy in the EU) in terms of manufacturing, engineering and skills transfers. Germany has taken the tough decision to break its dependence on Russian energy, even though this has come at the cost of inflation. It’s worth remembering how averse the Germans are to inflation after the experience of the Weimar Republic. 

SA should carefully avoid offending countries that have taken what they believe to be a principled stance, especially if these countries are major trade partners. Many German car companies have set up manufacturing plants in SA. We should look to encourage and if possible grow German investment in the SA economy. 

Our Western trade partners have largely remained silent on SA’s foreign policy positioning to date, but being one of the few countries that refuses to condemn the Russian invasion of Ukraine will eventually cause their patience to wear thin.

We have already seen US members of congress calling for SA’s exclusion from the African Growth & Opportunity Act (Agoa), US legislation that gives SA and other Sub-Saharan countries duty-free access to the US market for more than 1,800 products. 

Countries such as Cuba and Russia are insignificant for SA trade and are unlikely to ever be significant. We cannot spend our limited geopolitical capital defending them when their support will never benefit us meaningfully.

Supporting the Palestinian Authority over Israel is even less productive than supporting these countries because it’s not even a country and is dependent for its very existence on US government funding, and much of this funding is lost to corruption.

SA could benefit from taking advantage of Israel's expertise in areas such as water, agriculture, entrepreneurship, healthcare and technology, which the country is famous for globally. This would be a direct benefit to South Africans while allowing government the standing it needs to be seen to be a nonaligned player in international relations. 

The key takeaway here is that SA foreign policy should be driven by the imperatives of trade and investment, in a manner that ultimately benefits our people through economic growth and improved access to opportunities. Russia, Cuba and Palestine have nothing to offer on that front.   

• Dhlamini, a programming tutor, is also a policy fellow at the Institute of Race Relations and writes for the Free Market Foundation.