subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
We exported goods worth R65.9bn to the US under Agoa in 2023. Picture: SANDILE NDLOVU
We exported goods worth R65.9bn to the US under Agoa in 2023. Picture: SANDILE NDLOVU

The adage that you can’t have your cake and eat it too generally applies in ordinary situations where the rules are clear and breaching them has swift consequences. It doesn’t apply in more intricate circumstances of global democracy and international trade, where the decisions are underpinned by state interests above all else. Even less so when political considerations underpin decisions.

It gets murkier in situations where the ideological and material interests of the decision-makers, often men and women in politics, are placed ahead of legitimate national or state interests. Sadly, the latter is often the case where the interests of African states are concerned. National interests are sacrificed all too easily on the altar of often undemocratic, corrupt political elites.     

In the contemporary case of SA, a country that has been led by the same political party — and a former liberation movement — since the end of apartheid in the early 1990s, the line that should separate the interests of the state from those of the party has long since been crossed and is increasingly blurred.

Aside from state capture and other forms of institutionally devastating corruption under the ANC — a once respected party of the inimitable Nelson Mandela — archaic, Soviet-era ideologies still shape the political language and the country’s international relations.

Accordingly, the West — associated with former colonisers — generally is to be shunned, and the East — associated principally with Russia and China — is to be embraced with incomprehensible fervour. Often, the latter seems to be done just for the perverse pleasure of getting back at the West.     

Ironically, SA’s biggest trading partners and export destinations remain in the West, specifically the US, the UK and the EU. Access to their markets and foreign direct investment (FDI) in SA by Western companies continues to create many small business and job opportunities, helping the country maintain a functioning economy despite the beating it has suffered over the past two decades or so thanks to state capture, other forms of corruption, and the toxic practice of cadre deployment (the appointment to key state institutions of ill-suited yet politically connected individuals who are either corrupt or lack requisite skills and experience to deliver on their mandates).

Experience has shown that such individuals are appointed into positions to remain at the beck and call of unscrupulous politicians, ensuring that their political protectors, or “blessers”, or companies and individuals they designate, always receive lucrative state tenders.         

Over the years SA’s sovereign credit rating and those of its strategic state-owned enterprises (SOEs) have been severely downgraded by the main ratings agencies due to poor policy-making and governance. As we write, SA is struggling to be removed from the Financial Action Task Force (FATF) greylist, which came into effect in February 2023.

This happened due to mounting concerns about the country’s capacity to combat financial crimes, specifically suspected international money-laundering, which was feared to go through SA institutions to potentially facilitate global organised crime. SA was handed 22 items to address before it can be removed from the greylist.

SA needs its friends

Given these concerns, SA cannot afford to jeopardise any of its trade partnerships. While it comes as a great relief that recent reports indicate the US House of Representatives has decided it will no longer proceed with its plans to review SA’s inclusion in the African Growth & Opportunity Act (Agoa) — for now at least — any adverse action against SA in this would have had a severe effect on its economy.

SA’s trade relationship with the US is pivotal to its economy and jobs, exporting R258bn worth of goods in 2023 — representing 12.6% of total exports. By comparison, SA exported a mere R5.2bn to Russia in 2023, representing just 0.25% of total shipments — and less than those to Malawi (R8.9bn), Turkey (R7.9bn) and Vietnam (R6.4bn) over the same period. Yet the ANC government is prioritising its relationship with Russia over other countries, to the detriment of the whole of SA. 

Any review of our bilateral relations with the US, particularly where Agoa is concerned, would have an extremely damaging effect on jobs, the economy and our standing as a leading African economy. As part of Agoa, SA enjoys preferential trade access to US markets. We exported goods worth R65.9bn to the US under Agoa in 2023, or 3.2% of SA’s total exports, which supports more than 150,000 local jobs. 

Agoa’s extension is up for review this year, and its continuation is vital. Yet the ANC’s seemingly irrational efforts to align the country closer with Russia over our stronger traditional trade partners stand to jeopardise our continued inclusion in the programme. This directly threatens dozens of job-creating sectors in SA and places the previously mentioned  150,000 jobs at risk. Furthermore, losing Agoa and cosying up to Russia could harm investment inflows into SA, which will further cripple the economy, worsen unemployment and reduce our development prospects.

A more balanced approach is needed. We strongly believe the government needs to work for South Africans, not just the ANC’s ideological interests and dogma. Irrespective of which party leads the government, it should support local businesses, entrepreneurs and citizens ahead of its partisan interests, be they financial or ideological. Solving SA’s unemployment crisis should be the government’s priority. Placing our preferential trade status with the US in jeopardy works directly against that.

While SA has the right to articulate important matters in the global arena and to belong to groupings as Brics, it must do so in a manner that doesn’t lead to careless, avoidable economic losses. It should aim to build an inclusive economy that will create opportunities for more people, particularly the growing numbers of the economically excluded and downtrodden.

Given its rich human diversity and its position as the most industrialised economy in Africa, despite having lost its status as the number one economy, SA must maintain its strong economic ties with its traditional partners while it extends its reach into other parts of the world, including Russia and China.

Scribante and Moeng are ActionSA’s experts on economic development and international relations, respectively.

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.