South Africa's conflict with US President Donald Trump risks causing systemic damage to the country's economy unless a compromise is negotiated through an SA Inc approach. This would involve not only the ANC but the government of national unity partners, organised business, civil society, non-ANC experts and South Africans based in the US who are in Trump's inner circle.
The engagement must be on the basis that the fallout with the US, unless resolved, may tank South Africa’s economy — increasing deindustrialisation, disinvestment and deskilling, which will deepen poverty, unemployment and business closures.
President Cyril Ramaphosa and ANC leaders such as Gwede Mantashe appear to have made light of the importance of the US to the South African economy. Mantashe, astonishingly, said South Africa should withdraw its mineral exports to the US. In his first response to Trump cutting aid to South Africa, Ramaphosa wrongly stated that the only US development aid to the country is $400m (R7.3bn) to fight HIV/Aids. It is way more than that.
South Africa — with a world-record unemployment rate of 33%; youth unemployment of 45%; GDP growth averaging only 0.8% annually since 2012; public debt averaging 54% of GDP; 28-million people on welfare grants but only 7.4-million taxpayers — desperately needs development aid, foreign investment and markets for its products.
The economy, sadly, has declined since the end of formal apartheid in 1994 to such an extent we are now comparing ourselves to African economies like those of Nigeria or Egypt, while other emerging markets such as South Korea, Saudi Arabia and Poland are now $1-trillion GDP economies.
The reality is that in the post-Cold War, digital economy world, a country's sovereignty is determined by the size of its economy, including its globally dominant businesses and its intellectual, cultural and technological domination.
The US — through its Agency for International Development (USAID), direct government funding, philanthropic family and company foundations, NGOs, scholarships, cultural and research exchanges and company investments — provides direct and indirect jobs and countless opportunities to South Africans.
US funding supports many public sectors in which there are service delivery failures, such as health, welfare and education. US companies provide more than 500,000 direct jobs. Many manufacture products in South Africa — which has a multiplier impact on the economy, creating more employment, supplier opportunities and broader development.
Exports from South Africa worth R59bn go through the African Growth and Opportunity Act (Agoa) generalised system of preferences, particularly benefiting manufacturing and agricultural exports.
Many ANC and populist opposition party leaders — and their supporters and ordinary South Africans — simply do not grasp the depth of the US investment and support for this country. Some ridiculously suggest that South Africa break its trade relationship with the US and shift its trade to China or Russia.
China may be our largest trading partner, but it only sells already manufactured products to us. This has deindustrialised economic sectors such as textiles, light manufacturing and steel, and risks doing the same to car manufacturing, creating more job losses, poverty and inequality.
The ANC's populist, ideological and past-based foreign policy, which prioritised the interests of the ANC and not those of the country, has brought about this crisis
The Chinese government does not do development aid — not at the scale of the US, the world's largest development aid provider. Rich Chinese families or rich individuals or other non-state institutions do not provide development aid, let alone at the scale of their US or European peers.
Russia's trade with South Africa is minuscule — only 1.7% of total trade.
It is critical that ANC leaders, mostly steeped in Cold War-era alliances and the pre-technology economy, do not respond emotionally or ideologically or play to the online public gallery.
The ANC's populist, ideological and past-based foreign policy, which prioritised the interests of the ANC and not those of the country, has brought about this crisis — and many others. Prior to the establishment of the GNU last year, ANC majority governments have — rather than taking at least a neutral stance towards the US — pursued a glaringly obvious anti-American stance.
South Africa’s peers in Brics, developing-country democracies such as India and Brazil, have been more strategic in protecting their interests. India pro-actively lowered tariffs, proposed to repatriate illegal immigrants in the US and to buy US oil. Brazil has strategically refrained from attacking Trump as the country needs the US market given that two of it’s other major markets, China and Germany, are in economic downturns.
South Africa is now a multiparty government, not an ANC majority government: this presents an opportunity in negotiations with the US, because the GNU government could disassociate itself from pre-2024 governments’ anti-Americanism.
Ramaphosa must rein in ANC leaders making populist, emotional and ideological attacks on Trump and the US administration. It is critical that the ANC does not conduct the negotiations with the US on its own; it must be an SA Inc approach.
* William Gumede is the founder of the Democracy Works Foundation and the author of South Africa in BRICS (Tafelberg)
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