In the euphoric days of the mid-1990s, as a South African student researching my MBA thesis — “US investment in a post-apartheid South Africa”— at Eastern Illinois University in the US, I encountered a stark dose of realism from a Washington official on the Africa desk. In response to my idealistic questions about why the US was not immediately reinvesting in our newly democratic nation, she dismissed any notions of goodwill-driven investment with the retort: “There ain’t no such thing as compassion capital, Ravi.”
That phrase stuck with me. It was the era of Madiba Magic, when we believed the world would embrace our democratic miracle with open arms. South Africa had the moral high ground, the inspirational story and a global audience eager to celebrate its transition. But while we saw ourselves as a beacon of hope, international investors saw balance sheets, governance structures and risk factors. They were not going to pour money into a country based purely on goodwill.
Fast forward 30 years, and we find ourselves in an equally defining moment — except this time the challenge is not attracting foreign capital in a post-apartheid transition, but defending what we have under shifting global power dynamics. The Trump-era narrative of strong-arm diplomacy, particularly regarding land expropriation without compensation and threats of economic retaliation, was a wake-up call. While US administrations change, the fundamental question remains: How does South Africa strategically engage with the US in an era where our economic and political challenges have only deepened?
The conditions have changed — so must our approach
Back in 1994, our economic potential was the selling point. Today, we cannot rely on the same narrative because the conditions are starkly different:
- South Africa’s GDP is roughly the size of Wisconsin’s. That’s a sobering reminder that — in the grand scheme of global economic priorities — we are not an economic powerhouse that can afford to dictate terms;
- Youth unemployment is at crisis levels. At more than 60% in some regions, it’s a ticking time bomb that rhetoric alone will not defuse;
- Municipal failure, sewage spills and corruption have become the defining characteristics of governance. This makes it difficult to argue that South Africa is a stable, attractive investment destination; and
- Global geopolitics is shifting. US investment in Africa is being outpaced by that of China, whose infrastructure-driven approach is often seen as more pragmatic than Washington’s conditional aid and investment policies.
The Trump administration’s rhetoric on land expropriation — accusing the South African government of targeting white-owned farms — was a reminder of how quickly international investors can be deterred by uncertainty. Even though the spoken-about expropriation without compensation has not led to the kind of property seizures seen in Zimbabwe, the perception of policy instability remains a concern for investors and governments of the day.
This is not about whether South Africa should enact land reform — it absolutely should. The question is how we communicate policy clarity to global investors while ensuring that economic confidence is not eroded. This is where our engagement with the US must be strategic rather than reactive.
The reality is that the US — regardless of administration — engages with nations that demonstrate economic stability, clear policy direction and a commitment to good governance. Public declarations and diplomatic gestures will not alter this equation. Instead, tangible action on the ground must do the talking.
If South Africa wants to be taken seriously — whether by Washington, Brussels or Beijing — it must shift its focus from declarations to demonstrations. We can host as many investment summits as we want, but until investors see change on the ground, scepticism will remain.
Here’s what real action looks like:
Fix municipalities
Basic service delivery — clean water, functional roads, reliable electricity — is not a political issue, it’s an economic one. Investors look at local government efficiency before committing capital. If a company cannot be certain that its supply chain will function without disruption due to failing infrastructure, it will take its business elsewhere.
Rebuild trust by addressing corruption seriously
It’s not enough to talk about “zero tolerance” for corruption. Arresting senior politicians, not just middlemen, would send an unmistakable message that impunity is more than that. The National Prosecuting Authority needs to be seen taking action, not just promising it. Investors and international partners want to see South Africa tackle systemic corruption — particularly in state-owned enterprises — where financial mismanagement remains a red flag.
Sort out energy policy
Energy uncertainty remains a barrier to foreign investment. Load-shedding, the management issues of Eskom and delays in renewable energy projects all contribute to the perception that South Africa is unreliable for long-term investment. If we cannot guarantee reliable power, we cannot expect economic growth.
We cannot expect foreign investment or diplomatic engagement to solve our problems for us. No US administration — Democrat or Republican — will put South Africa’s development above its own national interests. That is simply the reality of geopolitics
Tackle the water crisis head-on
Water insecurity is a growing and underappreciated threat. Drought-prone regions, mismanaged infrastructure and polluted rivers and dams threaten public health, agriculture and industry. Water, like energy, is a foundational resource. Without a credible, forward-looking water management strategy — one that addresses infrastructure, waste, and climate resilience — we risk compounding our development challenges and losing investor confidence.
Revamp youth employment strategies:
Training programmes, incentives for job creation and removing bureaucratic barriers for small business growth need to move from committee discussions to on-the-ground implementation. South Africa’s greatest asset is its young population — but without job opportunities, this demographic advantage turns into a social crisis.
Strengthen trade and diplomatic relations beyond aid
The US remains an important trade partner, but our approach cannot be one of dependency. Instead of positioning ourselves as aid recipients, we must establish our place in the global economy through trade agreements that emphasise mutual benefit. Strengthening AGOA (the African Growth and Opportunity Act) should be the priority, but we also need to diversify our trade relationships beyond a reliance on preferential trade agreements.
As we host the G20 summit and talk about grand ideals to demand international respect, we must also confront the poverty on our doorstep. The battle for a functional South Africa is not about grand ideological statements or international lobbying. It is about whether a township schoolchild has a working toilet, whether a graduate can find work, whether a family can keep the lights on, or whether the food sold in spaza shops is safe to eat.
We cannot expect foreign investment or diplomatic engagement to solve our problems for us. No US administration — Democrat or Republican — will put South Africa’s development above its own national interests. That is simply the reality of geopolitics.
In 1994, we believed the world owed us something for our peaceful transition. The hard truth is no-one owes us anything. Nations operate on interest, not sentiment. South Africa’s engagement with the US — or any global power — must be rooted in demonstrated competence, not hopeful rhetoric.
If we want international investment, strategic partnerships and geopolitical influence, we must earn them through action, not words. That is the only language the world respects.
• Pillay is a former South African economic diplomat to Switzerland. He is a non-executive director of the Consumer Goods Council of South Africa; a faculty member at the Gordon Institute of Business Science; and a board member of Food Forward South Africa. He writes in his personal capacity.
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