Suggestions that South Africa can substitute US trade with African trade are misplaced as developed and emerging powers have already stepped in; African countries do not have the US's sophisticated consumer market; and they are hard to do business with because of chronic state failure, corruption and instability.
The US is the world’s largest consumer market. Apart from President Donald Trump’s sweeping tariffs, domestic rules are predictable, property rights are respected and the courts function.
Many developed and emerging powers have targeted Africa for years to secure raw materials, land for agriculture and to sell manufactured products.
China’s state-owned infrastructure companies now dominate most of Sub-Saharan Africa, while in South Africa corruption, incompetence, state failure and narrow BEE have left private sector infrastructure companies struggling to survive.
China's development model has been to build infrastructure linked to its African mining interests and the transport of minerals to seaports or airports for export to China. Very little Chinese-built infrastructure is integrated into Africa's domestic economies. Much of its non-mining infrastructure links presidential places to airports or sports stadiums.
Murray & Roberts, the 133-year old South African construction company, said recently it is likely to cease to exist in its current form. It is the latest victim of the rapid decline of South Africa’s domestic construction industry, but it is also a victim of the rise of state-subsidised Chinese companies that have taken control of Africa’s infrastructure build.
State-owned Chinese companies have also led the recent build of new railway lines in Africa. South Africa used to build its own railways, engines and wagons, but this has now also collapsed — so it can't be part of Africa’s post-independence rail expansion.
Australia, China and Canada now dominate the African exploration, mining and mining equipment sectors, despite South Africa’s previous dominance. New players such as Japan, India, Saudi Arabia and the UAE are also now muscling South Africa out of the African mining sector. China controls much of Africa’s critical minerals and rare earth production.
Despite the rise of Africa’s mining sector, South Africa has long ceased to be a producer of mining equipment, with China, Sweden and other countries now dominating that sector. South Africa also used to manufacture machinery and white household goods. Other players, such as China and India, are now dominating these sectors, not only in South Africa but throughout Africa.
Many non-African countries are buying African land for agriculture, including Middle Eastern powers and China. They then ship the produce to their home countries. This is in direct competition with South Africa's global agricultural exports.
The Trump administration is compelling African countries to make available their resources and allow US companies to operate there in return for reducing sweeping tariffs. This will allow the US to be a major player in African economies, squeezing out South Africa even further.
Middle Eastern powers such as Saudi Arabia and the UAE now lead peace negotiations in Africa. Under Nelson Mandela and Thabo Mbeki, South Africa used to be a key peace negotiator.
Lack of the rule of law abounds, property rights are not secure and red tape is the norm
Africa is a difficult place to do business in. It has been the graveyard of many South African companies. Corruption, state failure and incompetence are endemic. Infrastructure is uneven. Lack of the rule of law abounds, property rights are not secure, and red tape is the norm. Rules are unpredictable. Many courts cannot enforce rights.
Almost half of the 54 African countries are in conflict, run by military rulers or corrupt liberation and independence movements. Many countries are at war with others. Military rulers in countries such as Mali have recently seized mining companies. Liberation movement governments, such as those in Zimbabwe, Angola and Mozambique, demand BEE shares in foreign companies. Informal mafias often demand a share of companies.
Though there is an African Continental Free Trade Area, only 24 African countries are actively participating. Many African countries have high trade and non-trade barriers. China has lifted tariffs for most African countries. The small print is that China wants African countries to lift tariffs for Chinese products in return — this will be a challenge for South African countries.
The ANC stubbornly controls all of South Africa's foreign policy. The party has appointed largely party cadres with little business acumen as ambassadors to African countries, while our competitors appoint commercially adroit envoys with the skills to prioritise investment for their countries’ companies above political ideology.
The ANC’s foreign policy has broadly focused on ideological solidarity, rather than on securing the country's economic interests, as our competitors do.
Finally, South Africa is perceived to be xenophobic by many countries — meaning they are unenthusiastic about inviting in South African companies. Ironically, many of the most xenophobic South Africans are the ones now calling for closer trade with African countries in the face of Trump’s tariffs.
• Gumede is founder of Democracy Works Foundation and author of Restless Nation: Making Sense of Troubled Times (Tafelberg)
For opinion and analysis consideration, e-mail Opinions@timeslive.co.za
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