American corporates doing business in SA have a role to play in resetting diplomatic relations between Washington and Pretoria, says Trudi Makhaya, President Cyril Ramaphosa’s erstwhile economic adviser.
In a wide-ranging interview with Business Day, Makhaya, now a partner at Boston Consulting Group (BCG), said the diplomatic relationship between the US and SA is not beyond repair.
“The relationship with the US is not hopeless. I know at the moment there are questions around our diplomatic presence and how that is playing out. The point we are making is that if we go back to a fact-based engagement between the US and SA, we can make some progress,” Makhaya said.
“There is clearly too much that hasn’t been constructive or explained well. Business also has a role to play because there are many US businesses that are thriving in SA, that can be champions of the real SA story on the ground. There are American companies that have managed to craft strategies that support SA’s transformation agenda. I think elevating those narratives will be important.”
There are American companies that have managed to craft strategies that support SA’s transformation agenda. I think elevating those narratives will be important.
Some of the blue-chip US companies doing business in SA include Citi, Goldman Sachs, Microsoft, General Electric, Visa, Ford and Amazon.
The souring diplomatic relations between the countries which culminated in the expulsion of SA ambassador to the US Ebrahim Rasool has put at risk two-way trade of about $20bn.
One of the issues the Trump administration has with SA is the country’s affirmative action and broad-based BEE policy programme. These are contentious policies meant to redress economic inequality induced by the apartheid governance system and facilitate economic conditions that are more inclusive and representative of the country’s racial dynamics.
However, the policies’ detractors, including US President Donald Trump ally and SA-born Elon Musk, have called the policies discriminatory.
Ryan Cummings, senior associate with the Africa programme at the Centre for Strategic and International Studies (CSIS), a pre-eminent voice on foreign policy and national security issues, has also urged Pretoria to reach out to US companies doing business in the country.
Cummings said to counter claims of racial bias, the SA government can mobilise the about 600 US corporates doing business in the country to provide an “honest and transparent account of labour conditions and business practices”.
SA is one of the countries that have attracted retaliatory tariffs from the US, which have been put on hold for 90 days.
I think from an SA Inc perspective, there has to be a sense of a surge for alternatives in terms of the global trade order. You can't assume that you will have the same type of access you had before to any market really.
The tariffs put the future of the African Growth & Opportunity Act (Agoa), which comes up for renewal in September, in doubt. The state of SA-US diplomatic relations could have implications for US-SA bilateral trade, and its inclusion in any extension of Agoa, which provides duty-free access to the US market for most agricultural and manufactured products, such as cars and parts.
According to BCG’s data, trade with the US makes up about 13% of SA exports, and that nonrenewal of Agoa ends duty-free status for 25% of SA exports to the US, which is projected to dent exports by $397m.
Makhaya said with Agoa, people have for several years been questioning whether middle-income countries like SA should be part of Agoa.
“This is not a Trump administration thing. The question has been asked for some time whether SA should be part of Agoa. I think from an SA Inc perspective, there has to be a sense of a search for alternatives in terms of the global trade order. You can't assume that you will have the same type of access you had before to any market really,” she said.
“Continental integration becomes an important antidote to all that is happening. We have seen the African Continental Free Trade Area (AfCFTA) come into shape. If we are fair and we compare it to the history of the EU, it was actually stunning how quickly the AfCFTA was moved from a concept to a fully-fledged trade agreement,” Makhaya said.
“We are hitting a period where the momentum is slowing down a bit in terms of actual trade. That should be a real focus for our leaders to figure out the acceleration of continental trade because that seems to be one of the core ways to survive the current moment.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.