South Africa and the continent should develop solutions to prepare for president-elect Donald Trump’s return to the White House and prevent potential disruptions threatening national and regional economies.
This is according to the regional head of Visa, a multinational payment systems giant that is looking to introduce solutions for easier cross-border transactions between SMEs in African countries.
Meagan Rabe, Visa’s head of digital in Africa, told Business Times the pan-African economy was deeply influenced by economic and political events in the US, China and Europe. “I think what is going to come through in the next couple of years is a lot of change and headwinds. And we need to be able to make sure we’ve got mechanisms, tools and processes that can, as far as possible, mitigate it,” she added.
Rabe’s remarks follow Trump’s threat to impose 100% tariffs on emerging economies in the Brics Plus group if they sought to undermine the US dollar by introducing a “Brics currency”.
Trump posted on his social media platform Truth Social late last year: “We require a commitment from these [Brics Plus] countries that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy.”
Brics has not resolved to establish a new currency, but to encourage trade between Brics nations using local currencies instead. While the global trade market has various currencies, the dollar is considered the fiat reserve currency and dominates the trade markets globally, even in transactions the US is not involved in.
Finance minister Enoch Godongwana stated there was no formal commitment by Brics to establish a new currency.
Rabe said African markets would have to develop tools and processes to soften the blow. “If … tariffs are going to be increased, that’s of course going to have a knock-on impact, and inflation and everything will take its toll. But we need to really see how we navigate all of that and make sure we’ve got tools and processes in place to navigate those changes, because they will occur.”
She said Visa committed to invest $1bn (R18bn) into African businesses to grow digital payments. She said more integration between African economies would serve the continent well. “If a business owner wants to make a payment from South Africa to Kenya, the payment actually goes from South Africa to London, (and) from London to Kenya. We are Africans building solutions for Africans, so why must that be the case? Why are we adding that cost to the ecosystem?”
A global rewiring of supply chains to increase resilience was set in motion some years ago – other emerging market economies will continue to benefit from diversification away from China, and the US cannot start to produce many of these goods immediately
— Peter Kent, co-head of emerging market fixed income at Ninety One
Trade and Industrial Policy Strategies executive director Saul Levin said Trump intended to be a disruptor and to change the nature of global trade with his “America first” policy, posing a risk to even the country’s closest allies. “It is likely South Africa and other African countries will be casualties if the outcome is a trade war between the largest global economies.
“The minerals in Southern Africa are important for the US. It is therefore likely the comparatively small volume of trade that the US does with Africa — along with the need to maintain a reliable source of these critical minerals — will see limited direct trade measures against the continent.”
Levin said Africa needed to chart its own way forward through initiatives such as the African Continental Free Trade Agreement for improved trade and economic development. “It will be increasingly important for African countries to increase trade with each other and support growth of industrial capacity on the continent, as the US and others take a different inwardly focused pathway.”
Peter Kent, co-head of emerging market fixed income at Ninety One, said while Trump’s second term raises uncertainty around the size and shape of future tariffs, any impact on emerging markets would be far from uniform.
“A global rewiring of supply chains to increase resilience was set in motion some years ago – other emerging market economies will continue to benefit from diversification away from China, and the US cannot start to produce many of these goods immediately.”
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