Parks Tau, the new minister for trade, industry & competition, was in the US this past week trying to recalibrate relations with the world’s biggest economy. It is interesting that Tau chose the US — and not one of the countries in the Brics club, as his first official trip.
His counterpart, international relations and co-operation minister Ronald Lamola, chose the UK, and not a country in the Global South, for his first voyage. These are signs that South Africa realises where its trade bread is buttered.
South Africa’s relations with the US have been significantly strained in recent years, as Pretoria has not been able to decide how to position itself in a complex global environment. Instead of a principled approach, South Africa has clumsily chosen its infatuation with despots like Vladimir Putin, while an ally like India has become the poster child of diplomatic skill. India has managed to have a good relationship with the US while being critical of Russia’s invasion of Ukraine at the same time.
Tau’s new headache is about the renewal of a preferential US trade pact with Sub-Saharan Africa. There have been multiple calls from the continent and in Washington DC for a long-term extension of the African Growth and Opportunity Act (Agoa), which enables African countries to export thousands of products to the US under favourable terms.
In 2023, President Cyril Ramaphosa called for the “extension or renewal of Agoa for a sufficiently lengthy period for it to act as an incentive for investors to build new factories on the African continent”. He said there was potential to enhance Agoa with reforms that would add more products and make it easier for small and medium-sized businesses to benefit from.
There is a school of thought that the African Continental Free Trade Agreement could be a part of the Agoa deal, allowing more goods to move along the continent and with backward and forward trade linkages.
It would be difficult for the US to halt Agoa, as that would simply push African countries closer to China, Washington’s nemesis.
Tau had to support trade unionists and business leaders on the trip, which also sought to sell the new government of national unity as the new sheriff in town. The business leaders included Adrian Enthoven (Yellowood), Rightwell Laxa (Sasol) Stavros Nicolaou (Aspen) and Rick Menell (Sibanye-Stillwater).
Tau’s case for South Africa is a hard sell, though, coming after a decade of avoidable hostility. To show how South Africa did not take its relationship with the world’s biggest economy seriously, it first sent Nomaindia Mfeketo, who is famous for being invisible as our top diplomat to the US. Mfeketo’s term ended last year, and that vacancy has not been filled yet.
Pretoria is likely to appoint a host of new ambassadors before the end of the year. Due to the list of political casualties from May 29, pushing up a few former cabinet ministers ahead of already trained and ready-for-appointment diplomats may be tempting. I hope Ramaphosa’s wry sense of humour does not see him sending Ebrahim Patel, the former minister of trade & industry, as a replacement. Patel hates fact-based economics and would rather worship at the altar of long-discredited dogmas.
There are no signs that the government of national unity has a discernible approach to global politics and trade
Ramaphosa might also want to consider Naledi Pandor, the former minister of international relations, though her as a choice is also laden with risk due to her pro-Palestinian politics. Another option to consider is Ebrahim Rasool, who would be going back to the US as an ambassador for a second time.
There are no signs that the government of national unity (GNU) has a discernible approach to global politics and trade. At home, Tau has the job of managing South Africa’s industrial policy, with the dual duty of growing the economy and, at the same time, making it racially inclusive.
This week, Ramaphosa signed into law the Preferential Procurement Bill, which is seen as an instrument to turbocharge efforts to grow black companies’ participation in the economy. The state spends more than R1-trillion a year, which could be a powerful enabler for change. However, the reasons previous empowerment initiatives have not worked are still there, including corruption and fronting, among a litany of sins.
State procurement is a potentially powerful lever; but we should not ignore the fact that it often yields negative results. The fiscal multiplier is -1, according to state records, meaning every rand spent yields negative returns. Growing the economy needs to be one of the priorities, and it needs to be made inclusive, otherwise, we will have very little of the economy to spread, even to the designated groups.
Good luck to Tau as he figures it all out. He is an exciting man. His references on Wikipedia carry an unflattering entry: “In 2012, it was reported that Tau’s wife, Pilisiwe Twala-Tau, received a stake in a Capitec Bank BEE deal in 2006 worth around R10m to manage the Johannesburg council’s R2bn liability redemption fund, led by Regiments Capital. At the time, Tau was the MMC responsible for treasury and was responsible for the awarding of the contract.”
I guess he can be presumed innocent as no charges ensued from this.
• Mkokeli is lead partner at public affairs consultancy Mkokeli Advisory
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.