Buckle up, it’s about to be a bumpy ride.
President Cyril Ramaphosa is preparing to send a team to the US to negotiate with Donald Trump and co. South Africa is nervous about the prospect of losing out on preferential trade with the world’s biggest economy.
Ramaphosa showed this when he announced it during Thursday’s state of the nation address. He did not announce who would make up the team, but it is easy to see who he would wish to have on the jet. Johan Rupert and Koos Bekker have been touted as the kind of businesspeople who could best explain the South African society and its complexity to Trump.
Barking at Trump is not the best strategy. He behaves deranged and unpredictably, masking a sharp, determined corporate plundering agenda behind him.
Mineral & petroleum resources minister Gwede Mantashe fell for Trump’s trap early this week when he shouted back at the American president. He said: “I have ministers in my cabinet who always worry about geopolitics, with this imminent threat that because we passed an expropriation act, Trump will withhold funding to South Africa.”
I have ministers in my cabinet who always worry about geopolitics, with this imminent threat that because we passed an expropriation act, Trump will withhold funding to SASouth Africa.
— Gwede Mantashe
Mantashe reacted to reports that Trump was considering blocking aid and trade benefits to South Africa because of the recently passed expropriation laws. “I said let’s not immobilise Africa. Let’s withhold minerals from the US. If they don’t give us money, let us not give them minerals. But the reality is they take our minerals but say they are withholding funding. No, we have minerals in the continent and therefore we have something. We are not beggars,” he said to applause.
The South African government is not in a position to withhold minerals. In fact, it does not own any of the mined minerals. The rights belong to the mining companies that need to sell their products. They do not want to get caught up in a tit-for-tat that will disrupt their order books.
A tit-for-tat would destroy the mining and finance industry in South Africa in a flash.
It’s all good to discuss the theoretical possibility, as Manchester United fans are wondering what an Alex Ferguson return would look like. But a well-defined strategy works better than aimless pontification. This is a real battle and requires sharp strategy.
International relations and cooperation minister Ronald Lamola says South Africa will engage the US as “equals.” That is fair, and will resonate with the South African market. But the reality of global economics is that South Africa and the US are not equals. The Trump administration will not be interested in reciprocating any sensibilities. They work differently from the established diplomatic construct. They tweet their lies on the spot and have no qualms about it.
Trump set off the tensions when he tweeted that SA was engaged in a “large-scale killing of farmers”, after Ramaphosa signed the new expropriation law. US secretary of state Marco Rubio also criticised the country’s G20 themes of “solidarity, equality and sustainability”, saying: “SA is doing very bad things.”
It is not conceivable that pressure is being applied to South Africa so that Elon Musk’s companies can easily enter the country. Musk showed this when he tweeted to Ramaphosa, asking why SA has openly racist policies.
His Starlink delivers broadband internet beamed down from a network of roughly 5,500 satellites deployed by sister company SpaceX, which designs, manufactures and launches rockets and spacecraft.
Ramaphosa and Musk discussed a broader set of investments that could include Starlink, Tesla and Space X. Nabbing Musk would be a game-changer for the Ramaphosa era as it would send a strong message to potential investors worldwide that SA is open for business.
But not so fast.
Foreign companies entering the telecom sector need to meet a 30% BEE threshold. Musk is clearly not interested in having new black partners in his business, which could be why he tweeted.
There is a way around BEE, which, I’m told, has been considered in Pretoria. Equity equivalent programmes (EEPs) are an alternative to BEE and were crafted by the department of trade & industry and competition to help foreign investors. They can include social projects and programmes to empower black rural women and youth.
They can also involve skills, research and supplier and enterprise development. EEPs can be measured against a percentage of the multinational’s SA operations or revenue. EEP objectives include enterprise creation and development, foreign direct investment, infrastructure investment and human development.
Trade, industry & competition minister Parks Tau must approve EEPs.
South Africa has much to lose if Agoa — the African Growth and Opportunity Act, which enables African countries to export thousands of products to the US under favourable terms — is not renewed; even if the US needs Africa’s minerals. It’s not an argument anyone wants to advance when dealing with brazen plunderers.
Trump and Musk will easily hurt their economies in the short term in pursuit of their selfish corporate interests, but our government cannot afford to stoop to their level. Indeed, we are burghers in this case and grovel we must. It is too early to think of retaliation.
• Mkokeli is lead consultant at public affairs consultancy Mkokeli Advisory
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