“We should not underestimate what may ultimately be at stake for the South African economy and business in the face of the current sharp breach in bilateral political and diplomatic relationships between the United States (US) and South Africa.”
In commenting about the latest tensions in the US-South Africa political and economic relationships, Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says disinformation about the situation in South Africa and negative US statements about the country’s policies have triggered a worrying spike in economic uncertainty, which is not only bad for business but also for the country more broadly.
“Apart from the growing concerns about the future of the African Growth and Opportunity Act (AGOA) and its economic significance to South Africa, a serious break in economic relationships with a major trading partner like the US could have other collateral consequences for South Africa – particularly its quest to generate higher investment and job-rich growth.”
Prof Parsons points out that, as President Cyril Ramaphosa reiterated in his SONA last week, the top priority for South Africa is higher inclusive growth and job creation. This is now the overall thrust of the Medium Term Development Plan of the GNU. As a small open economy that is at present aiming for a much higher gross domestic product (GDP) growth rate of 3% in the medium term, South Africa therefore needs to play its cards well and smartly.
“To minimise the possible impact of external shocks, South Africa needs to respond urgently to the latest threats from the Trump administration and make the economy as ‘Trump-proof’ as possible.”
According to Prof Parsons, it is therefore necessary to do battle with disinformation about South Africa at several levels.
In addition to the various political and diplomatic initiatives that are now under way, the business sector has a crucial role to play in the escalating saga.
Affected companies in both the US and South Africa need to enlarge their spheres of influence in the face of these challenging developments.
“Chambers of commerce in South Africa and the US are already intervening. However, in the period ahead, affected business firms also need to take positive steps to reinforce South Africa’s longstanding economic engagement with the US.”
Prof Parsons says companies have suppliers and customers to mobilise for support. Business needs to apply skilful and coordinated messaging that continues to advance South Africa’s national economic and strategic interests.
“Indeed, business needs to be more united than ever in presenting its case to the Trump administration and other stakeholders. Intervention by business should be conducted in a calm and focused manner, though, proposing better ways – supported by facts – to manage and preserve US–South Africa economic relations in the short and longer terms.”
