Africa-Press – South-Africa. South Africa is undergoing self-inflicted pain from its inability to secure a trade deal with the United States and move with the changing economic reality.
The country’s government is run according to an ideology from the 19th century that is not fit for purpose in the modern era.
While other emerging economies have grown strongly over the past decade at an annual rate of 4.5%, South Africa has only managed an average of 0.8%.
This divergence is further exacerbated by the country’s inability to adapt to changing trade policies from the United States and elsewhere.
Pan-African Investment and Research Services CEO Dr Iraj Abedian explained that music has changed, but South Africa keeps dancing the same dance.
This makes it out of tune with the rest of the world, unable to grow its local economy and effectively engage with the United States.
Abedian, a former Standard Bank chief economist, said one of the country’s major problems is the government’s lack of action and willingness to view problems as outside of its control.
This has happened more recently with the imposition of tariffs on South African goods exported to the United States, with the government failing to meaningfully engage with Washington to secure a trade deal.
“Tariffs are not beyond our control. They are very much within our government’s control. We need to change our attitude and look at how other countries have dealt with the United States,” Abedian told Newzroom Afrika.
“When President Trump comes into office, it is like you are on a dance floor and the music changes – you have to change your dance. You cannot continue the old movements because the music has changed.”
South Africa has ultimately failed to adapt to the rapidly shifting realities of US trade policy and its impact on the local economy.
“Someone else will come into office in five years’ time. We pay our President and ministers to be resilient and proactive in dealing with these challenges,” Abedian said.
The government has failed to engage with the United States and has not been able to secure new markets for its exports.
Abedian explained that the government appears to have no strategy in engaging with Trump or securing a trade deal with the United States.
“We cannot say, ‘We adopted a policy stance 55 years ago and we are going to stick to our guns.’ No, the music changes, you have to change your dance. If you cannot change your dance, get off the stage,” he said.
South Africa must focus on itself
Chief Executive of Pan-African Investment and Research Services Dr Iraj Abedian
South Africa has been lucky in avoiding the worst consequences of its diplomatic fallout with the United States.
However, this luck appears to have run out, with the country now being one of the few to face the full force of the elevated tariffs threatened by Trump.
While other nations, including emerging market peers, have secured trade deals and lower tariffs with the United States, South Africa has failed to do so.
This has almost instantly made its exports uncompetitive in the US market and undone any benefits from the Africa Growth and Opportunity Act.
Abedian explained that South Africa has to look out for its own interests in this situation. It cannot try to be friends with everyone at the expense of its own objectives.
“Trump is trying to do what is good for the United States, not for us. We need to find a way to react to what Trump is doing and not sit back and wait for something to fall into our laps,” Abedian said.
“He has been waiting and inviting South Africa to come up with a solution, and our government is not doing that. We must not blame forces outside of our control.”
The uncertainty and volatility created by Trump’s changes to US trade policy should reinforce how desperately South Africa needs to get its house in order.
The economy’s growth will not depend on clever plans drafted by government bureaucrats but on crowding in the private sector.
This requires more effective support from the government, and the government getting out of the way – less government and more governance.
This is especially true of local government, which remains dysfunctional in many parts of the country.
Source: dailyinvestor
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