Africa-Press – South-Africa. Big business has criticised government’s response to allegations that Russian forces received arms from South Africa last year.
US ambassador to South Africa Reuben Brigety’s claim sent the rand crashing to a new record low of R19.47 on Friday.
Business Unity South Africa (BUSA) said the immediate reaction to Brigety’s allegations indicates how seriously the markets consider these allegations.
“Our economy is already buckling under the severe impact of load shedding, which is expected to shave off as much as 2% from the GDP growth forecast for 2023, and any further negative developments will sink us even deeper. These allegations, if proven true, will have a significant negative impact on the economy and will most likely jeopardise our trade relations,” BUSA CEO Cas Coovadias said in a statement.
BUSA is concerned about the impact of this on SA companies’ access to the US market through the African Growth and Opportunity Act (AGOA) agreement, which it believes the country desperately needs, as the US is SA’s second-biggest single-country trading partner after China.
The AGOA agreement gives SA and other sub-Saharan African countries duty-free and quota-free access to the US market. This allegation also surfaced at a time when countries’ AGOA eligibility will soon be up for review.
“As it is, South Africa is exporting far less than it is capable of because of the failure of our logistics networks,” said Coovadia.
BUSA believes that the government’s response is unsatisfactory and introduces more uncertainty. It said the appointment of a judicial commission of inquiry to investigate these allegations, as announced by the president, will take months.
“[Government’s reaction] has actually disillusioned people. It either suggests that the president is out of touch with what’s going on, or it speaks to them feeling guilty and trying to limit the implications,” said director and chief economist at Econometrix, Azar Jammine.
Jammine said it’s not just AGOA he’s worried about. South Africa could be at risk of facing the same sanctions as Russia from its biggest trading block partner, the European Union (EU) if these allegations are true.
This would be devastating to SA, as more than 40% of the country’s trade is with Western Europe.
“Europe is by far the most dominant source of trade with South Africa, way beyond the United States and even China. So, we stand to suffer a hell of a lot more than just AGOA,” he said.
At the PSG Conference in Sun City, political analyst Daniel Silke, said just the “purported neutrality” on Russia’s invasion of Ukraine was already “very concerning”. While the government preaches neutrality, SA was seen to be taking Russia’s side.
“You can’t be neutral on the issue of Russia and Ukraine, where a sovereign country has been invaded,” he said. “It’s going to count against us when it comes to relationships with the West, particularly on the AGOA agreement,” he added.
Silke said these were clear indicators of the divide within the ANC about the kind of economy it wants for SA. He said the ANC seems confused about whether it wants a free market economy, a socialist state or communism. It is also unclear whether the governing party wants to have and maintain interests with the Western countries or to be part of the “new anti-Western alliance”.
British journalist Richard Quest also told delegates at the PSG Conference that there was no question in his mind that SA’s stance on the Russia-Ukraine war will backfire because people always remember who their friends were in hard times.
“There will come a moment where somebody says, hang on; you weren’t with us on this. Not only were you not with us, but you were arguably against us. You can dress it up with a fig leaf as much as you like. But the reality is, what has been put in place will be remembered, ” said Quest.
Brand reputation management advisor and media commentator Solly Moeng said he is beyond understanding what the ANC wants when it comes to international policy and the kind of state it wants SA to be perceived as. He believes the era where the ANC’s interests coincided with the country’s interests is long gone.
He pointed out that not long ago, the ruling party debated whether SA should pull out of the International Criminal Court (ICC), something other countries wouldn’t even think of, just to let “one man visit one more time”.
“It’s nonsense! We shouldn’t have a democracy like this, where a bunch of politicians can decide to pull a whole country out of an international institution like that,” he said.
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