The immediate market reaction to the allegations made by the United States of America (USA) Ambassador to South Africa related to South Africa supplying arms to Russia was the dramatic fall of the rand against the dollar which indicates how seriously the markets consider these allegations. BUSA believes that the government’s response is unsatisfactory as it introduces uncertainty that we simply cannot afford. 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 jeopardize our trade relations, in particular our continued access to US markets created under the Africa Growth Opportunity Act (AGOA) which we desperately need. As it is, South Africa is exporting far less than it is capable of because of the failure of our logistics networks. The long-term impact of reduced exports is job losses, government revenue loss, and less money available for social and infrastructure spending.
The USA is our second biggest trading partner, after China. It is extremely important for us to maintain good relations with the USA, as it is in our interests to maintain good relationships with China and other major trading partners.
We appeal to President Ramaphosa to provide urgent clarity and certainty on these allegations. We note the announcement by the Presidency that a judicial commission of inquiry will be appointed to investigate these allegations, but believe our country needs clear answers now, not in a few months.
BUSA has consistently articulated a position that the critical priorities for South Africa are the creation of an environment for investment and inclusive growth. We have consistently stated that any position adopted by the government on any matter must promote investment and growth, and not inhibit these. The response by the markets to the allegations by the ambassador of the USA to South Africa demonstrates that we are achieving the opposite of making our country attractive to investors.
Ordinarily, we do not concern ourselves with geo-political issues and South Africa’s position on its foreign relations. However, we are concerned that the current foreign policy stance of the South African government is having a negative impact on the economy and inhibits our ability, as a country, to address the socioeconomic crises we face. We are beneficiaries of AGOA, which will soon be up for review, and these types of developments threaten our ongoing participation in this critical trade agreement.
We call on the government to act swiftly and deal with this matter in a manner that prioritises our economic interests as a country.
Business Unity SA CEO
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