Business leaders send a stern warning to Ramaphosa
Leaders of South African business groups have met with president Cyril Ramaphosa, warning him that South Africa’s foreign policy in relation to Russia and its war in Ukraine could do untold damage to the country’s already crippled economy.
According to the City Press, even more CEOs and business leaders are scheduled to meet the president in the coming weeks to discuss the same matters.
The paper said the business leaders from Business Unity South Africa (Busa) and Business Leadership South Africa (BLSA) met with the president this week to discuss the fallout of allegations made by the United States that SA had a hand in aiding Russia.
The US embassy earlier this month alleged that South Africa had supplied ammunition to Russia – a country currently at war with Ukraine following an invasion of the latter in February 2022.
The fallout of the allegations was immediate, tanking the rand and putting many multinationals on edge, fearing sanctions or being booted out of beneficial trade agreements with the United States – one of South Africa’s biggest trade partners.
The South African government has denied the allegations. It has launched an independent investigation into the matter, all while insisting it is neutral and not aligned with any side in the conflict.
Despite what the government says, however, markets, Western nations and business leaders are simply not convinced, as statements, utterances, and even policy standpoints from the African National Congress (ANC) lean firmly into pro-Russia territory.
South Africa’s office of international relations has also described its relationship with Russia as friendly, while president Cyril Ramaphosa has echoed pro-Russia talking points – such as blaming NATO for the “conflict”.
Politicians in positions of power have also antagonised the US in statements; the country’s military has hosted war games with Russia and China on the anniversary of Russia’s Ukraine invasion; and South Africa will (for now) host a BRICS summit in August – which Russia’s president Vladimir Putin will attend, despite an ICC arrest warrant.
According to the City Press, business leaders asked the president to rethink South Africa’s foreign policy, as fears are rising that the country will suffer sanctions because of its proximity to Russia.
Specifically, the African Growth and Opportunity Act (Agoa) is at risk. The Agoa gives South Africa a beneficial trade relationship with the USA, which benefits the local economy to the tune of R50 billion a year.
The Act will be up for renewal soon, and the worry is that the fallout from the recent allegations will see South Africa booted.
Ramaphosa reportedly told the business leaders that there is no evidence that the USA or any country is threatening to punish South Africa for its stance.
The president said this week that South Africa will also not be forced into picking sides and changing its position of neutrality on the matter. He said that South Africa’s approach is to push for peaceful negotiations and mediation to end the war.
Growing chorus
Busa and BLSA’s warnings join a growing chorus of business leaders and risk experts flagging South Africa’s ties to Russia as a major risk for the country.
In March, FirstRand chief executive officer Alan Pullinger said that the South African government’s “open support” of Russia presents significant geopolitical risks for businesses and could bring extremely negative consequences.
The same month, the Institute of Risk Management in South Africa (IRMSA) flagged the geopolitical conundrum as one of four major risks that companies need to make a plan for.
“There will be a global viewpoint taken (on Russia and China), and South Africa will be expected to take a position,” it said, adding that all South African businesses will face repercussions.
Regardless of the cause or source – whether the country picks a side, tries to stay neutral, or something else – businesses need to assess their position and to this and how it will impact their operations. IRMSA said this risk is being underestimated in the market.
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