Despite a tense relationship for most of 2023, South Africa and the USA are now on the mend, alleviating some fears over the local economy.
South Africa’s relationship with the world’s largest economy was under severe strain over the last several months after US Ambassador Reuben Brigerty accused South Africa of loading arms onto the Russian Cargo ship Lady R last year in Cape Town – causing the rand to weaken.
Following the controversy, several US lawmakers – both Democrats and Republicans – wanted South Africa expelled from the African Growth and Opportunity Act – which aims to expand economic relations between Africa and the USA.
According to research from RMB, the move would have a damaging impact on the agricultural and automobile sectors.
However, following an independent investigation into the matter in which no foul play was found regarding the Lady R fiasco, relations between the two nations have become far more cordial.
Business Leadership South Africa CEO Busisiwe Mavuso said these improved relations could be seen at the AGOA summit in Johannesburg last week and the SA Tomorrow Conference in New York.
Mavuso said that the African Growth and Opportunity Act expires next year after ten years of operation and needs to be renewed before 2025, with indications that it will be. There were also discussions over how the Act can be improved.
“Secretary of State Antony Blinken told the conference that the US president wants to work with Congress to make it better,” Mavuso said.
“One way to do that was highlighted by President Cyril Ramaphosa, who addressed the forum: extend AGOA for a sufficiently lengthy period so that African businesses can commit to long-term investments on the basis that AGOA supports demand for the long term.:
“Governments also pushed for longer terms for the review of country eligibility. At the moment, eligibility is reviewed every year, which means, in theory, countries can lose AGOA preferences, making it difficult for companies on the continent to make long-term investment decisions.”
At SA Tomorrow, several government – such as public enterprises minister Pravin Gordhan – and private sector – including Nedbank CEO Mike Brown and Capitec CEO Gerrie Fourie – officials were in attendance, with Transnet and Eskom officials also present to explain how they plan to turn around their flailing companies.
Mavuso said that US investors were keen to hear how serious the government’s commitment to reform is, with them trying to find new opportunities as risk appetite is improving.
“These events are important for different reasons but also have some common strands. At both, the diplomatic relationship between South Africa and the US was much discussed. I think this relationship is healing, with the South African government now much clearer about its non-aligned stance,” she said.
“The two events will have helped that healing process by shining a light on the shared opportunities the two countries can deliver by working together.”
“The investment and trade relationships we have with the US are already very important – certainly among our most important in the world in terms of volumes. The events last week will help consolidate that and build it.”