Sacci urges SA to push investment as mood plunges

South Africa should focus on attracting foreign investment and extending trade relations, one of the nation’s main commercial lobby groups said after business confidence fell to a year low.

An index compiled by the South African Chamber of Commerce and Industry showed average business confidence declined to 106.9 in May from 107.1 a month earlier. The latest figure is the lowest level since May 2022, when global headwinds exacerbated by Russia’s war on Ukraine fueled inflation and capital outflows.

Read: Why the IMF is worried about SA

“With a global economy that is slowly recovering to perform optimally, it is essential that due attention be paid to place South Africa back on a trajectory attracting foreign investment and extend lucrative trade relations,” Sacci said in a statement on Wednesday.

South Africa’s relations with the US, its second-biggest trading partner, and other Western allies have come into focus in the past year because of Pretoria’s stance on Russia. It’s angered the US by abstaining from United Nations resolutions condemning Russia’s invasion of Ukraine, and by hosting naval exercises with China and Russia.

Last month, a diplomatic row broke out between South Africa and the US when American Ambassador Reuben Brigety accused South Africa of supplying weapons to Russia. Brigety implied that South Africa may lose its duty-free access to American markets, a prospect that sent the rand to a record low against the dollar. before the two governments sought to smooth over the spat. President Cyril Ramaphosa has denied the allegations about the weapons shipment and ordered an inquiry.

Duty free

Trade between the US and South Africa was estimated at $23.3 billion (R430 billion) last year. That compares with $850 million (R15.69 billion) of exports and imports between South Africa and Russia, according to International Monetary Fund data.

South Africa has duty-free access to the world’s biggest economy under the American Growth and Opportunity Act and the so-called Generalized System of Preferences — last year it exported $2.7 billion of goods under the programmes. AGOA expires in 2025 and US officials have previously said the qualifying criteria for beneficiaries could be revised or the programme replaced.

Earlier this week, four American congressmen urged the Biden administration to relocate an AGOA event that’s scheduled to be hosted in South Africa in November over its relations with Russia.

Read: SA says it has US support to host Agoa Forum

If the US and its allies in the European Union decide to retaliate against South Africa over its Russia ties, the country may lose as much as $32.4 billion (R598 billion) in export revenue — almost a 10th of its gross domestic product, according to Ndivhuho Netshitenzhe, an economist at Stanlib Asset Management, which has more than R650 billion of assets under management.

“Threats of losing out on lucrative trade agreements may dent an important element of South Africa’s economic relationships and wellbeing,” Sacci said. “This calls for government to ease speculations and remove lingering uncertainties.”

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