Regional trade could focus South Africa’s muddled foreign policy
Coalition governance is messy, but parties should be able to agree on prioritising economic growth and trade into Africa.
South Africa’s Government of National Unity (GNU) has just staggered past the one-year mark. Its foreign policy reflects continuity, some change, a steady mismatch between ambition and resources, and little focus on national growth priorities.
Disagreements on foreign policy and strained relations, particularly regarding Western partners, highlight the challenges when the two largest GNU parties – the African National Congress (ANC) and Democratic Alliance (DA) – come from such different backgrounds.
The 2024 GNU statement of intent includes only one catch-all sentence on foreign policy among its basic minimum priorities: the country will pursue ‘human rights, constitutionalism, the national interest, solidarity, peaceful resolution of conflicts, to achieve the African Agenda 2063, South-South, North-South and African cooperation, multilateralism and a just, peaceful and equitable world.’ Everything and therefore nothing.
The sum effect is a foreign policy adrift. The International Relations and Cooperation Department rarely pursues the country’s developmental priorities (growth, poverty reduction and equity). It also has a selective approach to democracy and human rights issues in the region. And the defence force’s humiliation in eastern Democratic Republic of the Congo also shows that South Africa does not have the military means to support its peacemaking ambitions in Africa.
SA seems to take a principled foreign policy stance only when it has no real influence on an issue
Foreign policy largely takes the form of a commitment by the ANC to its traditional partners and issues such as Palestine, Cuba, Western Sahara, China and Russia. Regarding Russia, it’s ironic that United States (US) President Donald Trump’s tilt towards that country has reduced European (and US) criticisms of the ANC’s tacit support of Russia.
Some fresh air came into a stale debate when the Umkhonto weSizwe Party (MK) stood back from the ANC’s commitment to the Sahrawi Arab Democratic Republic’s independence from Morocco. The DA hasn’t taken a formal position, but is less passionate about Western Sahara than the ANC, and would probably agree with MK.
South Africa’s active role in international forums and advocacy for human rights on Israel’s genocide in Gaza has been commendable. However, Pretoria seems to take a principled stance only when it has no real influence on an issue that is suitably far away (such as Western Sahara) – shrinking back on matters in its own neighbourhood.
The ANC’s hostility towards Western partners is readily evident to anyone on the diplomatic circuit in Pretoria and Cape Town. BRICS partner events attract many government officials, whereas high-level events such as the European Union’s (EU) Europe Day, struggle to attract even one, despite EU trade being more important.
South Africa is particularly enthusiastic about BRICS’ expansion, emerging as a leader of the global south – although without any substantially associated trade benefits. Unlike trade with China, where South Africa exports commodities and imports manufactured goods, EU-South Africa export values roughly match imports, and have higher-value content.
EU countries also have much larger investments in South Africa, and many European companies have long-standing domestic operations. Between 1 000 and 2 000 EU companies are active in South Africa, collectively holding almost half of the total foreign direct investment (FDI) into the country and supporting over 500 000 jobs.
South Africa has a Comprehensive Strategic Partnership with China (as do many other African countries), and the number of Chinese-invested companies in South Africa has increased. But while the stock of Chinese FDI has grown, it is still below 4% of South Africa’s total stock, compared to 48% in the EU’s case.
China presents South Africa with two existential challenges. The first is the imbalance created by South Africa largely exporting commodities and importing manufactured and other higher-value items from China. Second, China is South Africa’s largest regional competitor, and the flood of Chinese goods has been key to South African and regional deindustrialisation.
The Institute for Security Studies’ African Futures and Innovation programme has modelled the comparative contribution that growth in different sectors could make to increasing incomes and reducing poverty in South Africa. The forecasts find that manufacturing has the largest potential impact on these two crucial indicators of progress.
Yet, after peaking at 25%, manufacturers’ contribution to gross domestic product has declined to below 13%. South Africa is deindustrialising. Reversing that trend requires a hard-nosed assessment of partners and future markets.
Unlike trade with China, EU-SA export values roughly match imports, and have higher-value content
However, the future of South Africa’s trade and manufacturing growth doesn’t lie in Europe, China or the US – which the American Chamber of Commerce says accounts for around 5.3% of South Africa’s FDI stock. Rather, it lies in Africa.
Already, trade with African nations accounts for much of South Africa’s exports, emphasising the country’s role in regional commerce. With the African Continental Free Trade Area, there’s potential for growth.
During the most recent budget vote, Trade, Industry and Competition Minister Parks Tau made the appropriate noises, but still referred to the tired butterfly strategy of the 1990s – with a wing each in Asia and the Americas. Instead, the vision should be of South Africa’s own Belt and Road Initiative into Africa. The country should build the infrastructure to benefit from the regional market.
Regional trade must be the pillar of South Africa’s trade strategy, especially in promoting value-added exports and expanding its influence across Africa. While not as large in absolute terms as trade with Asia or Europe, intra-African trade strategically aligns with South Africa’s industrial and geopolitical goals.
The future of SA’s trade and manufacturing growth doesn’t lie in Europe, China or the US – but in Africa
The Southern African Development Community region accounts for around 20%-25% of South Africa’s total exports, and South Africa enjoys a significant trade surplus with most African countries.
Regional trade is also heavily weighted towards value-added exports, such that vehicles, machinery, processed foods, construction materials and petrochemicals dominate exports to African countries. Trade into Africa helps support local South African manufacturing and industrial employment.
Meanwhile, the end of the African Growth and Opportunity Act and Trump’s punitive approach to trade with South Africa (and other countries), will inevitably galvanise the search for alternative markets, particularly in Africa. That is good news.
Under the GNU, South Africa’s foreign policy operates within a more complex domestic political landscape. But the one thing parties should agree on is to prioritise South Africa’s economic growth and trade into Africa.
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