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PODCAST | Tebogo Khaas advises Ramaphosa: Put South Africa first
In the current US-SA impasse, Public Interest SA Chairman argues that South Africa must stop trying to please everyone.
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eNCA
5 hours ago
- eNCA
US, China seek to extend trade truce with London talks
The United States and China are to sit down at the negotiating table in London on Monday to attempt to preserve a fragile truce on trade, despite simmering tensions. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are leading the US delegation, President Donald Trump announced on Friday. Chinese Vice Premier He Lifeng -- who led Beijing's negotiating team at previous talks with the United States last month in Geneva -- would also head the team in London, China's foreign ministry announced at the weekend. "The meeting should go very well," Trump said on his Truth Social platform. His press secretary, Karoline Leavitt, told Fox News on Sunday: "We want China and the United States to continue moving forward with the agreement that was struck in Geneva." While the UK government reiterated that it was not involved in the content of the discussions in any way, a spokesperson said: "We are a nation that champions free trade." UK authorities "have always been clear that a trade war is in nobody's interests, so we welcome these talks," the spokesperson added. - Rare earths - The talks in London come just a few days after Trump and Chinese President Xi Jinping finally held their first publicly announced telephone talks since the Republican returned to the White House. Trump said the call, which took place on Thursday, had reached a "very positive conclusion." Xi was quoted by state-run news agency Xinhua as saying that "correcting the course of the big ship of Sino-US relations requires us to steer well and set the direction". The call came after tensions between the world's two biggest economies soared, with Trump accusing Beijing of violating a tariff de-escalation deal reached in Geneva in mid-May. "We need China to comply with their side of the deal. And so that's what the trade team will be discussing tomorrow," Leavitt said Sunday. A key issue in the negotiations will be Beijing's shipments of rare earths -- crucial to a range of goods including electric vehicle batteries and which have been a bone of contention for some time. "Rare earth shipments from China to the US have slowed since President Trump's 'Liberation Day' tariffs in April," said Kathleen Brooks, research director at trading group XTB. "The US wants these shipments to be reinstated, while China wants the US to rethink immigration curbs on students, restrictions on access to advanced technology including microchips, and to make it easier for Chinese tech providers to access US consumers," she added. In April, Trump introduced sweeping worldwide tariffs that targeted China most heavily. At one point the United States hit China with additional levies of 145 percent on its goods as both sides engaged in tit-for-tat escalation. China's countermeasures on US goods reached 125 percent. Then in Switzerland, after two days of talks, the two sides agreed to slash their staggeringly high tariffs for 90 days. But differences have persisted, including over China's restrictions on exporting rare earth minerals. The impact was reflected in the latest official export data released Monday in Beijing. Exports to the United States fell 12.7 percent on month in May, with China shipping $28.8 billion worth in goods last month. This is down from $33 billion in April, according to Beijing's General Administration of Customs. There is also huge uncertainty around the outcome of other trade disputes. - 'Green channel' - Throughout its talks with Washington, China has also launched discussions with other trading partners -- including Japan and South Korea -- in a bid to build a united front to counter Trump's tariffs. On Thursday, Beijing turned to Canada, with the two sides agreeing to regularise their channels of communication after a period of strained ties. Canadian Prime Minister Mark Carney and Chinese Premier Li Qiang also discussed trade and the fentanyl crisis, Ottawa said. Beijing has also proposed establishing a "green channel" to ease the export of rare earths to the European Union, and the fast-tracking approval of some export licenses. China is expected to host a summit with the EU in July, marking 50 years since Beijing and Brussels established diplomatic ties.
Daily Maverick
6 hours ago
- Daily Maverick
The strategic reforms that could transform South Africa's economy
The key is to break the strangleholds that Eskom and Transnet have on our electricity, ports and railways. Introducing real competition into electricity generation and the operation of ports and railways is the key to unlocking real growth in South Africa's stagnant economy. So said Deputy Finance Minister Ashor Sarupen at a seminar organised by the In Transformation Initiative last week, where Jakkie Cilliers, head of the African Futures unit at the Institute for Security Studies (ISS), presented the unit's latest report, co-written with Alize le Roux, which forecasts SA's growth trajectory to 2043. The seminar pondered why, despite the creation of a government of national unity (GNU) last June and the virtual end of load shedding, the South African economy only grew by a miserly 0.1% in the first quarter of 2025. Cilliers said South Africa was caught in a 'classic upper middle income growth trap'. From 1990 until 2025, South Africa's economy had grown by an average of 2.3% a year, and on its current path, without significant reforms, he forecast it would grow at an average 2.4% annually from now until 2043. That would expand GDP from about $402-billion in 2025 to about $628-billion in 2043, in constant 2017 US dollars. This 'slow but steady growth' would not be enough to dent poverty. It would barely keep pace with the population, which the unit forecast would expand from about 65.5 million in 2025 to about 77 million in 2043. Cilliers said annual GDP per capita would therefore rise from $12,600 in 2025 to about $14,700 in 2043 — with South Africa falling behind the rest of the world (except Africa) where he forecast average annual GDP per capita would climb from $20,300 in 2025 to $28,500 in 2043. He noted that on its current development trajectory it would take South Africa until 2037 to return to the peak GDP per capita of $13,800 that it reached in 2013. South Africa had been stagnating for years, with steady deindustrialisation, weak investment, and a growing dependence on social grants undermining growth, particularly during the Jacob Zuma presidency, Cilliers said. Cilliers noted that 740,000 South Africans entered the labour market every year, and because of slow growth and a very capital-intensive economy the number of unemployed people increased annually. In 2023, the International Labor Organization (ILO) found that South Africa had the highest unemployment rate globally after only Eswatini. Because being part of the informal sector is considered 'work' by the organisation, South Africa's relatively small informal sector contributed to this high percentage. In South Africa, only about 18% of the labour force is employed in the informal sector. Cilliers noted that about 62% of South Africans were now living below the World Bank's poverty datum line for upper middle income countries, of $6.85 per person a day. On South Africa's current economic path, that percentage would decline 'modestly' to 58% in 2043, though the absolute number of people living below that poverty datum line would increase, from some 40.9 million in 2025 to 44.4 million in 2043 (because the overall population would rise). Cilliers said South Africa should now be reaping a 'demographic dividend' because its ratio of working age population – aged 15 to 64 — to its dependent population (children and elderly) had now reached 2.1. In the African Futures calculations, the demographic dividend should kick in when the ratio of working people to dependents reached 1.7. he said, Economic growth stunted by poor human capital But South Africa was not earning this dividend largely because economic growth was being stunted by poor human capital, mainly an unhealthy population, many of whom were still afflicted by HIV/Aids and tuberculosis and low-quality education. The question, he said, was why South Africa did so poorly on social capital, education and health, given the very high levels of expenditure on those services. 'And the only answer that you can come up with is government inefficiency, the poor use of existing funds. And the question is, how do we escape the middle-income trap?' Cilliers asked. He said the African Futures team had modelled the effects of reforms in eight different sectors on South Africa's economic development. These were demographics and health; agriculture; education; manufacturing; infrastructure and 'leapfrogging' (i.e. bypassing older technologies); free trade; financial flows; and governance. They found that the largest return was from increased manufacturing, followed by freer trade and then better governance. So, for instance, all eight sectors combined would increase GDP per capita in 2043 by about 33%, from the $ 14,750 on the current path to $19,650. Of this, increased manufacturing would contribute about $930; freer trade (with the full implementation of the African Continental Free Trade Agreement) would contribute about $900; and better governance about $800. The combined impact of those eight reforms would decrease the percentage of South Africans living below the $6.85 a day poverty rate to 50% by 2043, down from 62% in 2023. This would represent 6.1 million fewer poor people than if the economy remained on its current path, though still leaving South Africa with a large poverty burden, Cilliers said. The African Futures team had compiled a laundry list of recommendations, starting with the need to strengthen governance and accountability through evidence-based policies, curtailing corruption and increasing accountability and inclusivity. Deputy Finance Minister Sarupen, of the DA, said much of Cilliers' analysis resonated with assessments by the Treasury's own economic policy team and the work being done by the government's Operation Vulindlela and by various parties in the GNU. He agreed that merely 60% growth in the size of the economy over the next two decades 'will not get us out of the trap that we're in' and that South Africa was in danger of falling from upper middle to lower middle income status. Structural constraints The low growth was driven by structural constraints, weak productivity, low investment in capital, higher inequality and an underperforming formal labour market. The Treasury was 'acutely aware of this'. But he said the government had to prioritise its reforms to tackle the problem because of the many competing demands of a massive amount of social ills and a very strong active civil society. He noted that South Africa had a system of fairly autonomous government ministries that made it harder to pursue coherent policies. Cilliers had identified manufacturing and freer trade as South Africa's best paths forward. Sarupen noted that cheap reliable energy with stability of pricing and supply underpinned manufacturing and industrialisation . 'And one of the drivers of our de-industrialisation has been excessive pricing and inefficiency of supply that really hurts manufacturing in South Africa,' he said. He noted that while prices in the rest of the economy had risen 196% since 2009, Eskom's prices had increased by 403%. So Eskom was driving inflation and deterring investment. Sarupen added that part of the reason GDP growth had been so low over the past year, despite an end to load shedding, was because companies had sunk so much money into load-shedding-proof themselves over the past few years that they had not spent enough on actual business expansion and employment. Sarupen also noted that free trade — another key reform advocated by Cilliers — 'requires you to be able to actually move goods and services cheaply and easily around, so the logistics reforms need a lot of depth and need to maximise competition. 'And so in the reform process that we're undergoing we need to be careful to not just bring the private sector into Transnet's monopoly structure. But rather how do we create competition, across multiple ports for example.' Likewise, South Africa had to maximise competition in railway freight lines. He agreed with Cilliers that crime had to be tackled much better as it was discouraging investment as well as acting as a deterrent to economic activity inside South Africa because, for example, citizens were fearful of using public transport to go to work. Rule of law He said the rule of law was the foundation of all other economic reforms, followed by macroeconomic stability, and then better education and health, and only after that global competitiveness and industrial masterplans. Sarupen did note though that South Africa's foundation of macroeconomic stability was 'probably one of our saving graces'. He also said that the government had to reduce debt. He noted that about 90% of South Africa's debt was denominated in rands, and about 75% of that was purchased by domestic markets. Rand debt was generally better than debt in foreign currency but the scale of government borrowing, about R300 to R400-billion a year, was crowding out the amount of capital that could be invested in business ventures and therefore growth. He added that the relatively high premium of about 11% on a 10-year South African Government Bond was discouraging businesses from investing in riskier ventures. He noted that many of the investments in this year's controversial national Budget were important — such as in public transport. He said, for example, that while a lower income worker in Vietnam earned a similar wage to a lower income worker in South Africa, the Vietnamese worker spent about 10% of his or her income on transport, the South African workers spent around 50%. 'People are going to work to earn money to be able to go to work,' he said. And this was diverting money away from workers buying goods and services, which was essential for economic growth. DM
IOL News
7 hours ago
- IOL News
'High promises, dololo delivery' – Economist slams Ramaphosa for doing nothing
According to Professor Jannie Rossouw from Wits Business School, President Cyril Ramaphosa has failed to deliver meaningful results ever since taking office. Image: GCIS Professor Jannie Rossouw of Wits Business School has described President Cyril Ramaphosa as an "ineffective" leader who has contributed "nothing" since taking office, and is now leaning on race-based policies like B-BBEE to win back support for the ANC. Speaking to IOL News on Monday, Rossouw said Ramaphosa is using race-based empowerment policies such as the Broad-Based Black Economic Empowerment (B-BBEE) Act and the Employment Equity Act to try and regain support for his party. The African National Congress (ANC), is currently the leader of the Government of National Unity (GNU), which includes other parties. 'Mr Ramaphosa is at the end of his presidency,' Rossouw said. 'His party is in trouble. It's losing support all the time. So he's making these statements in the hope that it will improve support for the ANC.' His comments came after Ramaphosa's recent weekly newsletter, in which he defended the B-BBEE and the Employment Equity Act. Ramaphosa rejected what he called a 'false notion' that South Africa must choose between economic growth and transformation. He said the country must remain committed to redressing historical injustices. 'Our Constitution reflects the promise we made to one another and to future generations to redress the injustices of our past and realise the full potential of our country,' Ramaphosa wrote. 'For this reason, we reaffirm that broad-based Black economic empowerment is not just a policy choice but a constitutional imperative.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ He referenced the 70th anniversary of the Freedom Charter, which proclaimed, 'the people shall share in the country's wealth,' and argued that empowerment policies are key to ensuring inclusive growth. 'We must make our empowerment policies more meaningful,' he said. 'Economic growth without transformation entrenches exclusion, and transformation without growth is unsustainable.' According to Ramaphosa, South Africa has made measurable progress since 1994, including improvements in ownership, management control, and enterprise and skills development, especially among women-owned businesses. However, Rossouw sharply disagreed. He argued that the current application of race-based policies has done little for ordinary citizens. 'It's obvious by now that the ANC government's economic policies are not working,' he said. 'Over the past decade, our growth rate has averaged around 1% per year, while population growth is 1.5%. That means on a per capita basis, South Africans are getting poorer.' He added that the benefits of B-BBEE have largely gone to a small, politically connected elite. 'I can give you five or six people who are now exceptionally wealthy, Mr. Ramaphosa himself among them... Think of people in the coal and mining industries. Meanwhile, we have a large group of very poor South Africans,' he said. 'We see it in the Gini coefficient. We see it in unemployment. These policies are clearly not delivering the results they were originally intended to deliver. There's no skills transfer. Few people get very wealthy, while unemployment is over 50%.' Rossouw said transformation is important, but not in the way the ANC is doing it. 'Transformation is necessary, but the current approach isn't helping. It's not creating jobs or reducing poverty. It's enriching a small elite. That's not a real transformation.' The ANC's economic policies have also come under fire from opposition parties. Both the Economic Freedom Fighters (EFF) and the uMkhonto weSizwe (MK) Party criticised a recent proposal to allow foreign companies to meet B-BBEE requirements through the Equity Equivalent Investment Programmes (EEIPs), including Elon Musk's Star Link. The EFF called it a 'backdoor for foreign multinationals' to avoid local empowerment laws, while the MK Party labeled it a 'treacherous blueprint' designed to dismantle state capacity and cut deals with foreign tech oligarchs. When asked to comment on the backlash, Rossouw declined to weigh in on specifics, especially following recent global controversies. 'Well, that's a difficult one for me to respond to because the official line is that structures will be in place to allow people like Mr. (Elon) Musk into the country. Given his fight with Mr. (Donald) Trump (US President), I'd rather refrain from commenting,' Rossouw said. Ramaphosa, for his part, argued that the world is in a 'polycrisis,' marked by global conflict, economic stagnation, and environmental degradation, and that South Africa must not retreat from its transformation agenda. 'We must dispense with the false notion that we must choose between growth and transformation,' he wrote. 'B-BBEE is not a cost to the economy; it is an investment in it.' However, Rossouw said he remains unconvinced. 'What has Mr Ramaphosa brought to South Africa since his presidency that we can be proud of?' he asked. 'He's brought us nothing. High promises, no delivery… He is an ineffective leader.' IOL Politics
