[Letter] SA should be very worried about US Congress’s Agoa letter

A letter from a group of US congresspeople asking the Biden administration to explore the possibility of moving the upcoming African Growth and Opportunity Act (Agoa) Forum away from SA to another African country, may not be the most concerning development (“Agoa Forum remains in SA despite US push to punish SA,” June 13).

However, a letter signed by congresspeople from both sides of the aisle should give the SA government a serious headache. The bipartisan makeup of the letter and its signatories indicates the level to which SA’s claimed “nonaligned” stance on the Russian invasion of Ukraine is being questioned in Washington.

Moving the Agoa Forum away from SA — it is scheduled for November — can be seen as a first rung on a ladder of options that would escalate in terms of severity for the economy. Not nearly as devastating as secondary sanctions, for example (the possibility of which the SA Reserve Bank recently warned), but nonetheless a real step down a path SA probably cannot afford. And symbolically, an indication that SA is not playing the kind of realistic, nuanced dance required of real, actions-backed nonalignment.

Perhaps President Cyril Ramaphosa sending various envoys to G7 nations in the form of senior ministers will be enough to reverse the current impression and narrative. But thus far the evidence and actions on the part of the US and other G7 countries points in the opposite direction.

SA is on track to record under 1% GDP growth in 2023. The IMF expects real GDP per capita to contract 1.4% in 2023, and to increase by only 0.3% in 2024, and 0.1% in 2025.

Assume for a moment the Agoa agreement will not be renewed: SA can try to export elsewhere. But by cutting itself off from more economically free, technologically advanced, open societies, the skill sharing, technology transfers and job-creation capital and opportunities an already moribund economy desperately needs will steadily decline.

The government is setting SA up for long-term decline and irrelevance.

This letter originally appeared here.