The ANC won’t budge

11 August 2025 - In this week’s Risk Alert, we begin with an assessment of the ANC’s latest National Executive Committee meeting.

Though under great pressure from multiple quarters, President Cyril Ramaphosa’s closing remarks at the end of the African National Congress’s National Executive Committee (NEC) meeting last week revealed a party determined not to adapt to changing circumstances. 

After acknowledging upfront that the South African economy was “in a state of emergency”, Mr Ramaphosa exhorted the ANC-led government to save it by continuing to do what it was doing.

He applauded the party for adhering to the “progressive policy agenda of the National Democratic Revolution which is the core pillar of ANC policies” and added that “industrial policy must be the leading instrument of economic development and transformation”.

He referred to the Government of National Unity (GNU) as a “tactic” that “has enabled the ANC to continue to execute its agenda… under conditions imposed on us by the strategic electoral setback that we suffered last year in 2024”. As part of that tactic, the ANC is considering adding more parties in the GNU, which will dilute the influence of the Democratic Alliance (DA).

In his remarks, Mr Ramaphosa said that the NEC disagreed with the decision by the South African Communist Party (SACP) to contest the upcoming local government elections but affirmed that SACP members who were also ANC members were “full members of our movement”. The SACP sees the National Democratic Revolution, which the ANC also endorses, as a strategy which seeks to provide “the most direct route to socialism”, from whence the country is to be transitioned into a fully communist society.

Mr Ramaphosa also spoke at length about the national dialogue, an ANC prestige project that he values highly. However, following the DA’s refusal to participate in it, last week ActionSA said it was also reconsidering its participation. Furthermore, a group of prominent institutions – including the Biko, de Klerk, Luthuli, Mbeki, Tambo and Tutu Foundations – withdrew from helping with the national dialogue preparations, saying the process was rushed, under-resourced, and not inclusive enough.

Mr Ramaphosa appears to be entering the lame duck period of his presidency. Heightened political volatility within the ANC is likely. 

A frustrated US

The Trump administration is set to maintain its trade and diplomatic pressure on the South African government and on the ANC.  

From meetings with US administration and Congress officials last week in Washington, DC, the CRA’s Chris Hattingh reads that lawmakers on the Hill remain frustrated with the South African government. Instead of responding to official messages and informal signals from Washington, Pretoria has ignored fundamental US concerns and not taken any concrete steps to address them.

An underappreciated problem for the South Africans is that it is not just President Trump who is disenchanted with South Africa’s domestic and foreign policy choices and lack of economic growth. Instead, these are bipartisan concerns.

The US-South Africa Bilateral Relations Review Act of 2025, which we analysed in a 24 July client note, is the latest example of this frustration. From briefings and discussions in which Mr Hattingh participated, it is possible that this piece of legislation could be passed on its own, or through attachment to other pieces of legislation, before the end of this calendar year. In the event it would expose high-ranking ANC leaders and government officials to the risk of individual sanctions. 

Furthermore, the US executive does not need to wait for the Review Act to pass before it acts against South Africa. The draft legislation serves as a signal to the executive from Congress that US-SA priorities are misaligned.  

The upshot is that although the US administration will maintain its pressure on South Africa, the issues are not intractable. For all the angry words, there is a desire in the White House, and in some parts of Congress, to make a deal and improve relations with South Africa. But South Africa has not given any of its supporters on the Hill evidence enough for them to stick their necks out for the executive to act differently towards South Africa.

Notably, from South Africa’s perspective now is probably a better time to improve the relationship than later. If Mr Trump is succeeded by Vice President JD Vance and if the Secretary of State, Marco Rubio, retains an influential position, the pressure on South Africa will be ratcheted up much further than currently under Mr Trump, as Messrs Vance and Rubio are much more focused and ideologically driven than Mr Trump is.

US punts trade over aid

Last week, the US State Department launched its Commercial Diplomacy Strategy, a policy framework designed to expand US trade and investment ties with Africa. Currently US exports to sub-Saharan Africa account for less than one percent of US trade in goods.

The US will pursue a carrot-and-stick approach to increase its trade with Africa, working closely with the private sector.

African governments of priority countries will be expected to implement “the top five market reforms identified by the private sector”. Countries that pursue such reforms with a sense of urgency will be considered “a prime destination for US investment”, and US ambassadors will be evaluated “on how effectively they advocate for US business and the number of deals they facilitate.”

For South African companies, the strategy offers a potential route back into a more constructive trade relationship with Washington at a time when relations have been strained by tariffs, geopolitical disagreements, and concerns over domestic policy.

Priority sectors under the strategy include energy, infrastructure, digital technology, agribusiness, and advanced manufacturing – all areas where South Africa has competitive capabilities or could develop them with targeted investment.

However, these opportunities will only materialise if Pretoria addresses the policy and regulatory obstacles that have been a recurring source of friction in bilateral relations. These include race-based ownership requirements under BEE, localisation mandates, restrictions on foreign ownership in certain sectors, measures undermining property rights, and a lack of policy certainty in energy, mining and logistics.

Without reforms, South African firms will find themselves sidelined as US trade missions channel opportunities to countries with fewer entry barriers and clearer investment protections.

SA’s response to US tariffs

South Africa’s response to the US tariffs has been lacklustre. Stopgap measures include an export support desk, tariff absorption measures, a localisation support fund, an export and competitiveness support programme with financing, job-loss mitigation via the Unemployment Insurance Fund, and a relaxation of competition rules under block exemptions for exporters. South Africa also aims to develop alternative markets beyond the US. However, diversification does not happen overnight and will not offset near-term US market losses.

Investor confidence is unlikely to recover while Washington’s political demands on property rights, rural security, and BEE, remain unaddressed. The real impasse is political: US demands for liberal economic reform clash with the ANC-led government’s commitment to the National Democratic Revolution (NDR). The ANC’s political will, and not the negotiators’ skill, is the main obstacle to any deal. The party regards the tariffs as a “calamity that has befallen us”, as Mr Ramaphosa put it, rather than being something within its power to change.

Could a court topple the tariffs?

There is an outside chance that the tariffs could be overturned on the back of a legal challenge in the US. In May, the US Court of International Trade ruled that Trump did not have the legal authority to impose sweeping tariffs on foreign goods.

Last week, an appeals court heard the Trump administration’s appeal and expressed skepticism that Mr Trump was empowered to impose tariffs in the way he had. The 11 appeals court judges have yet to issue their ruling, which is expected to be appealed to the Supreme Court if it goes against Mr Trump.

The US Constitution assigns Congress the power to “lay and collect Taxes, Duties, Imposts and Excises,” and regulate foreign commerce. Mr Trump imposed worldwide or retaliatory tariffs by invoking the International Emergency Economic Powers Act (IEEPA). The legal question is whether this law gave him the power to impose the tariffs. If it does not, there may be other laws the president could invoke. 

However this case turns out, Mr Trump will doubtless continue using tariffs as a key element of his foreign policy, using a variety of trade authorities. The ANC – and South Africa’s exporters – should not hold their breath for a reprieve via this route.