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Itumeleng Makgetla & Gcina Ntsaluba
26 Aug 2016 00:00
Should the ANC be ousted by the amalgamation of opposition parties in the 2019 national elections, this could have an earth-shattering effect on Africa’s intercontinental relations, writes the authors. (Justin Tallis, AFP)
ECONOMYThe sobering outcomes of the local government elections in South Africa and Britain’s European Union referendum present analysts and politicians with perplexing questions about the two countries’ historically robust economic ties and what the future holds.
Both these events represent a triumph for democracy and the agency of people. Traditional paradigms have been shattered and an assortment of new possibilities for unknown prospects in the bilateral commitments of these two countries and their place in the pecking order in world affairs have been presented.
The ANC, the Conservative Party and the United Kingdom Unionist Party have been jolted by unsettling trials leading up to and after their respective elections.
The Reserve Bank of South Africa has projected a flat line in economic growth for the foreseeable future starting from 2016. The possibility of a series of downgrades by the ratings agencies compounded by a looming recession cannot be attributed only to corruption, financial mismanagement and an ineffective and top-heavy bureaucracy.
An even greater imposter in the wretched state of the South African economy is the corrosive deindustrialisation stemming chiefly from its unbalanced relations with countries in Asia. Since South Africa embraced its partnership with China and became its biggest trade partner on the continent, it has encountered unsavoury trade disputes with the EU, threats of disqualification from the United States’s African Growth and Opportunity Act, as well as the UK’s unilateral decision to stop providing it with aid as of 2015.
These developments could indicate that South Africa has perhaps been perceived as having abandoned its co-operation with the West to counter the world order dominated by the developed world, despite its strong economic links with the UK in particular. These developments could pose a challenge for the UK’s foreign policy reorientation in its quest to pivot towards the emerging economies and the Commonwealth.
Britain is in a better position to gain from its decision to go it alone outside of the EU.
The same cannot be said about South Africa’s ability to embrace the new era of coalition politics, ushered in by its ruling party’s underwhelming provision of services for its people since assuming power more than two decades ago. Foreign debt has reached dangerous territory, according to the International Monetary Fund. The last time the country had a 40% debt to gross domestic product ratio was in 1985. Currently it is more than 50%.
Should the ANC be ousted by the amalgamation of opposition parties in the 2019 national elections, this could have an earth-shattering effect on Africa’s intercontinental relations and those with the UK, China, the EU and the US.
New trilateral undercurrents between South Africa, Britain and China have the potential to open up a window of opportunity for South Africa’s ailing economy in much the same way as gold is providing stability in international financial markets in the age of volatility. One of the major contributing factors to China’s exponential economic growth has been its ability to shift its rural labour force into labour-intensive manufacturing and industry, a significant part of which is produced for export.
This led to increases in the rate of growth of per capita income as well as a reduction in overall levels of poverty. China’s ageing population, coupled with the approaching middle-income economy trap, the rising cost of labour and its goal of a service-oriented economy have created a positive knock-on effect for economies in Asia.
The failure of South Africa to reinvigorate its industrial base is tantamount to squandering economic opportunities that automatically derive from its friendly political relations with China and its intricate economic ties with Britain.
South Africa’s foreign policy has the potential to draw investment and dividends from the rest of the world. But policymakers should be mindful of not emulating industrial models adopted during the industrial revolution and Asia’s speedy and palpable economic growth. It is true that “every minute, every hour, China changes”.
Although the growth trajectories of China and India have been impressive, they have resulted in a catastrophic environmental disaster, which has contaminated vast tracts of arable land, rivers and the atmosphere, thus posing health dangers to people, animals and plant species.
This has prompted China to invest in huge land lease and sales deals in Africa, and has served as one of the main pull factors that have attracted well over a million Chinese migrants to Africa alone.
South Africa, the UK and China are members of the Asia Infrastructure Investment Bank, initiated by China, and are also members of the G20. These institutions could serve as a platform from which the three countries can foster a common agenda regarding financial safety nets, foreign direct investment and access to liquidity and to markets.
The UK’s stringent immigration policies have been rather more welcoming recently towards Chinese investment, tourists and students. British manufactured products and its pharmaceutical and automotive industries have flourished in China, despite problems such as copyrights, intellectual property rights and patent infringements, which somewhat tarnish the largely cordial relations between these nations.
South Africa can benefit from increased skills and technology transfers from China and the UK. Favourable visa legislations for students and labour from the emerging economies and the Commonwealth could replenish the City of London’s labour force following the expected exodus of EU migrant labour from the UK when Brexit takes effect.
China has been able to benefit, without any compunction, from trade, technology and education from countries with which it has ideological and philosophical differences with. Its fixation on profits dwarfed its political gridlocks with Japan and Norway, for instance.
Britain will now have to negotiate trade deals with the EU while being at odds politically.
South Africa could learn a valuable lesson from these two in this regard. Instead of overlooking its longstanding economic interests in the West and banking on a hope for greener pastures in the East, it should increase the stakes and strive to build on the remnants of what’s left of the respect and promise its industrial output and bureau of standards once commanded on the continent and around the world.
The people of these three countries have similar characteristics and they can handle change. They boast some of the most flexible and resilient economies in the world and they benefit from a deep reservoir of human capital, world-class infrastructure and the rule of law. Their people are admired the world over for their strength in the face of adversity.
The question is not whether South Africa and Britain will adjust but rather how quickly and how well.
A central role for the imagination is crucial when we contemplate the economic and sociopolitical future trajectory of these dominant economic giants in relation to the rest of the world. As we cannot accurately quantify what will or should happen, we are compelled to take a creative leap to envision what the future could turn out to be.
Itumeleng Makgetla is an independent political analyst who specialises in the China-Africa discourse. Gcina Ntsaluba is a journalist and researcher.
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