South Africa’s strained relationship with the United States has been dealt a second blow with US Secretary of State Marco Rubio’s decision to boycott the G20 Summit in Johannesburg. In this interview with economist Dawie Roodt, he warns: “I think it’s pretty much a given that we will not be part of AGOA that much longer – unless we really start taking extraordinary measures to get on the good side of Donald Trump. And if the relations deteriorate even further, I think there’s a possibility that it could be some further actions against South Africa, something like levies or import duties. And we have to understand that if we don’t polish this guy’s ego for one, many other things that we need to do as well….If we don’t do that, we’re going to pay a very dear price. And South Africa simply cannot afford that.” Roodt also gives his take on Elon Musk’s role in the White House. And in his latest economic forecast, Roodt says: “We are in trouble. And it’s not only Donald Trump that causes all of that. A lot of that is homemade because of the wrong policies that we’ve been following locally for, in fact, many decades.”
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Edited transcript of the interview ___STEADY_PAYWALL___
Chris Steyn (00:02.012)
South Africa’s relationship with the United States has deteriorated even further. We speak to economist Dawie Roodt. Welcome, Dawie
Dawie Roodt (00:10.35)
Thank you Chris, good morning to you.
Chris Steyn (00:12.912)
In the latest development, the US Secretary of State is boycotting the G20 summit in Johannesburg. What are the implications?
Dawie Roodt (00:22.478)
Well, that in itself is perhaps not that important, but I think clearly what he’s trying to say is that they’re happy with a number of things. We know what Donald Trump said about South Africa. A lot of that, of course, is not true. And I think this is just another signal from the United States that they are not happy with South Africa’s, well, a number of things about South Africa. The way that South Africa is positioning herself internationally, politically.
And the other one has to do with local economic policies, like for example expropriation. Those are the sort of things that they are concerned about.
I read the comment of X that he made on X and there’s a bit of an ideological reason, it seems, why he doesn’t want to come to this G20 meeting early this year.
So I guess this is just another sign of the deteriorating relations between South Africa and the United States, which is really a pity and which is really something that we should be concerned about.
Chris Steyn (01:19.366)
Just going back to the first blow struck by President Donald Trump. How far do you think he’s prepared to take it?
Dawie Roodt (01:27.534)
I must tell you, if we remain on AGOA, for instance, for the next couple of months, I think we should consider ourselves quite lucky.
I think it’s pretty much a given unless we really start taking extraordinary measures to get on the good side of Donald Trump. I think it’s pretty much a given that we will not be part of AGOA that much longer.
And if the relations deteriorate even further, I think there’s a possibility that it could be some further actions against South Africa, something like levies or import duties. You know Donald Trump is quite keen on those. Maybe something even worse, but I think it’s pretty much given that South Africa is not going to get the benefits of a go that much longer.
Chris Steyn (02:11.612)
So do you think other countries are going to align with the US stance? I mean, there are many countries that are not happy with Trump’s re-election.
Dawie Roodt (02:20.524)
But we have to understand whether you like this guy or not, Donald Trump is the most powerful man in the world. He’s got the biggest economy behind him. He’s got the world’s reserve currency behind him. He’s got technology behind him. He’s got military behind him. He’s got Elon Musk behind him and many other people.
So he’s threatened a number of countries already. See what happened to Colombia. See what happened to Mexico and Canada. We’re talking about countries that are…In the case of Canada, for example, much, much bigger than South Africa, for instance, and they all fell in line, at least to an extent.
So Donald Trump really not in all cases, but he gets what he wants quite often. And that is the reality. That’s the reality that we have to deal with.
And we have to understand that if we don’t polish this guy’s ego for one, many other things that we need to do as well. If we don’t do that, we’re going to pay a very dear price. And South Africa simply cannot afford that.
South Africa is a small economy. The South African economy is hardly growing. The United States is South Africa’s most important or second most important trading partner. They are very important when it comes to the funding of certain deficits like the fiscal deficit. And that is just the reality.
In the meantime, South Africa has been getting more aligned with some of the countries that the United States considers enemies, countries like, for example, Iran, like Palestine, Russia, China, all those sort of countries. And we know that there’s this rivalry between the United States and those countries in the South Africa line, more with the enemies of the United States. I expect something will happen. And Donald Trump is certainly making that clear, that a couple of bad things is likely to happen to South Africa if we continue on this path.
Chris Steyn (04:06.364)
To what extent do you think Elon Musk, when it comes to South Africa, is the hand behind the throne?
Dawie Roodt (04:13.024)
Not only him, even before Elon Musk, were a number of senators in the US, Cruz for example is one, which put pressure on the previous administration to reconsider the relationship between South Africa and the United States. So it’s not only Musk. I think Musk, there are two issues when it comes to Musk. One is of course he’s an ex-South African, so I guess he’s got bit of a slightly better insights into what’s going on in South Africa and he’s of course influencing Donald Trump on South Africa.
But secondly, Elon Musk is an entrepreneur. He’s a guy that is known to really gut companies, to cut that cost in companies and to run companies very, very efficiently. And I think that’s an ideological position that he has. And Donald Trump, of course, shares that. And that’s why he’s been made the head of the so-called DOGE department that he’s supposed to streamline, the civil service in the United States and he’s running that like he’s running all other companies as well. So it’s not only his connection to South Africa, it’s also an ideological connection that has with Donald Trump and there are many other people agreeing with that.
I think a very good example is Javier Milei of Argentina, also following the same kind of approach, which in itself is not necessarily bad because the reality is governments and states internationally have been getting bigger and bigger.
And we need to cut back on governments. Governments are just far too big, including in South Africa. So it’s not only all bad, but certainly in case of Elon Musk, I think that he’s got a special interest in South Africa for coming from South Africa, and that certainly influenced Donald Trump as well.
Chris Steyn (05:57.17)
We have seen these utterances from Trump and Rubio, bad things are happening in South Africa. I spoke to a politician this morning and he said to me he feels that the US in this case is reacting to fake news. What do you think?
Dawie Roodt (06:16.642)
Well, certainly expropriation is not happening in South Africa. I think that’s what they are referring to. There’s no massive expropriation happening on land, for example. But let’s be honest about that. We’ve got this expropriation act that is part of the South African, that is a law in South Africa now. We know what the ANC government, what their ideological stance is, what they believe in. And based on this specific act, they can do all sort of bad things.
Bad things are not happening in South Africa yet as far as that is concerned, but many other bad things are happening in South Africa.We’ve got a government that believes in the wrong things ideologically. They are socialist, are leftist, they are interventionist. We’ve got a government that is highly incompetent. We’ve got a government that is destructive.
You can simply look what’s been happening to the South African economy for the past 10, 15 years. One good example is that on a per capita basis, we are poorer today than 15 years ago.
See what’s been happening to ESKOM, what’s happening to Transnet, see what’s happening to the water infrastructure. So we’ve got a government that is…bad things are indeed happening to South Africa, but when it comes to expropriation, and I think that’s what many people are referring to, that is not happening, well, not happening yet.
And in fact, I also believe that this expropriation bill is probably unconstitutional; that needs to be tested in a constitutional court before we can really get very concerned about that. I don’t think it will pass constitutional court muster.
But in the meantime, we have that as part of our law in South Africa and our ANC government, they can certainly use that at the moment to expropriate property in South Africa. They haven’t done that yet. It doesn’t mean they’re not going to do it in future.
Chris Steyn (07:59.858)
Dawie, in light of these recent developments, what’s your economic forecast?
Dawie Roodt (08:06.734)
Well, last year, we were waiting for the final numbers for last year, but last year, I don’t think the South African economy is going to grow by 1%. This year, think there are a couple of things, a few positive things, like, for example, the Government of National Unity has won, and a couple of other things. So, and I think the fiscal accounts are really deteriorating, still deteriorating, but at a slightly slower rate. So there’s a bit of a positive there. And I think the slightly stronger Rand. Of course, recently the Rand deteriorated again.
So there are a few silver linings. I also think that Eskom is slightly better managed. I think that in the case of Transnet, there are signs of improvement as well.
So I expect slightly better economic growth, but I don’t think we’re gonna see 1.5 % for 2025.
In the meantime, we’ve got this new developments. We’ve got the possibility that South Africa will be kicked off AGOA for example, or maybe whatever the Trump administration decides. And that of course will be a major headwind to the South African economy. But excluding whatever Trump may decide to do, I don’t think the South African economy would have seen one and half percent economic growth in any event. And that is more or less in line with population growth, which means that there will be another year of a decline in per capita GDP in South Africa. We will probably be knocked back to where we were 16 years ago in terms of per capita GDP in South Africa. We are in trouble. And it’s not only Donald Trump that causes all of that. A lot of that is homemade because of the wrong policies that we’ve been following locally for, in fact, many decades.
Chris Steyn (09:36.518)
That was economist Dawie Roodt speaking to BizNews and I’m Chris Steyn. Thank you, Dawie.
Dawie Roodt (09:42.616)
Thank you.
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