Sakeliga’s Russell Lamberti dissects SA’s trade challenges and political turmoil in the GNU

Sakeliga Executive Director and Chief Economist Russell Lamberti discusses South Africa's trade challenges, particularly with the US and China. He highlights the potential risks of increased US tariffs and emphasises that China cannot fully replace the US as a key trading partner. Lamberti also addresses the political landscape, expressing concerns over the slow pace of fiscal reform and the tensions within South Africa's coalition government. Despite these issues, he remains optimistic about Sakeliga's efforts to challenge harmful legislation and encourages South Africans to stay resilient and hold institutions accountable during this period of uncertainty..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.Edited transcript of the interview ___STEADY_PAYWALL___.Bronwyn Nielsen (00:01.256):Thank you so much for your time. We are looking at a couple of different topics today, and I want to start with AGOA and the trade relations that we, as South Africa, have. What is the overarching objective for the South African government in international relations? Specifically, what do you believe the overriding objective is in terms of the national interest, from your perspective?.Russell Lamberti, Sakeliga (00:34.968):Yeah, hi Bronwyn, that's a great question. It's a tough one because when you talk about national interest, you have to try to amalgamate all sorts of competing views on what that actually means. So, it's a complex starting point. However, some of the low-hanging fruit is to build as many good relationships globally as possible and trade with as many partners as you can. This means bigger markets and better supply onshore. So, that has to be the objective..We have a US administration now that is seeking to use the "tariff stick," as it were, as part of international relations and negotiating tactics. That creates a somewhat different landscape that people will have to get used to. No doubt, this will likely escalate globally. But, I think we need to see this as part of the shifting landscape and adjust our approach to these negotiations. Ultimately, the goal is to lower tariffs, facilitate freer trade, and provide cheaper goods and services..Better market access—especially for a small economy like South Africa—is absolutely critical. This escalation in tensions, I don't know where it's all going yet, but it's still very fluid and very new. It's a new territory for the South African government. Tensions are certainly escalating; the ambassador has been ejected from the United States. What that means for things like AGOA and various trade arrangements is still up in the air..However, the objective must be to maintain good relations with large trading partners as far as possible. To my mind, that's a no-brainer..Bronwyn Nielsen (02:55.496):Can China, just staying with the trade discussion for a little longer, make up for any shortfall we experience with the US? For instance, if we are ejected from AGOA, can our relationship with China make up for that?.Russell Lamberti, Sakeliga (03:14.112):Again, these are quite opaque themes, and it's not easy to get one's head around. We are a very small economy in this vast global landscape, so it's not like we account for a large portion of global trade. In terms of AGOA, I think the risk is somewhat overestimated. AGOA covers a relatively small portion of our trade. When you break it down, the adjustments in tariffs amount to maybe single-digit billions of rands. While that's not insignificant, in an economy worth seven trillion rands, it puts AGOA into perspective..So, I don't think we need to view US trade as disappearing. Perhaps we'll see more friction in bilateral South Africa-US trade, and that's something to be concerned about. But AGOA itself may not be as important as the threat of blanket, significant tariffs across all trade flows between South Africa and the United States. That's a far more concerning issue..As for pivoting to other countries, trade relations are based on established business connections and cultural compatibility. Both South Africa and the US are English-speaking countries, so it's not as simple as flicking a switch when it comes to global trade. There are big economies out there, but losing solid trade flows with the United States is very significant. This idea that BRICS can replace the US is a very shallow analysis of how trade and international relations work..Take India, for example. India is part of BRICS, yet it has a good relationship with the United States, manages relations with the Middle East, and even with Russia. It has also navigated relations with China. India has adopted what I would call mature diplomacy. That's the direction we need to move in..Bronwyn Nielsen (05:56.232):One more question on manufactured goods versus raw materials. There's the perception that we are more focused on raw materials, particularly in relation to China, while manufactured goods flow to the US. Do you think that's an accurate assessment?.Russell Lamberti, Sakeliga (06:23.692):We do send quite a lot of raw mineral goods to the United States. But I think people often try to simplify trade into these straightforward narratives. Yes, China needs resources, but there's nothing wrong with selling resources to someone if you're good at producing them. South Africa has actually become less efficient at producing these resources. But if you are good at it, that's fine..The idea of beneficiation—manufacturing more to get more for what you sell—is valid. However, if you're not efficient at manufacturing, it can cost you a lot to make those goods. South Africa needs to stick to its strengths. Businesses need to sell to as many markets as possible. We should continue sending raw materials to the US, China, and other countries. Similarly, we should continue sending manufactured goods to the US, though perhaps less so to China, since they're very competitive in their local market..Trade is not just something directed by governments. It's a business-oriented process, where businesses find other businesses to trade with in other countries. We need to give that process the space to happen organically..Bronwyn Nielsen (07:50.76):Let's now talk about the government of national unity and where we are headed post-budget controversy. The fact that opposition parties still need to sign off on the budget, and this could lead to a drawn-out parliamentary process—how do you see this playing out?.Russell Lamberti, Sakeliga (08:09.976):Exactly. For the first time in ages, we're seeing that the budget is actually up for debate after it's tabled by the Minister in Parliament. That's a welcome development. However, it's concerning that any discussion about increasing taxes is even happening. What this shows is that we have what I like to call a "special interest budget." Government departments, favoured contractors, and various beneficiaries are simply unwilling to take any cuts..As a result, we find ourselves in this political situation where the state is trying to impose even more taxes on a heavily taxed economy, despite no real economic growth. The fact that this is even being discussed is highly concerning. Yes, it's good that the DA has pushed back on the VAT proposal, but in general, I'm worried about the slow pace at which reform discussions are taking place..It's clear that the ANC, as the senior partner in this government, has no strong intention to make meaningful reforms. If they did, we would be discussing how to cut the deficit—around 300 billion rands of new debt each year, which adds up to about a trillion rands over three years. How can we halve the deficit in year one, reduce it further in year two, and balance the budget in year three? If that kind of conversation isn't happening, then we're just kind of "fiddling" around..Whether a half-percent VAT increase is on the table or not, it's really just fiddling in a conversation that needs to be much more urgent and focused. I hope there is increasing opposition to this budget to force a rethink. A latent concern I have with the current parliamentary setup is that the ANC has partners to its left that make up 25% of parliamentary votes. If the ANC doesn't get what it wants from its coalition partners, it can always turn to them. This limits leverage for the junior partners in the coalition, making the situation very tricky for them..Bronwyn Nielsen (11:13.448):Do you think the coalition will survive?.Russell Lamberti, Sakeliga (11:18.456):That's a tough question. It's never totally made sense to put together partners with such different starting points and views. From the outset, this coalition has been uneasy. To date, I'm not convinced it's working for the country. Those who support the coalition, particularly the DA, point to the potential consequences of not forming it—a so-called "doomsday coalition." There's some validity to that scenario, but it's not the only alternative. The ANC could have governed as a minority party, and the DA could have struck a deal with them around confidence and supply agreements..Just in the last day or so, the DA's federal chair has lamented the tension in the coalition, especially regarding the selection of a new US ambassador. They're concerned that the ANC is driving the ship without considering its partners. Clearly, there's a huge amount of tension..I would caution against framing the situation in terms of the "doomsday scenario" because that's not the only alternative. It's not obvious that the ANC wants to go into a coalition with its other partners either. By constantly dangling the "doomsday scenario," it's a somewhat manipulative strategy to lock everyone into a particular position..From a negotiation and leverage perspective, the DA and other junior partners need to think very hard about where their leverage lies and how they can start exerting more influence in this relationship. From my vantage point, the current trajectory doesn't seem to be working well..Bronwyn Nielsen (13:50.116):Is Sten Haesen the right man to be leading the Democratic Alliance at this time?.Russell Lamberti, Sakeliga (13:58.698):Bronwyn, I think it's incredibly difficult to run a political party that is both a coalition partner in government and also a major opposition party. Officially, it's no longer opposition, but the DA still wears both hats. Managing a major portfolio, like agriculture, while navigating coalition dynamics, is a very complex task..The ANC, for example, has a leader who is both the president and the head of the party. But that's a problem in itself—he doesn't run his party effectively, and he doesn't run the country very effectively either. I think the DA needs to make some tough decisions about how much capacity they can truly dedicate to these different roles..Managing such a large portfolio in government, while leading the largest opposition party, is a very heavy load. I think the DA, and Minister Steenhuisen, need to think hard about how to allocate their resources and whether it's possible to effectively juggle all these responsibilities..Bronwyn Nielsen (15:25.542):Russell, you mentioned an alternative to the doomsday scenario. Can you map that out for me?.Russell Lamberti, Sakeliga (15:32.558):Well, Bronwyn, I'm not a political analyst, but there has always been the possibility of the ANC governing as a minority party. In that case, the DA could have offered their vote to Mr. Ramaphosa to be president after the election, but then entered into what's known as a "confidence and supply" arrangement. This means offering your vote for the president in exchange for securing certain demands.."Supply" refers to helping the government pass the budget. As a minority party, the ANC would need the DA's votes to get the budget over the line. While this would create challenges—since the DA only holds around 22% and the EFF and MK add up to about 25%—it could have provided more leverage over the ANC..Currently, the ANC is governing with all the personnel and know-how built up over 30 years, so they are firmly in control. But, if the DA had leveraged its position better, the ANC might not be as firmly in the driver's seat. Instead, by constantly threatening a "doomsday" scenario, the junior partners are limiting their options..Bronwyn Nielsen (17:31.496):As a final question, how are you feeling as a South African who's seen numerous cycles, both economic and political? How do you feel at this juncture?.Russell Lamberti, Sakeliga (17:43.308):It feels… uncertain. I think people are feeling this, Bronwyn. The sense that the sand is shifting under our feet is palpable. We're in a time of tremendous uncertainty. The ANC, though having lost an election, still retains a lot of power over the economy. I'm concerned that they're feeling desperate and, in that desperation, pushing a very harmful agenda..There's a rising sense of tension—perhaps even racial animosity—and the US administration has contributed to this discourse as well. So, the uncertainty is ratcheting up. It's completely understandable that people are feeling nervous, even out of place..At the same time, we're excited about the work we're doing at Sakeliga. We have big cases ahead of us that are winnable against harmful pieces of legislation, like the NHI, Expropriation Act, and the Climate Change Act. Corporate South Africa is backing us in ways we've never seen before, which is encouraging..We must keep pushing forward, continue being a valuable partner for foreign companies, and resist harmful policies. If we get it right, we can win. But people will need to steel themselves, as we're entering shaky ground. This is a time to support good organisations, think clearly, and hold politicians and institutions accountable..Russell Lamberti, Sakeliga (20:01.794):People need to prepare themselves because the ground is becoming very unstable. This is a time to stay focused, realistic, and hold not only politicians but institutions accountable. It's understandable if people are feeling uneasy right now, Bronwyn..Bronwyn Nielsen (20:35.28):Thanks so much for joining me, Russell. It's been great engaging with you. Russell Lamberti is the Executive director of Sakeliga..Read also:.Neil de Beer on Mbalula, Morero, Mashatile, MK's first Western Cape win, the Battle for the Budget – and the general's disappearing wings…Harber's dismissive response mirrors ANC's mishandling of legitimate issues🔒 SA Presidency urges restraint over US consulate street renaming

Sakeliga’s Russell Lamberti dissects SA’s trade challenges and political turmoil in the GNU

Related Stories

Historic win for DA in ANC stronghold township - Electoral Roadshow with Wayne Sussman

Solly Moeng: Impeachment drama — Cyril fights, Mashatile waits, and SA is watching the DA…

Francois Rossouw - “Lying” Steenhuisen faces big damage claims from farmers

Shirley de Villiers: Joburg's last rites