Alec Hogg (00:07.16)

Russell Lamberti is with me from Sakeliga. You guys have been in the news a lot lately, but I've got a feeling you're going to be in the news a lot more in the next few weeks. You've come out with some dynamite proposals that will give South African businesses a way not to be penalised by the ANC's antagonism towards the United States, particularly those who are exporting into the US. What motivated this in the first place?

Russell Lamberti (00:37.72)

Thank you, Alec. It's lovely to be here with you in Hermanus. Recently, the US trade representative put out calls for submissions on how AGOA could be modernised. AGOA is the African Growth and Opportunity Act, and it is the framework by which the US trades with African countries. AGOA has been in the news a lot. So you...

Alec Hogg (00:59.85)

...tariff-free since its due, because of what the Americans are doing. We don't pay tariffs or weren't paying tariffs under AGOA.

Russell Lamberti (01:07.478)

If your country qualifies under the AGOA framework, then all exports from that country benefit from the access—benefit with access to the US markets. Now, AGOA has... American congressmen and the administration and many people in Washington have been increasingly disillusioned with the AGOA framework. It doesn't quite seem to be working as intended. It's quite a blunt instrument.

We can get into some of the problems with it, but there is a well-known kind of review process now underway. AGOA was only extended now for just one year until the 31st of December, 2026. So it is under scrutiny and review. And so we've participated in that submissions process. We have some what we think are very dynamic ideas for a modernised AGOA. They are not strictly novel in the sense that numerous role-players in the United States have already for a number of years been putting forward similar ideas that we've put forward, and we think we've just kind of crystallised it in a way that makes good sense.

So what is the essence of what we're saying. Under the current AGOA framework, a country in Africa is either in or out. And therefore, every business, every product within that country either benefits from AGOA or it doesn't, based on the behaviour of its central government, its policy environment. We think that there is a way to make AGOA far more flexible, and that is by introducing what we would call something like sub-national differentiation.

Individual companies can show that they are compliant with US requirements, regardless of their national government's policies, and actually get access to the US markets tariff-free or, more accurately, at baseline tariffs for their goods. Or that sub-national jurisdictions—in South Africa's case, that means provinces...

Russell Lamberti (03:27.394)

...municipalities, maybe even in some countries, economic zones—can actually get that AGOA access again, regardless of national government policies, to the extent that those regional governments comply with US requirements, even if the national government doesn't.

Alec Hogg (03:46.19)

Kind of talking in code, practically. What does that mean? It is only one province that is...

Russell Lamberti (03:53.774)

In South Africa's case, so this is going to be unique to many different African countries, but in South Africa's case, can the Western Cape, for example, dissent from South Africa's race-based requirements, from the central government's BEE policies, the central government's expropriation policies, the central government's...

Russell Lamberti (04:24.172)

Let's call it silence, perhaps even tacit endorsement of songs and chants like "Kill the Boer".

Alec Hogg (04:31.628)

And those are the... you basically told us about the five requirements that the Americans have put onto South Africa and South Africa generally to normalise relations.

Russell Lamberti (04:42.926)

America has made a set of initial, let's call it, demands of the central government. Those pertain to things like expropriation without compensation. The Americans do not like that. They pertain to BEE initially for American companies, but in totality, they don't like it as a total practice. They are very, very concerned about the freedom with which whole stadiums of people can sing terrible songs like "Kill the Boer". They are very concerned about South Africa's foreign policy alignments and so on. And so they've made a set of initial demands to begin—that's just to begin the normalisation of kind of diplomatic relations.

Those demands are unlikely to be met at the national government level, Alec, anytime soon, because they run right into some of the ANC's vital interests. And so it's very unlikely going forward, as AGOA comes under review and as individual countries within AGOA come under review, that South Africa would pass an AGOA review on merit. So it's very likely, whether it's through an AGOA framework and an ejection from AGOA, or whether it's more through the executive function in the United States through what are called its 301 investigations—which investigate things like labour practices, perhaps even the racialisation of the economy, various investigations around South African trade practices...

South Africa does currently put race requirements on certain important export licensing. It dictates to European and American businesses who they may trade with in South Africa based on certain permits and quotas and so on. So America doesn't like this. And so these investigations are already leading to recommendations for higher tariffs. So now, in our view, whether it's through AGOA or whether it's through executive action, tariffs are going up across the board in South Africa.

Russell Lamberti (07:03.394)

So this is not a case of determining or opining whether that should or should not be the case. America has a particular approach to this and they are putting tariffs on South Africa. That will be either more or less durable depending on whether this finds expression in an ejection from AGOA itself, in which case this will be quite a durable sort of tariff structure.

Our AGOA proposal offers an off-ramp from this kind of punitive action. It says that a province or even a municipality can comply actually with these US conditions. And then.

Alec Hogg (07:51.265)

How? Explain how they would.

Russell Lamberti (08:00.748)

Let me give you a great example. Let's say America said that part of this compliance was......that a provincial government may not expropriate land without compensation. Well, that's not difficult for the Western Cape to comply with. Regardless of what the legislation says—and we're going to, we haven't launched it yet, but we're going to be litigating against expropriation without compensation in the Expropriation Act—but let's suppose that legislation sustains. That legislation does not force the Western Cape government to expropriate without compensation; it permits it to. To which the Western Cape government can respond, "We will not take that up."

The Premier could make an official, formal statement that they will not expropriate without compensation. And if and when they do, they will lose this privilege, this differentiated AGOA access. That would be one baseline.

Alec Hogg (09:00.855)

What about companies in other parts of the country, though?

Russell Lamberti (09:04.546)

Yeah, so we think that there are already mechanisms in place. This might sound like an administrative nightmare, but there are already mechanisms in place to be able to identify goods from particular companies and agricultural goods from particular regions. The reason why the regional thing sits so well with agriculture is because farms are somewhere specific. Farms are geo-located.

Yes, a manufacturing plant might physically be somewhere, but its inputs come from all sorts of different places and it's much more complex to determine where that product is from. Of course, agriculture has a number of different inputs into it, but ultimately you grow a crop somewhere. And so that can be geo-located and identified. So the Western Cape complies. Every, for example, every citrus grower in the Western Cape can benefit from kind of the AGOA framework.

Alec Hogg (10:04.28)

That's part of your strategy. But what if I'm sitting in Mpumalanga and I'm also producing oranges, and I've got a friend in the Western Cape and I send him a lot of boxes? How are they going to know that...

Russell Lamberti (10:19.726)

So there are ways to... there are already ways, very well-established ways to kind of audit these processes in international trade. Remember, agricultural goods in particular are very heavily geographically policed, if you like. You can't call something... you can't say that something's grown in Stellenbosch if it's actually grown in Paarl or what have you. So this already exists for agriculture.

Alec Hogg (10:44.814)

But let's point that through to a logical conclusion. I'm now producing citrus in Mpumalanga. I'm subjected to an ANC government who I don't agree with, and the Americans don't agree with. What do I do as a business to actually get around the other regulations?

Russell Lamberti (11:05.71)

That's a great question. So this is where the kind of company-level idea kicks in. So we've spoken about the regional idea, but what about at a company level? Well, we think there are mechanisms—very, very feasible mechanisms—for companies to register their own compliance and adherence to US standards. Again, let's make that a bit concrete. Let's say that the US... we know that you are operating in a jurisdiction that very often requires BEE. In some instances, you might be legally required to do BEE. In other words, if you do not do it, you will lose your license. And if you continue operating like that, you may even be prosecuted.

I mean, that's, for example, with employment equity—if you're strictly non-compliant with employment equity, it can lead to prosecution. So there are certain sectors where it is a legal requirement. In some sectors, it is not. The United States could say, "We want to see proof, and this is verifiable, that you as a producer, as a business, are minimally compliant with that particular policy." And that could be coupled with a public declaration that is signed on a secure platform, perhaps even summarised into a public register.

Companies that formally registered their dissent from BEE and race-based requirements... Now, I just want to add something really important here, Alec. The beauty of this is that this is strictly non-racial. The requirement for these benefits is not a race requirement. It is a principles requirement. Do you agree with and line up with market-based principles, merit-based principles? Do you dissent from the harms that BEE and employment equity and all these things do?

So what's interesting about this is a 100% black-owned company can obtain the full benefits of this. A 100% white-owned company that refuses to make such a declaration, that does far more BEE structures—maybe not equity structures, but even...

Russell Lamberti (13:32.642)

...other kinds of BEE point structures than is legally required of them—may not get these benefits. So that would be an example of how this can actually work. Now you might say, "But Russell, thousands of companies, is this actually administrable?" And I think that comes down to having a really strong centralised system. There are really good mechanisms in place where goods are either eligible or ineligible. It can be checked off at US customs.

There's already a major administrative apparatus at customs in any case, because things have to be checked. Contraband has to be looked at. There are loads of different products where, for example, there are tariff exemptions. Precious metals and minerals from South Africa don't attract any tariffs. There are mechanisms to determine who those come from, where they are, and what they are.

Alec Hogg (14:28.762)

Is there going to be, in the way that you're looking, would there be some kind of a register that you would be a member of? And who would administer that if there were?

Russell Lamberti (14:38.286)

Well, I think ultimately the United States would administer whatever is done here, but they may partner with local partners. But ultimately, this is a unilateral action from the United States. So I can only speculate right now as to the kinds of conditions that they will put into this.

Alec Hogg (14:57.75)

You say, "Give us conditions that we can follow as business, so that we're not penalised by crazy legislation."

Russell Lamberti (15:05.966)

Correct. And I think we have a reasonable sense of the shape of those conditions. We know already from the existing AGOA framework, and we know from the existing administration, the kinds of things that they want to see from a policy perspective.

Alec Hogg (15:24.226)

And they don't sound too difficult for many businesses, although, if history is any yardstick, you've seen that South African businesses, when they have put their heads above the parapet and criticised the government—particularly the ANC—certainly in years gone by, have been heavily penalised.

Russell Lamberti (15:42.862)

Well, look, Alec, I think there are many businesses that currently do not have any BEE structures for whom, to a large degree under the radar, I think would readily sign up for something like this.

Alec Hogg (15:58.668)

But then they'd be on a register and then the government can see that they're no longer...

Russell Lamberti (16:02.508)

Well, let's say, well, what would the government do to them? Because just bear in mind, there are groups like Sakeliga who are watching every move that the government would try and make against those companies. Victimisation is not acceptable. It's unlawful. Any kind of attacks that would be levied against those companies could be rapidly responded to.

Alec Hogg (16:25.516)

Little bit Like what OUTA did in Gauteng, I suppose, with the e-tolls. But Sakeliga does seem to be out on a limb here. You have Business Leadership South Africa, who are waving flags to a large degree for government policy at the moment. It's more of this, "let's talk about it nicely." What makes you guys more combative, as you have been?

Russell Lamberti (16:51.598)

There's nothing new here, Alec. This is just doing what Sakeliga does in a slightly different sphere. We're not litigating in this case. We are putting proposals that we think are ultimately to the benefit of South African commerce. That is our mission. We are here to create a favourable business environment, and creating a mechanism that gives an off-ramp away from these punitive tariffs—that are the result of horrendous state policies, which we already openly oppose in the courts of law—is absolutely on mission for us.

So there would be no inherent reason why suddenly, as we look to this slightly different domain, we would change our spots. We think that there's a great opportunity here to give an off-ramp and to open those trade channels that America really wants to open up, and that I think many businesses will be able to take a great opportunity of.

Alec Hogg (17:54.158)

Is there momentum on your side? Are you finding that more business people are seeing the light, as you would see it? Five years—what Rob Hersov said at the business conference, it's only five years ago, he was...

Alec Hogg (18:23.148)

...heavily ostracised for really saying things plainly. Now you're not saying things plainly; you're saying them more than plainly in this case, and saying this is... you also have to stand up if you want to be able to do business with the United States.

Russell Lamberti (18:38.91)

Well, the United States is saying that. You know, there's no free lunch.

Alec Hogg (18:43.32)

But is the momentum there?

Russell Lamberti (18:45.102)

So I think the short answer is yes, in the sense that, we've also been saying for a long time that... you know, so Rob's going back five years. If you go back 10 years, criticising BEE was incredibly difficult to do. It's a lot easier to do now. In fact, every man and his dog is criticising BEE, including black businessmen. And that might be for different reasons.

Alec Hogg (19:08.756)

We saw Sam Montsi recently put his screen up and say, "It must go. It's divisive."

Russell Lamberti (19:13.582)

Exactly. Now, 10 years ago, I hadn't heard of... you know, times change. So I think domestically, you know, the momentum is with us. And I think we have not just an administration in the United States, but a Congress that is losing patience. You know, people forget under the Biden administration already, there were concerns about South Africa's trade practices. South Africa has been under the US spotlight from Democrats and Republicans for a number of years.

Alec Hogg (19:47.502)

But the ANC would not tell you that. The ANC, certainly from inside the government, will tell you that we're just waiting for Trump to finish his term and then things will get back to normal. And you're saying normal wasn't a very pleasant place. In fact, the pressure was already growing.

Russell Lamberti (20:03.512)

Correct. And the disillusionment and the concerns with AGOA and the need to revamp AGOA to give it more teeth, that is a bipartisan issue. That is a congressional issue. That doesn't mean it's easy to just get things through Congress in the US. It's a slow-moving machine. But I think there's more durability to these concerns, and I think it would be an analytical mistake to say that this is just a Trump administration phenomenon.

I think the Trump administration has certainly given more momentum to this. I think there's perhaps more impetus as a result. The second thing, of course, to say is that the future is uncertain, yes, but the ANC could very well be looking at, after the Trump administration, another eight years of a Republican administration. It could be.

Alec Hogg (20:56.726)

Yeah, that's more difficult to sit out than when you have four years. Now you get to 12, not so much. Is this a bit of a Hail Mary pass? Is this something where you're trying to do something for your members, for the business community you represent?

Russell Lamberti (21:14.478)

I don't think there's anything Hail Mary about this, Alec. We think that there's just a tremendous opportunity here for the United States to do something that's in their interests and ultimately to do something that's going to be, I think, very beneficial to the continent, but certainly for South African businesses that want to just get on with the business of doing business with the United States. And so we see an inevitable ratcheting up of trade barriers. And we think there's an off-ramp here for businesses that dissent from the orthodoxy.

Alec Hogg (21:52.158)

As economists, you see things rationally. Politicians don't; they play games. Is there anything that gives you more than a... or some sense that this might actually fly in Washington?

Russell Lamberti (22:08.093)

Yeah, in that sense, Alec, I think there's nothing certain about this. I think your viewers should know that this is an idea that Sakeliga has put forward. We have some reason to believe that our proposal is being well considered. There were about 130 proposals that were sent through for the AGOA modernisation submissions, and we think ours is near the top of the pile.

But we're under no illusion that this whole process is long, slow, complex, and ultimately can go in directions that Sakeliga in South Africa doesn't have any control over. So what we've done is put forward what we think is a sound, constructive idea. That idea is now in the wild, it now lives, and it's going to be used or abused or misused in the way that lots of forces are going to impinge upon it. But it gives this a chance—gives AGOA a chance to be really constructively kind of rethought.

Alec Hogg (23:20.588)

And what I'm trying to get at is, what are the chances of success here? Have you had engagements with members of the administration, with the Americans who are going to make the decision? Do they give you a sense that, "Yeah, actually, this could be something that we would really like"?

Russell Lamberti (23:39.838)

I think that there are certain people in the administration that like the idea. But remember, this AGOA idea is not an administration thing. This has to work its way through the halls of the House and Senate. This is a congressional thing, and that is a much more complex space. There's a reason why it's so difficult to get legislation passed in the United States, by the way. By design from the founding fathers, it was something that was meant to be difficult.

And honestly, at that level, I can't give a clear answer. It's very difficult to say. We think that there's momentum behind these ideas at an administration level, but how much they can lean on and influence Congress is an open question.

So this is something now, I think, to really watch over the next few months. The AGOA stuff is going to build up now over the second half of 2026 towards its deadline. And we'll see, is our idea in the mix, or some version of it, some similar type of process? And if so, we are there to provide insights and kind of support where that might go. But for us, the rationale here is we think that escalating tariffs and barriers coming to South Africa is inevitable. Can we provide relief for good businesses and for jurisdictions that want to dissent from the very things that are causing that escalation?

Alec Hogg (25:24.728)

Now I can understand that your members would love this, but I can also understand that there will be people in Pretoria who think you need to be taught a lesson because why are you making trouble for this government, which is following a particular line? Does that... does that fill you with trepidation?

Russell Lamberti (25:45.742)

No, because we would be diminishing trouble, because the government is following its own policy framework. They're not influenced by Sakeliga. And that policy framework is leading to an escalation of trade barriers. And we're offering as many businesses as want it the chance to get relief from that. And the more businesses in this country that get relief from those measures, the better it is not only for them, but for everyone in this country that depends on them—which is their staff, their shareholders, but also the people that they trade with.

So more successful South African businesses, more successful farms, more successful exporters to the United States is to the benefit of everyone, even people who don't like it.

Alec Hogg (26:33.598)

How welcome is trouble, though? And I think here, if it's a good thing anyway, even if you don't export to the United States, what's the incentive to pick up on this outside of, well, things have got to change?

Alec Hogg (26:51.256)

What I'm getting at there, if you are a business that does not export to the United States, there's no direct incentive to sign up or to become part of the whole scheme. But from the way that you've articulated it, it's actually a good business practice because race-based legislation is not a great thing for the country long term. So can you see this moving from outside of......the US exporting community?

Russell Lamberti (27:23.49)

I think so. I think there could be really interesting spin-offs from something like this. This could be the entry point for companies, regardless of the export situation with the US, to sign on to a public code of ethics and be visible to other businesses who signed it. So hang on a minute—we actually want to trade and do business with guys that are going in a good ethical direction on this, regardless of race. Any business can sign this. Doesn't matter what your ownership structure is.

Alec Hogg (27:56.14)

The anti-BEE grouping, if you like, because you've got a grouping who are getting their credentials through all of these BEE rating companies. They're on the one side, and you're saying, "Well, actually, you don't need to be part of that. We have an alternative."

Russell Lamberti (28:18.958)

Yeah, I think that's one implication of where this goes. And certainly, Alec, I mean, this would be if something like this comes to fruition... and again, this is in an idea phase at the moment. But if it comes to fruition, this would be one of the first big sort of counter-incentives against the system. Up until now, generally, your incentive has been play the game, get the points, get the contract.

And I don't think that this is an equal and opposite counterweight to that. It's smaller. It would just be a start. It's just with US-based trade initially, and maybe you get more people kind of signing on. And perhaps you get an ecosystem developing here where people say, "Actually, I want to trade and do business with guys who are willing to repudiate the system and move away and go in a different ethical direction." So there are... his possibilities for that to move in that direction.

And that is, you know, that is right, right within our mission, right within what we do. We are openly daily litigating against BEE. Our mission is to end it, Alec. There's nothing... there's nothing untoward and there's nothing underhanded here. We are very openly saying we want to create equal and opposite incentives to go the other way, because we think that that's actually better for business, better for employees, better for the country, better for everyone.

Alec Hogg (29:51.554)

So maybe one day people are going to be asking for Sakeliga credentials rather than the BEE credentials.

Russell Lamberti (29:58.51)

Let's see how things evolve. But we're excited about where this can go. And our submission is in and now it's going to be in the hands of lawmakers in the US to see the degree to which they want to kind of carry this forward. We're excited about where this could...

Alec Hogg (30:19.884)

Russell Lamberti is with Sakeliga. I'm Alec Hogg from BizNews.com.

Sakeliga proposes ‘off-ramp’ to shield compliant businesses from US tariffs and ANC policy fallout