South Africa’s positioning regarding Russia is threatening become the worst economic crisis in its history.
The country risks becoming bankrupt for its relationship with Russia, which adds virtually nothing to the economy, state revenues, economic growth, job creation, socioeconomic stability, and investor sentiment.
This is according to Investec chief Annabel Bishop, who commented on the dire consequences of entertaining relations with Russia – a country that has continued to push war with Ukraine.
Concerns arose when the USA formally indicated that South Africa was in danger of being ousted from the African Growth and Opportunity Act (AGOA), losing its trade benefits due to its love of Russia.
In a letter to the US Secretary of State Antony Blinken at the beginning of June, US legislators said that there are “serious concerns with current plans to host this year’s AGOA Forum in South Africa” and that “actions by South Africa call into question its eligibility for trade benefits under AGOA”.
This development came as US Intelligence suggested that South Africa’s government has deepened its military relationship with Russia over the past year, as accusations suggested a Russian cargo vessel subject to US sanctions docked in South Africa where the government covertly supplied Russia with arms and ammunition that could be used in its illegal war in Ukraine.
On top of this, South Africa held joint military exercises with Russia and China, authorised a Russian military cargo plane (also subject to US sanctions) to land at a South African air force base, and continues the push to host the BRICS Summit, where the government aims to strengthen its ties with China and Russia.
This love for Russia might be justifiable if there were massive economic upsides to strengthening ties with the Russian Federation. However, it’s the exact opposite.
Russia accounts for a paltry 0.2% of South Africa’s global export trade, while the US, UK, and the EU account for a combined 35%, with China around 9%.
This means South Africa is risking over 40% of its export revenue. This would wipe out approximately 10 to 15% of its GDP – which stands at roughly R4.6 trillion, according to Stats SA.