Denise van Huyssteen, Nelson Mandela Bay Chamber of business CEO. 
It has become all too easy to lay the blame for South Africa’s economic woes at the door of the USA’s import tariff hikes. The issue of tariffs now dominates many interactions of business and government on what is needed to accelerate economic growth and reverse the unacceptably high unemployment levels in our country.
While blame keeps being heaped on the USA’s tariffs as a key contributor to South Africa’s advancing de-industrialisation and rising unemployment, the country continues to score “own goals” in the extremely slow pace of implementing needed changes in industrial and agricultural policy, and lack of urgency in addressing basic service delivery issues, tackling crime and corruption, and also undertaking vital investment and maintenance of key infrastructure.
This focus on tariffs as the main factor obscures many of the challenges facing SA business, as there are far more areas within the practical control of government and other stakeholders.
This is not to say that South Africa must ignore the issue of tariffs, and actions need to intensify efforts to find new markets and secure free trade agreements. As we do this, we need to ensure that these trade relationships are not solely based on extracting value out of the country, but rather represents trade which is mutually beneficial and puts the best interests of South Africa and its people first. This must include two-way trade in manufactured goods.
This needs to be happening with the same urgency as what other countries are doing, as each moves to protect their own interests in the wake of the upheavals brought about by a move away from globalisation to protectionist policies.
Meanwhile, SA’s agricultural exports to the US grew by 19% and 26% in Q1 and Q2 respectively this year, amid an overall 10% increase in exports in each quarter.
Overall automotive exports are tracking 6.7% higher than in 2024, despite an approximately 80% drop in exports in the first half of the year to the USA. This growth has mostly been driven by vehicle exports to the UK and European markets.
Of course, both sectors still face substantial challenges in the global trading environment that are not necessarily reflected in quarterly figures. The US market remains important and subject to uncertainty as SA has not yet managed to conclude negotiations on a better trade deal, while there is further uncertainty over the likelihood of the US reinstating the benefits enjoyed under the Africa Growth and Opportunity Act, which expired in September.
The point is that some export growth is being achieved by local manufacturers and farmers despite global trade upheavals and local enabling environment challenges. Couple this with the country’s inherent advantages such as its strategic minerals, the multi-national manufacturers which provide technology and skills development opportunities, demonstrated innovation abilities and eight ports – including four deep-water ports.
Imagine what they could do in a fully enabling environment? This is referring both to policy level and to practical service delivery.
During an oversight visit by Parliament’s Select Committee on Economic Development and Trade to the Nelson Mandela Bay area last month we highlighted our concerns around the economy and the de-industrialisation trends which are emerging, and what needs to happen to improve the enabling environment for business, and what business actually needs for long-term sustainability and investment retention.
Service delivery
At the municipal service delivery level – where businesses countrywide grapple with the unreliability of electricity supply and its rising cost; lack of maintenance of water and sanitation, electricity, roads and other critical infrastructure; rapidly declining safety and security – it is vital to understand the collective impact of these issues on the costs and ease of doing business.
Multinational corporations making decisions in head offices far away from SA will readily move their operations to locations offering the most effective costs of doing business and efficient operating environments. Simply put, it does not make sense to manufacture in an environment where production can be disrupted by power outages, water disruptions and other issues; and the rule of law and minor through to major regulations are not enforced.
If government is serious about retaining South Africa’s manufacturing strength, and the millions of jobs it supports, we need much greater urgency in improving service delivery and in investing and maintaining infrastructure and logistics networks.
These are the bedrock of the manufacturing ecosystem. If we lose that supporting ecosystem, we lose our manufacturing base – and we will not get it back.
Sadly we continue to see drawn-out delays in appointing contractors and completing infrastructure; municipal committees that fail to meet, tying the hands of officials who are unable to finalise procurement and project approvals, and simply obtain the necessary tools and equipment to get the work done.
The Nelson Mandela Bay Metropolitan Municipality is carrying R22 billion in unauthorised, irregular, fruitless and wasteful expenditure on its books, that it has failed to act on – the highest level in the country, prompting National Treasury to warn that the metro’s equitable share payment for December could be withheld unless progress in dealing with the matter is demonstrated.
Key to dealing with the matter, and potentially recovering mis-spent public funds and holding officials and service providers accountable, is that the red-flagged expenditure must by law be investigated by the Municipal Public Accounts Committee (MPAC).
Yet, the day after the National Treasury warning, the Nelson Mandela Bay council’s scheduled MPAC meeting had to be postponed due to several councillors failing to attend and the committee thus not having a quorum to proceed with picking away at the backlog of unresolved, irregular expenditure.
This is not the first time the Bay has had national grants withheld or had to return funding – either through non-compliance with conditions (such as addressing irregular expenditure, or meeting timelines) or inability to spend funds in time.
Policy
At the policy level there is much that government can and should be doing – with speed – to improve the business enabling environment.
While other countries have responded speedily to counter the impact of the US tariffs and protect their own industries, South Africa is still embroiled in negotiations with the US, and while there is much talk of the need to broaden our trade relationships and secure free trade agreements, little progress is being seen beyond summits and announcements of good intentions.
On the automotive industry side, the urgency continues to grow for the mid-term review of the South Africa Automotive Master Plan which was first requested in 2022, but government has yet to appoint a lead consultant to drive this process. This, despite repeated pleas from the industry for this review to be urgently finalised.
The review needs to tackle aspects such as SA’s import tariffs on vehicles and components, and reversing the unintended consequences of policy that has incentivised semi-knocked down assembly and the rise of cheap imports that are threatening local completely knocked down manufacturing which utilises local components and directly employs around115000 people, and indirectly impacts a surrounding eco-system which employs 500 000 people.
Similarly, the Agricultural Business Chamber, AgBiz, recently highlighted that the Agriculture and Agro-processing Master Plan, seen as key to unlocking inclusive growth in the sector, has been discussed extensively and is the product of co-creation by all stakeholders. While there are calls for further debate, AgBiz argues that focus must now shift to implementation.
As with implementation of any plan in any sector, efforts need to focus on getting started, sorting out wrinkles and contested aspects along the way – a continuous improvement approach.
And yet, at both policy and service delivery level, we continue to see more talk, with not nearly enough action.
Now, before it is too late, the shift must move from talk to action, from planning and policy discussions to implementation in order to retain investments and jobs.
Government-business collaboration
Efforts being made by business on a non-partisan basis – at national level through its involvement in Operation Vulindlela, have for example helped to address reforms in the energy sector and effect visa system improvements. At a local level through proactive initiatives, driven by organisations like the Nelson Mandela Bay Business Chamber and its members, we have helped to implement collaborative and action based solutions to hold the line in terms of enabling environment challenges.
At the end of the day business has no interest in taking over the role of government, only by wanting it to succeed by helping to strengthen its capabilities and efficiencies. These are vital requirements in enabling the country to unlock its immense potential as to retain and attract investment and employment, and to help uplift and empower communities.
It is a win-win that puts political interests aside in the interests of the country – putting people, employment that lifts people out of poverty and inequality, ahead of political gains or business profits.
This concept of a partnership of government and business must be seen as coming from a mutual desire for success; not as some attempt by business at running a parallel government. Rather it is our hope that government achieves its goals of creating an enabling environment, so that we can get on with the business of creating jobs. If this succeeds, everyone wins.
The prize we all should be aspiring to win, is for South Africa Inc to unlock its true potential and become a leading player on the African continent and within the global arena. DM