News · Published 3 September 2021
Over the past three decades or more, boosting economies has increasingly become the priority goal of the international relations of most countries.
Globalisation and a — generally — more peaceful world have played major roles in this shift.
But South Africa has not fared nearly as well in this global re-orientation towards a more economic foreign policy as countries that have more enthusiastically embraced the new liberal world order of free trade.
Eddy Maloka probably captures the underlying ANC sentiment responsible for this when he rather disparagingly describes economic diplomacy as “economism” or “economic determinism” in his book; When Foreign Becomes Domestic” The Interplay Of National Interests, Pan-Africanism And Internationalism In South Africa’s Foreign Policy.
Maloka, now CEO of the African Peer Review Mechanism (APRM) Secretariat, but previously an adviser to then-South African minister of International Relations and Cooperation Maite Nkoana-Mashabane, notes how South Africa’s first president focused on re-orienting foreign policy towards the much wider world of international partners (and put much emphasis on human rights, others would add).
Thabo Mbeki’s foreign policy was “Afrocentric” and he focused on trying to uplift the continent, including by transforming the moribund Organisation of African Unity into a more dynamic African Union (modelled on the European Union. It was only under Jacob Zuma that South Africa’s foreign policy began to really focus on economic diplomacy, Maloka says, lamenting that this shifted South Africa’s focus away from Africa.
His book preceded Cyril Ramaphosa’s presidency, but it’s clear that the incumbent’s foreign policy is attempting to synthesise Mbeki’s Afrocentrism with Zuma’s “economism.”
This emerges from Towards a 25 Review; 1994-2029, an assessment by the Presidency’s monitoring division of a quarter-century of ANC government, in which Ramaphosa says among his key foreign policy objectives “is to realise the Africa we want, a peaceful, prosperous and interdependent continent connected by a massive and expansive network of infrastructure.”
In other words, not just Africa for Africa’s sake but Africa connected up for a surge in trade from which all, including South Africa, might benefit.
Unlike Maloka, most commentators believe that South Africa has suffered, not from too much economic diplomacy, but from too little — and not very well done at that.
The 2012 National Development Plan 2030 drafted by a team under former finance minister Trevor Manuel was quite sharply critical of South Africa’s foreign policy and pragmatically recommended a shift towards a more economic policy based on immediate domestic demand, including through regional burden-sharing of common resources like water and energy and expanding regional trade and investment.
The 2019 “Pahad report”, commissioned by then minister of International Relations and Cooperation Lindiwe Sisulu, drafted by a panel chaired by foreign deputy foreign minister Aziz Pahad, recommended a much more focused economic diplomacy. This included systematic mapping of economic opportunities in foreign countries, mobilising South Africa business into foreign policy and quantitative evaluation of performance of embassies and ambassadors in economic diplomacy.
The Presidency’s Towards a 25 Review made similar recommendations.
So a South African foreign policy fit for growth, prosperity and reduction in poverty, unemployment and inequality would in the first place implement all those pragmatic recommendations.
At the most practical level, that would include measures to ensure that all diplomats in the Department of International Relations and Cooperation (Dirco) are given a thorough grounding in applied economics, with a focus on the economic aspects most relevant to their functions, ie identifying market and investment opportunities.
A better foreign policy would also align the number and location of South Africa’s foreign missions more closely with its economic interests.
The government should drastically reduce the number of political appointments to ambassadorships, ending the debilitating practice of using the country’s embassies as havens of patronage or “disguised unemployment” for disgraced or otherwise superfluous politicians.
A better foreign policy would also align the number and location of South Africa’s foreign missions more closely with its economic interests. It would close some missions and give responsibility for those countries to embassies in neighbouring countries. It would also reduce the staff size in other missions.
It would embrace South Africans outside government — especially business people — much more closely in the formulation and even implementation of foreign economic policy.
It would continue and expand the focus on trade and investment in Africa, South Africa’s natural economic hinterland, including through injecting more urgency into getting the African Continental Free Trade Area (AfCFTA) off the ground.
It would also continue to pursue its advocacy at the G20 and elsewhere of an equitable international tax system where companies paid taxes where they do business, not in tax havens.
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And it would focus more on improving its own governance and in providing practical assistance to traders, investors and manufacturers and less on ideological point-scoring.
Take South Africa’s campaign for a waiver of the WTO’s Trips agreement which would allow South Africa, India and other developing/emerging countries, to simply seize the patents of pharmaceutical companies and manufacture their Covid-19 vaccines free of charge.
The Trips waiver has become something of a touchstone issue — an emblem of the sort of politico-economic diplomacy which they believe South Africa should be conducting to revive the halcyon Mbeki days when SA made an impact internationally.
Others believe it is simply ideological and impractical. They suggest South Africa should rather throw more effort into what its pharmaceutical companies, like Aspen Pharmacare and Biovac are already doing well — negotiating mutually beneficial licensing agreements with Covid-19 vaccine manufacturers like Johnson & Johnson and Pfizer, to make those vaccines in South Africa.
A former Department of Trade, Industry and Competition (DTIC) official, now doing private research, says the weakness of South Africa’s foreign policy is that it is “too policy- and narrative-focused, and too weak on a services-focus. We’re too obsessed with writing a good summit declaration, and too weak when companies want to walk into an embassy or the DTIC campus and need direct assistance for things like translating a document.”
An obvious way of improving economic diplomacy, then, would be to merge Dirco with the DTIC. Australia did that in 1987 and it’s generally regarded as having been a huge success, greatly boosting trade.
New Zealand, Canada and others have done the same.
Catherine Grant Makokera, a director of South Africa’s Tutwa Consulting Group and a former trade negotiator for New Zealand, says such a merger would make sense for a country that has economic development objectives at the international level. For one thing, it would help to recruit the necessary mix of skills to pursue an economic foreign policy.
A seasoned South African ambassador, who requested anonymity as he is not authorised to speak on such policy matters, said he had always advocated a merger of Dirco and DTIC — or perhaps a partial merger.
He complained that South Africa had lost many trade and investment opportunities because DTIC did not immediately take up opportunities detected by embassies abroad.
This ambassador believes just such a merger was on the table when Ramaphosa re-structured government departments in 2019, for instance collapsing the Department of Economic Development into DTI to form the new DTIC. For some reason which he does not know, the idea fell off the table.
He believes this is a great pity, as the countries he has seen over the years that have been the most successful are the likes of China, Australia or Brazil which apply a whole of government approach to foreign economic policy — an “Australia Inc” approach, for example.
“Because we talk about SA Inc but in reality, we don’t have a SA Inc. And until we really develop a proper SA Inc we won’t be as successful in competing against these other countries, like Australia and China.”
Creating a SA Inc would include seeing business as “bosom buddies” of government, not as “the enemy.” SA Inc would also include other government departments such as Home Affairs, to entice investors and not frustrate them with visa requirements. “You need a one-stop shop that truly takes care of investors, trade opportunities, etc.” It would also embrace other elements of SA society such as unions.
However, a Western diplomat wonders if merging trade and foreign affairs would really fly in South Africa. It worked in Australia because that country enthusiastically embraced free trade. It might not work in South Africa with a government that regards globalisation with grave suspicion and is implementing a 2010 trade strategy that subordinates trade to industrial policy.
We are now seeing DTIC Minister Ebrahim Patel going further down that path with industrial sector policies that include restrictions on exports and likely increases in import tariffs to boost specific local industries. These risk incurring backlashes from trading partners as they could transgress World Trade Organization (WTO) free trade rules.
In 2015 we saw South African exports of autos and agricultural products to the US very nearly take a big hit as US President Barack Obama provisionally suspended some of South Africa’s Agoa benefits in retaliation for SA raising import tariffs on US meat.
It would surely be more beneficial for all concerned in the long run if, by and large, the government let businesspeople themselves decide where their best opportunities lie.
This article is based on the paper “A Fit for Purpose Foreign Policy: Integrating Investment, Growth & Diplomacy”.
Listen to the podcast: A masterclass in designing a fit-for-purpose foreign policy for South Africa with Peter Fabricius here.