Tag: economy

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The G20 revealed a shift in South Africa’s foreign policy

ANTHONY BUTLER: Shifting from China focus to balanced foreign policy

Balancing global partnerships is SA’s new foreign strategy

5 December 2025

President Cyril Ramaphosa’s firm handling of his US counterpart during a successful G20 process has modified popular views about his capabilities. He is still a lousy president on domestic matters, the conventional wisdom now goes, but he is rather good at foreign affairs.

However, the distinction between domestic and foreign affairs is far from clear-cut. Countries seek agreements with their peers, but any deal must be ratified at home by legislatures, interest groups, citizens and political parties. Negotiators respond to the preferences of their domestic constituents while using pressures at home as leverage in international forums. In practice, the two levels of negotiation are simultaneous and continuous.

South Africa’s foreign policy has long been criticised for insufficiently prioritising economic growth and development at home. Turf wars between trade and foreign affairs officials have made an integrated approach hard, while debates about race and transformation have undermined co-operation between big business and government.

The major international crises during Ramaphosa’s first term — the pandemic, the Russia-Ukraine war and the Israel-Palestine war — created space for a reorientation of Pretoria’s goals and instruments. Behind the smokescreen of a theatrical confrontation with President Donald Trump, the final G20 summit revealed three related shifts in South Africa’s foreign policy.

After a decade of emphasis on a China-dominated Brics (Brazil, Russia, India, China, South Africa) forum, a significant rebalancing has taken place. Former president Thabo Mbeki cautioned about the danger of falling into a new “colonial relationship” with China, noting that exporting raw materials while importing Chinese manufactured goods would leave Africa “condemned to underdevelopment” in a replication of European colonialism.

The new, more balanced, approach recognises that South Africa benefits from Chinese markets and financing but that we also need European investment and global standards access, and alternative vehicles for South-South co-operation.

In a second development, the G20 cycle underscored the maturing and pragmatic relationship between South Africa and Europe. European countries remain by far the biggest investors in this country, and the eurozone hugely surpasses China as South Africa’s biggest trading partner.

The G20 summit unveiled a sharper instrumental and pragmatic focus on critical minerals, sustainable energy transition and trade standards, in place of previous performative issues of political alignment and misalignment.

South Africa signalled deepening co-operation on energy transition supply chains, with the critical minerals needed for batteries, wind magnets and hydrogen infrastructure framed as a durable area of strategic alignment. South Africa wants investment in local beneficiation while Europe wants reliable supply.

In a third development on the margins of the G20 process, leaders of the three Ibsa countries — India, Brazil and South Africa — indicated their determination to revitalise the forum as a channel for South-South co-operation outside the broader Brics agenda.

Brazilian President Luiz Inácio Lula da Silva has established a close working relationship with Ramaphosa, while India’s Prime Minister Narendra Modi was uncharacteristically effusive. Ibsa is the one major trilateral South-South forum that allows South Africa strategic autonomy, avoids being folded into Sino-centric diplomacy, and facilitates co-operation between large democracies (or just-about-democracies in India’s case) that share concerns about norms, institutions, trade and energy transition financing.

Positive signalling about Ibsa takes place while Europe and the US are seeking non-Chinese industrial partners, Brazil is concerned about mineral supply chains and energy transition, India is positioning itself as a hedge power, and South Africa wants South-South development co-operation and beneficiation without sacrificing Western investment. Ibsa provides a platform for these various goals to align without the geopolitical baggage that sometimes surrounds Brics.

The real test of these three shifts in South Africa’s international orientation lies not in their intrinsic elegance and rationality, but rather in their sustainability, and in whether they will deliver the fruits of stability, co-operation and economic development.

• Butler teaches public policy at the University of Cape Town. He recently published a book about the post-apartheid presidents, ‘Presidential Power’.

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A new iteration of BEE is possible

ANTHONY BUTLER: Consensus about BEE policy needs to emerge

First published in Business Day

12 September 2025


The contentious debate about broad-based BEE (BBBEE) has been a real problem for the country. If coalition government between constitutionalist parties is to survive the next decade, some rudimentary consensus about the policy needs to emerge.

Until recently the polarisation has been deepening. BEE’s defenders insist it has created a black capitalist class, black managers and professionals who would otherwise have remained excluded. It has also brought changes in employment equity, skills development and enterprise support.

President Cyril Ramaphosa has always championed the framework he helped create and from which he benefited so handsomely. He has rebutted claims that BEE hinders growth, framing it as an investment in the economy, not a cost. He has strongly backed the Black Industrialists Programme and a proposed R100bn Transformation Fund to bolster black entrepreneurs. Last year he supported legislation to reinforce compliance through enhanced incentives and possible punitive measures such as fines and public “naming and shaming”.

The president’s only real accommodation of critics has been support for the Equity Equivalent Investment Programme, which allows multinationals to invest in skills, innovation and supplier development rather than transferring equity directly.

BEE has meanwhile faced intensifying criticism from opposition parties, businesses and civil society, who argue that the main beneficiaries have been a politically connected, ANC-linked elite rather than ordinary black citizens. It has been a mechanism for patronage, with state contracts channelled to politically connected business people under the guise of empowerment. BBBEE has also been weaponised to justify corrupt procurement practices.

The DA’s hostility has hardened. The party rejects race-based legislation and proposes instead a nonracial economic empowerment framework with a “social impact” approach to integrate sustainable development goals into procurement and other regulatory frameworks, and an “economic empowerment for the disadvantaged” model to target poverty rather than race. An empowerment index for companies would meanwhile measure their social and economic inclusivity to mobilise shareholder activists.

Civil society actors want to replace elite enrichment with broad-based, skills-driven, employment-generating empowerment, by prioritising employee share ownership schemes, community trusts and co-operatives over elite ownership deals, and linking state support and contracts to demonstrable worker and community benefits.

There has also been renewed interest in ordinary citizen investment in stock markets through their pension or investment policies, in carefully designed retirement schemes that encourage saving, in expanded home ownership, and in reducing the barriers to entry that shut out the small, medium and micro enterprises that are the most immediate mechanisms of economic empowerment for most people.

Some of the dwindling band of ANC intellectuals have been influenced by Malaysia’s recent rethink of indigenous empowerment. Its new road map for economic transformation for the bumiputera (sons of the soil) refocuses on upskilling and mentoring of particular individuals, helping smaller enterprises move up the value chain, and giving empowerment agencies dedicated roles as talent developers or “super-scalers” of businesses — with measurable outcome targets, rather than broad objectives or mere compliance metrics.

The ANC’s recently released discussion documents for December’s national general council (NGC) show a flickering — if not yet a significant uptick — of the liberation movement’s formerly flatlining cognitive functioning charts in this area. The NGC “base document” concedes that BEE has primarily incorporated an elite minority of black people, and a few women, into the existing capitalist structure.

It insists that empowerment policies must be “reoriented to benefit more than an just elite few”, and suggests employee ownership trusts and co-operatives, better support for small, black-owned businesses, a public venture capital fund or credit-guarantee scheme, and BEE incentives linked directly to actual job creation.

What is needed is a bit more academic research and an open mind on all sides about potential change. A broad consensus on the way forward might conceivably yet be forged. But don’t bet on it.

  • Butler teaches public policy at the University of Cape Town.
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Vulindlela Phase 2

ANTHONY BUTLER: Operation Vulindlela will have to remain lean and mean

First published in Business Day and BusinessLive

09 May 2025

The fanfare that surrounded Wednesday’s launch of the second phase of the hitherto low-key Operation Vulindlela shows how central the project has become to the credibility of President Cyril Ramaphosa’s otherwise faltering reform programme.

Vulindlela was born out of crisis, established in October 2020 as a joint initiative of the presidency and National Treasury to fast-track the delivery of reform in the midst of the Covid-19 pandemic. It had long been recognised that structural change was crucial to addressing the underlying causes of low economic growth, but Covid-19 broke down political and institutional barriers to change. 

Initially focused on a narrow list of priorities with the greatest impact on growth and employment, Vulindlela aimed to “modernise and transform” — in truth to salvage — network industries including electricity, water, transport and digital communications, and to remake the visa regime to attract skills and promote tourism growth.

While departments and state-owned entities would still implement structural reforms, a dedicated unit bridging the presidency and the Treasury was created to monitor progress, provide “technical support” and generate clear recommendations for political principals to endorse. 

The first phase went pretty well, though slowly, with reforms to enable private operators to access the freight network and participate in container terminal operations, a re-engineered water-use licence application system, auctioned high-demand spectrum, streamlined telecommunications infrastructure regulations and an updated visa system. All this resulted in somewhat cheaper data and fewer needlessly excluded skills, and unlocked investment in several sectors. 

The government’s review of the first phase observed last year that there was “still a long way to go” in the performance of ports and the rail system, an assessment that applies across most of Operation Vulindlela’s areas of focus. Vulindlela will have to drive its existing initiatives — and prevent backsliding — as it moves on to fresh problems in a second phase that presents four key challenges.

  • The issues Ramaphosa has now placed on its plate include broad digital transformation, a technical quagmire that has defeated the most capable reformers in other countries.
  • Operation Vulindlela’s success has always hinged on private capital mobilisation. Without credible, predictable delivery frameworks — and faster impact timelines — economic benefits will remain limited. Sceptics believe bureaucratic delays will continue to undermine investor confidence in sectors like rail, ports, energy and digitalisation.
  • Operation Vulindlela can only be a supportive partner, and it will continue to be hampered by the lack of technical and managerial capacity in the wider civil service, conservative state-owned enterprises, water boards and other government agencies.
  • Finally, the politics will only get rougher as Operation Vulindlela’s scope of activities embraces local government and it becomes generally more politically exposed. Reform threatens entrenched interests and so brings pushback from unions, opposition parties and monopolistic entities resisting competition. Vulindlela may not be able to depend on political protection from the incoming president — or from their senior ministers — after December 2027. 

Fiscal constraints, slow growth and a rising debt burden will continue to hamper Operation Vulindlela. Reforms requiring public financing or major contingent liabilities, including infrastructure investments, water system development and a local government reboot, will be delayed or downscaled.

Politics precludes any major shift from consumption to investment spending, but SA desperately needs to invest in the future. As is so often the case, crisis has made reform possible, but it has denied reformers the resources they need to realise their goals. This means Vulindlela will remain lean and mean, and we should salute its foot soldiers as they venture across new political minefields. 

• Butler teaches public policy at the University of Cape Town.