While South Africa might finally see the end of being on the grey list, the country still faces the US tariffs that could be 30% again.
While the world watches various wars and conflicts play out that can affect economies worldwide, including our own, South Africa must also complete its work to get off the grey list and plan and negotiate to manage the US tariffs scheduled to kick in on 9 July.
Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says in her weekly newsletter that South Africa’s completion of all the Financial Action Task Force (FATF) requirements is a significant achievement for the country’s economy.
“I congratulate National Treasury for orchestrating a complex, multi-agency effort that fundamentally strengthened our anti-money laundering and counter-terrorism financing frameworks.
“The final hurdle, to demonstrate sustained improvements in investigation and prosecution capabilities, required rebuilding capacity across our entire criminal justice system, from police units to the National Prosecuting Authority.
“We now have a clear trajectory toward exiting the FATF grey list in October, pending the required on-the-ground peer review.”
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Grey list costs the economy but can soon be over
Mavuso says this progress cannot come soon enough, as grey listing imposed crushing costs on South Africa’s economy due to the fact that international financial institutions must apply enhanced due diligence to every South African transaction, a burden many simply avoid by severing relationships with our companies entirely.
“BLSA sounded the alarm about impending grey listing six months before it happened, commissioning a report that analysed the potential economic costs. Throughout this process, business stood ready to support government in meeting FATF requirements, and there have been various joint projects to do so.
“The improvements achieved since February 2023 extend far beyond FATF compliance. We now have comprehensive beneficial ownership registers for companies and trusts, while investigators can finally use the Financial Intelligence Centre’s vast data reserves to build prosecutable cases.
“Our law enforcement agencies have also been integrated into global networks combating transnational crime. Let’s be clear: Grey listing was state capture’s direct legacy. The systematic gutting of our criminal justice system, from crime intelligence to the NPA, created a paradise for white-collar criminals.
“Skilled investigators were purged, replaced by political appointees whose job was protection, not prosecution. The probability of facing consequences for economic crimes became negligible.”
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Treasury reversed institutional decay to get SA off grey list
Mavuso points out that the National Treasury’s remediation process started to reverse this institutional decay, with important economic implications.
“As I consistently argued, the collapse of the rule of law devastates economic growth. Contracts become unenforceable. Businesses shoulder massive fraud and corruption costs. Criminal syndicates flourish, spawning extortion networks that strangle legitimate enterprise.”
Although critical steps remain before October’s official exit, Mauvo says prospects are now excellent.
“Removing this economic headwind will provide crucial momentum for growth. Given the challenges we face, we need every advantage we can get.”
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US tariffs of 30% looming on 9 July
However, she says, with this good news, there are also other challenges waiting for the South African economy, and in particular, the significant headwind from Washington that demands urgent attention.
“The current 10% US tariff on South African goods expires on 9 July, reverting to a punitive 30% unless we can secure an extension.”
Trade, industry, and competition minister Parks Tau will meet with US officials this week at the US-Africa Summit in Angola, a meeting that could determine our economic trajectory.
However, Mavuso says progress has been disappointing since President Trump and President Ramaphosa’s Washington discussions, during which South Africa tabled proposals, including mineral access and potential US liquified natural gas acquisitions.
“The US did not give formal feedback, and the clock is ticking. The minister and his team must break the logjam. The broader geopolitical context makes this moment even more critical. China’s recent announcement of duty-free access for all African nations with diplomatic ties will not have gone unnoticed in Washington.
“We may be witnessing a fundamental shift in Africa’s global orientation, one that could permanently damage American interests on the continent.”
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SA cannot afford to lose employment-intensive industries due to US tariffs
She says this matters profoundly for two reasons.
“Africa remains a crucial source of critical minerals essential to the American economy, while our continent’s young, growing population positions Africa as a key long-term consumer market and manufacturing hub. America risks ceding this strategic advantage to China.”
Mavuso believes that South Africa must present a materially different proposition that clearly serves American interests as well as our own.
“In this transactional environment, incremental gestures will not suffice. Business has a vital role here.
“Our daily interactions with American customers and suppliers provide direct insight into genuine opportunities and risks. This intelligence must inform our negotiating strategy. The consequences of failure fall hardest on manufacturing and agriculture, sectors that drive employment.
“Raw material exports remain exempt, but value-added activities that create jobs face significant disruption under 30% tariffs. We cannot afford to lose these employment-intensive industries.”
She emphasises that this week’s meetings will be defining.
“We need a deal that recognises economic realities while serving mutual interests. The stakes are high.”
