Tackling youth unemployment using the blue economy
Experts say it can be resolved using one of the continent's most overlooked economic levers, the blue economy.
Teboho Makhabane, Head of ESG and Impact at Sanlam Investments, discusses the opportunities.
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IOL News
18 hours ago
- IOL News
BRICS and G20 poised to reshape geopolitical landscape
President Cyril Ramaphosa addressing the G20 High Level Opening Session on the margins of the 79th Session of the General Assembly in New York. South Africa assumed the G20 Presidency this year under the theme 'Solidarity, Equality and Sustainable Development'. Image: Kopano Tlape| GCIS Ashraf Patel In 2025, the scale, scope, and velocity of Trumpism are so disruptive that new forms of partnerships are evolving in ensuring the global governance consensus and saving UN Multilateralism. The Global South nations, especially G77, desperately need multilateralism to function and for fair WTO and WHO to work in order to broaden the benefits of trade, financial reforms and any hope for the UN SDGs. The BRICS Rio communique in July is significant. The 130-point plus final declaration, not only thoroughly detailing every major issue, with calculated moderation, but resolutely setting a trademark BRICS tone – and a clear set of humanistic values – focused in three strategic pillars: economy-finance; designing a new global security framework; and cultural and people-to-people exchanges, the over-arching umbrella of inclusiveness and mutual respect. The following week, the G20 Finance Ministers (minus the US ) meeting in Zimbali was unable to reach a consensus statement on key issues of global minimum tax and African debt relief. While both the BRICS and G7 core are members of these groupings, prioritising different themes and modalities is proving illusory. Saving Multilateralism Both G20 and BRICS blocs are converging out of necessity at this moment in time. The BRICS Rio July 2025 declaration is groundbreaking in its scope and depth and committee clarity in saving the UN system and reforming multilateral institutions for common development and humanity, adopting the Leaders framework, declaration on Climate Finance, AI Governance and Partnership on Elimination of Diseases. (BRICS Rio Declaration ) In an age where AI is leading to deepening inequalities and disruptions, the BRICS commitment to AI Governance shows a deep commitment to multilateralism. Aligned to the UN Pact for the Future, the BRICS declaration is rooted in UN principles that balance both Digital Industrialisation, AI inclusion and privacy safeguards. There is good alignment with both G7 and G20 and the new EU AI Act. Ruptures in peace, security and climate pathways Despite these new alignments between both Global North and South formations in saving multilateralism, it is in the area of Peace and Security where major real geopolitics come into play. The BRICS plus is anchored in the Non-Aligned movement, while the core G7 is still committed to preserving Western hegemony. Indeed, the announcement by NATO and EU core states in increasing defence budgets to 5% of GDP - and the drastic cuts in development aid is sobering and will negatively impact the UN Development agenda. Here, realpolitik rooted in geo-political fractures is laid bare in the grave conflicts of Gaza, Ukraine, Sudan, DRC, Libya and numerous war zones. Here, the UN SC have so far failed to find consensus. Groups such as the Hague Group, which are examples of responsible nations committed to international law, are converging to confront the Genocide in Gaza, and such formations can catalyse new UN reforms and preserve the UN Charter. Finance reform and the African Debt crisis Last week's G20 Finance ministers meeting and the lack of any concrete agreement on Africa's debt crisis or global minimum tax expose the lack of coherence in the G20 model. The G20 Common Framework is essential in committing nations to financial reforms. So far, ministers are engaged in merely the 'MDB Roadmaps', essentially talks about talks, a painful road that does not guarantee a global finance and tax deal. Sadly, given that the G20 in 2025 is billed as the African Union's year, its core development agenda relevant to Africa is still elusive, and unlikely to bear fruit. SA is now 'treading lightly 'as we hand over our G20 baton to the Trump administration later this year, which has stated it will ignore most of our G20 agenda. The EU's Climate Moment of Truth arrives. Another area that is unravelling is the pathways to climate change mitigation. The EU, which has been the standard bearer of climate and the 'Just Energy Transition JET agenda, faces its moment of Truth. The scale of scope of Europe's Big Oil scouring Africa is a throwback to the early 20th-century colonialisation of Africa. Today, it's Oil giants - BP, Total, Shell, ENI - are making a big play for oil and gas in African states like Angola, Mozambique and Nigeria. This is akin to the early 20th century great oil frontier. In South Africa, Shell Oil is embroiled in yet another controversial exploration in the Karoo and Northern Cape. Meanwhile, South Africa's leading coal export destination are EU nations including Germany and the UK that are supposedly at the forefront of the Just Energy Transition (JET). The EU and G7's signature JET project is riddled with contradiction and will make the UN COP 30 deal much more difficult, as the EU wants 'Green cake and Oil'. The EU's CBAM program further raises trade barriers for Africa, leading to further deindustrialisation and job losses, thus fuelling the migration crisis northwards. Its glaring contradictions are no longer tenable as the EU is no different from the Trump administration's stated policy- 'Drill Baby Drill'. The EU is drilling for oil in Africa and globally, but not in their backyards. As the Trump 2.0 trade wars and economic nationalism deepens, an unlikely alliance of G20, BRICS and G77 can play a central role in saving multilateralism, the UN and global governance- but each with a vastly different focus and modalities. Will a new consensus emerge and the centre hold or rupture? * Ashraf Patel is a Senior Research Associate at the Institute for Global Dialogue, UNISA. ** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.
The Citizen
2 days ago
- The Citizen
US tariffs: fragmentation and reshaping global supply chains and African MNEs
South Africa has reportedly reached an agreement with the US about tariffs, but government is keeping it under wraps until it is finalised. The US tariffs that will be implemented on Friday if countries do not make a deal with US president Donald Trump, will mark a fundamental economic shift towards fragmentation and reshape global supply chains and African Multinational Enterprises (MNEs). Arthur Kamp, chief economist at Sanlam Investments, warns that the sharp rise in US tariffs represents a significant shock to the system due to its stagflationary risks. 'You would expect higher inflation and lower growth in the US. After all, this is effectively a significant tax increase.' However, despite market calm, he cautions that from a macroeconomic perspective, the backdrop has worsened. The current US tariff for South Africa is 30%. Roy Mutooni, portfolio manager at Sanlam Investments, believes the initial market reaction may have been overly complacent. He explains that tariffs typically hurt companies in one of two ways: either manufacturers absorb the costs, which squeezes margins, or they pass them on to consumers, which dampens demand. 'It seems to me that the market's initial response was to derate – to reduce the value of future earnings. Then, as uncertainty grew, markets began assuming it would all be rolled back. That is the prevailing view now – that the full effect of the tariffs will not materialise,' Mutooni says. ALSO READ: US tariff of 30% on SA exports: where to now? US tariffs shock will likely affect margins and consumer demand However, he cautions that this represents 'very much the best-case scenario' and warns that the shock is likely to affect margins as well as consumer demand. Kamp's core observation is that the world is changing. 'We have come from an era of global integration, freer trade, low inflation and high growth. That is clearly changing with increasing protectionism, trade barriers, financial sanctions and a shift toward a more geo-economically fragmented world. 'We are moving into a more difficult environment for multinationals, with potential disruptions to capital flows already evident in some cases.' Mutooni adds that the traditional global trade model, with emerging markets supplying commodities to Asia and Asian economies exporting to the US consumer, is starting to break down. 'What the US is saying is: you will pay a toll or tax to access our consumer. And for the rest of us, there is no alternative.' This shift leaves investors needing to assess how companies will adapt, whether by finding new markets, changing business models, or investing in the US. 'Effectively, as an investor, you are still stock picking, but you must do it in the new context. 'Key questions include: how is the company dealing with the changed environment, how are its supply chains adapting, can its customer base handle the higher costs and are there new competitors emerging better able to navigate the changed circumstances, such as domestic producers or those from countries with lower tariffs and is management looking to new markets?' ALSO READ: Ordinary South Africans will feel impact of US tariffs Multinational enterprises will face complex questions under US tariffs, expert warns Michael Hewson, director at specialist African transfer pricing advisory firm Graphene Economics, says as Trump's second term seems set to be defined in part by a renewed surge of tariffs and trade protectionism, MNEs face complex questions about supply chains, profit allocations and the overall structuring of their global value chains. 'A key area under pressure is transfer pricing, the term for how multinational groups set the prices for transactions between related entities in different countries. These prices affect where profits are reported and in turn, how much tax is paid in each jurisdiction. 'While transfer pricing is usually a behind-the-scenes concern for finance and tax teams, it becomes highly strategic in times of global economic upheaval.' He says tariffs, which tend to be used to shield domestic industries from foreign competition, act as a tax on imports. 'Trump's focus on introducing new tariffs and his swift changes of direction regarding implementation triggered retaliatory actions from certain trade partners and injected fresh uncertainty into global markets. For African-based MNEs, or those routing goods through Africa to the USA, the impact could be substantial.' ALSO READ: 'Open our eyes and ears' – Ramaphosa on how to tackle US tariff hike on SA cars MNEs manufacturing in Africa will have to reconsider supply chains considering US tariffs Hewsom says MNEs manufacturing in Africa and then distributing into the US will need to consider their value chains. 'For example, imagine a South African company that manufactures automotive components and sells them to its sister company in the United States, which then sells the completed vehicles to American customers. The price at which the South African company sells the parts to its US counterpart is the 'transfer price'.' He points out that revenue authorities in South Africa and the US want to ensure that the price of these components reflects what independent businesses would charge each other, known as the arm's length principle. 'If the price is deemed not to be arms-length, one country might claim it is losing out on tax revenue, which can lead to audits, penalties, or even double taxation. If the US levies high tariffs on South African goods, including these car parts, the multinational group may need to ask whether it makes sense to continue manufacturing in South Africa, or to use one of the other plants in the world that may have lower duties imposed. 'Or it might ultimately decide it is better to build a plant in the USA. These decisions have potential tax consequences. For example, if the profitability of the South African entity reduces because production is shifted to another company within the group, it may be considered as a business restructuring for transfer pricing purposes.' ALSO READ: Devastating impact of US tariffs on SA automotive sector even before implementation US tariffs will affect MNEs on many levels Hewson says that when tariffs raise input costs or make cross-border goods less competitive, traditional intercompany pricing structures may no longer reflect economic reality. 'This affects MNEs on many levels, from shrinking margins to costly compliance breaches. However, the knock-on effects on African economies can also be substantial. 'The ripple effects of tariff-driven supply chain realignments and transfer pricing adjustments can be significant for African economies. If, for example, the car manufacturer decides to shut down its local car parts plant in favour of producing in a lower-tariff country or relocating operations to the US, this could lead to significant job losses in a country already grappling with high unemployment and widespread poverty,' he warns. 'Reduced industrial activity also means lower tax revenues for African governments and diminished demand for local suppliers and service providers. In economies where multinationals play a crucial role in employment and development, these decisions, while financially prudent from the MNE's global business perspective, can have negative local consequences.'
TimesLIVE
3 days ago
- TimesLIVE
G20 SA 2025: a defining moment for the nation and the continent
Johannesburg, as host city, will become a strategic hub of diplomacy, business exchange, and cultural showcase. While the summit itself is a high-level, closed-door affair, South Africans can expect a wave of public engagement, community-driven programmes, investment conversations, and national pride as the event draws near. 'The G20 presidency is a powerful opportunity for SA to place Africa's priorities at the heart of global decision-making. We are committed to driving an inclusive agenda that ensures no country, and no person, is left behind,' says President Cyril Ramaphosa. For the South African government, this is more than ceremonial. It is an opportunity for G20 members to transform commitments into lasting action. Key issues remain a challenge in the country and on the continent, and there is a call for greater accountability to drive tangible progress in the global pursuit of gender equality SA's G20 presidency is also an opportunity to elevate African perspectives, strengthen international alliances, and advance sustainable development goals. It is a chance to reinforce SA's commitment to multilateralism and global co-operation at a time when unity is more important than ever. As preparations intensify in the coming months, all eyes will be on SA not just as a host, but as a bridge between developed and developing economies. The 2025 G20 Leader's Summit is more than just a gathering of nations. It is a moment for SA to lead with purpose, to shape global consensus, and to drive transformation that begins on the continent but resonates across the globe.
