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IOL News
08-07-2025
- Business
- IOL News
US tariffs threaten South Africa's economic growth and job market
US President Donald Trump's import tariffs will have a severe impact on the number of vehicles that South Africa exports to the US.. Image: Freepik High tariffs imposed by the US on South African exports from August 1 will be a blow that will further de-industrialise South Africa, kill economic growth, and cause further unemployment, Efficient Group chief economist Dawie Roodt said yesterday. Speaking in an online discussion held by the Motor Industry Staff Association of South Africa (MISA) about the US's plans to resume its threat of 30% import tariffs for South African goods, Roodt said the tariffs will result in lower investment into South Africa and will impact manufacturing and agriculture particularly, sectors that are among the most capable of growing job opportunities in the country. He said while South Africa's participation in the US's Africa Growth and Opportunity Act (Agoa) later this year was not formally over and uncertain - Agoa allows duty-free access to the US market for eligible sub-Saharan countries - the new tariffs effectively meant this prospect was unlikely, as the new tariff structure could not co-exist with the benefits of Agoa. In addition, Agoa had the protection of property ownership rights as a condition of membership, which South Africa could not meet due to its Land Expropriation Act. South Africa was viewed as a medium-income country, and the Act was for less developed economies. 'We need to accept that Agoa is dead,' he said. He said, however, that by appearances, US President Donald Trump's door was always open for further negotiation on the tariffs, but that the US appears to be seeking political concessions from the South African government. These likely included changing its outlook on BEE, on land expropriation, and on Israel and Iran, with much of the government's current views on these matters based on 'political grandstanding,' said Roodt. He said that South African exporters should seek to diversify their markets from the US, and there was growth and potential in China, India, Europe, and Eastern European markets, but there would also now be greater competition in these markets, as many other countries were now also working to diversify their markets from the US. The government had earlier this month sought to allay fears that the tariffs would be imposed, such as on July 1, when Trade, Industry and Competition Minister Parks Tau said that there was 'still room for engagement' with the US. South Africa is one of 14 countries arbitrarily targeted under this tariff policy. The US is South Africa's second-largest export market after China, with R157 billion worth of goods exported in 2024, mainly precious metals, vehicles, iron and steel, and aluminium. Over 25 000 vehicles were shipped to the US last year. FedEx Sub-Saharan African Operations MD Gregory Saffy said one promising avenue to diversify trade is the African Continental Free Trade Area (AfCFTA). 'The agreement represents one of the most important levers for driving inclusive growth and unlocking the continent's full trade potential. Of course, this won't happen overnight, but we're optimistic given the early progress being reported,' he said. Since the start of preferential trade under AfCFTA in January 2024, South Africa's exports had steadily increased, reaching some R820 million by March 2025. These included mining equipment, household appliances, plastics, apparel, food items, and electrical machinery. Professor Raymond Parsons of the NWU Business School said: 'South Africa is not without remedies. It remains essential that bilateral negotiations must continue to stabilise and consolidate future US-South Africa investment and trade relations. Collaboration between government and the private sector must continue to accelerate the steady identification of alternative markets, for which South Africa must remain globally competitive,' Parsons said. He said the costs of doing business in South Africa is still too high, and growth-friendly policies must be implemented. 'It becomes even more essential to speedily implement growth-friendly policies that build economic buffers and reduce costs in ways that also enable South Africa to successfully deal with any global setbacks,' he said. The US is the third-largest destination for South African automotive exports, with about R35bn worth of vehicles shipped in 2024, accounting for 6.5% of total vehicle exports in 2024. National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mike Mabasa said they were meeting with the motor manufacturers to get their inputs on the new tariff regime. However, in April, Naamsa said the proposed tariff increase will severely impact local manufacturers operating in South Africa, including BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen, who produce vehicles for global markets, including the US. The US move could have serious implications for jobs and investment in South Africa's automotive sector. 'The proposed tariff costs cannot be absorbed by manufacturers, resulting in additional costs for US consumers and a reduced choice of South African-produced brands,' Naamsa said.
TimesLIVE
08-07-2025
- Automotive
- TimesLIVE
Trump's 30% tariffs could kill SA motor industry growth, warns union
President Donald Trump's decision to slap 30% tariffs on vehicles, components, tyres and parts exported from South Africa to the US will 'kill any possible economic growth in our country', the Motor Industry Staff Association (Misa) warned on Tuesday. Trump said the new tariffs, set to take effect on August 1, are necessary because South Africa exports more to the US than it imports, a claim local experts reject. Dawie Roodt, founder and chief economist of the Efficient Group, told Misa: 'Trump's figures are not based on actual figures, but everyone will feel the impact because it will hinder any economic growth. 'These tariffs take away any competitive edge South Africa had in competing with the global market,' he said. 'Small retailers have already stopped manufacturing because it will not be feasible to continue with the new export tariffs, or because of a reduced demand from US clients. 'We can now accept that Agoa (the African Growth and Opportunity Act) is dead. Under Agoa, more than 1,800 South African products and goods, including vehicles, components and parts, were exported to the US duty-free,' Roodt added. The blow comes just as unemployment in South Africa edged up to 32.9% in the first quarter of 2025, the highest since the second quarter of 2024. 'The population has seen a steady increase year-on-year, with a growth rate of 1.33%. We live in a country where our population growth exceeds our economic growth. This makes job creation highly unlikely,' Roodt said. Misa CEO Martlé Keyter added: 'The retail motor industry, in which Misa is the majority trade union, is already struggling amid the uncertainty of tariff increases which started when President Trump came into office earlier this year.' 'The union is experiencing an increase in employers closing their doors, restructuring in terms of Section 189 of the Labour Relations Act, or embarking on short time.' Tiekie Mocke, manager of Misa's legal department, said: 'The negative impact on exports forced an employer within the retail motor industry to cut a five-day work week to four days, effectively leaving employees out of pocket by at least one week's income per month. 'This was done proactively to prevent retrenchments but cannot continue indefinitely,' she added. Keyter urged the government to act decisively. 'This is not about who is right or wrong, but about what is in the best interest of South Africa.'
IOL News
03-07-2025
- Business
- IOL News
How mathematics education deficiencies threaten South Africa's economic future
Basic Education Minister Siviwe Gwarube. Image: File At least 50% of South Africa's matric pupils need to pass Grade 12 with pure mathematics to provide relevant skills to boost the economy, according to experts. This is largely because economic growth is now happening in the tertiary sector, which requires specialised skills, especially mathematics. However, the Department of Basic Education recently revealed that 464 schools do not offer mathematics as a subject in the country, due to resource constraints and teacher shortages. The most affected province is KwaZulu-Natal with 135 schools. The Eastern Cape has 84 schools, Limpopo has 78 schools, the Western Cape has 61 schools, the North West has 31 schools, Gauteng has 31 schools, the Northern Cape has 19 schools, the Free State has 14 schools, and Mpumalanga has 11 schools. Over the years, the department has experienced budget cuts. Experts argue that South Africa needs to improve its Basic Education if it wants to grow skills that will enable the country to compete globally. Dawie Roodt, chief economist at Efficient Group, said current economic activities are based in the service industry, which is driven by skills and new technology that require mathematics. 'Big companies such as Meta, Google, Tesla, and Microsoft are based on new technology. And they are currently employing mostly programmers and experts in artificial intelligence (AI). If you want to be a programmer or an expert in artificial intelligence, there is one requirement: you must be good at mathematics,' Roodt stated. He added that in the South African economy as well, growth happens in the tertiary sector. However, in primary industries such as agriculture, it happens to a much lesser extent. Agriculture is now also becoming a service industry. Highlighting how sectors were switching to new technology, he said cars now are fixed by guys who plug in a computer to analyse the problem, and that is based on mathematics. Even a language model on ChatGPT is based on an algorithm, which uses mathematics, he said. 'You need a heavy dose of mathematics in all economic activities in order to grow the economy in a way that modern economies are supposed to. If you don't have good mathematics experts in your economy, it is just not going to perform well,' Roodt said. What are the prospects for pupils who are not learning mathematics as a subject? Roodt said not all is lost for these pupils. All they have to do is learn to be good at using technology (AI tools) in whatever field they are in, because this, while effective, does not require one to be good at mathematics. 'But you must have somebody else who knows mathematics to write the application for you to use the technology,' he added. Everyone, including those who excel in mathematics, has to stay on top of whatever the newest, most recent developments are, he said. 'You have to keep on sharpening up your skills. So, don't think for one single moment that you are going to learn something, get a qualification, and then stop learning. You have to learn for the rest of your life. And it doesn't end in all careers,' Rood said. He clarified that this does not mean that everybody must be a mathematician. 'If I had the power, as a minister of Basic Education, I would put all sorts of incentives in place to encourage teachers to improve their skills development. And then start paying those with better skills and better outcomes more than those without the necessary skills and the necessary outcomes. Then, I would start working out those teachers who are not doing their jobs. 'Teaching is a calling and is crucial for any economy. Many good teachers in South Africa are doing an excellent job. Unfortunately, that is not most of them,' Roodt said. He added that there are two things that one needs to teach a child. One is mathematics, and the other is a love for reading. And when a child loves reading and does read, they will be able to learn all other things on their own. Professor William Gumede from the Wits School of Governance said the government must improve the basic education system to avoid setting up learners for failure. 'All countries whose economies are performing well in the tertiary sector have more than 50% of their matriculants passing with mathematics,' he said. Elijah Mhlanga, spokesperson for the Department of Basic Education, stated that to support early mathematics development, the department is reviewing the Post Provisioning Norms to ensure smaller Foundation Phase class sizes and prioritisation of teaching posts that enhance numeracy development, addressing inefficiencies in current post distribution. 'The DBE has advised that learners, in consultation with their parents and schools, are required to select subject streams in Grade 10 that align with their interests and prospective career paths. While Mathematics remains a high-priority subject, schools, particularly smaller ones, may not have sufficient resources or demand to offer both mathematics and mathematical literacy. 'Additionally, some schools face challenges such as limited enrolment in the mathematics stream, making it unviable to run a full class; a shortage of qualified mathematics teachers; and budgetary or timetabling constraints that limit subject offerings,' Mhlanga said.
The Citizen
29-06-2025
- Business
- The Citizen
Oil price hikes could squeeze SA farmers amid US-Iran conflict fallout
While the full fallout of the US bombing of Iranian nuclear sites remains unclear, economist Dawie Roodt, the chief economist at the Efficient Group, told Farmer's Weekly it could ripple through oil prices and the exchange rate, which in turn would impact broader economic growth. 'Geopolitical instability and conflict in oil-producing regions, such as Iran, typically lead to a short-term oil price hike, which pushes fuel prices higher,' Roodt said. 'The effects could take days to several months to materialise, but we may see an increase of say 50c in the coming month, followed by another 20c hike the month after. Prices usually stabilise after the peak and often return, or even drop, to below pre-crisis levels.' The Central Energy Fund already reported an under-recovery of about 55c for petrol ULP, 51c for petrol 93 ULP and LRP, 79c for diesel (0,05%) and 81c for diesel (0,0005%) between May 30 and Monday. Fuel prices could spike far more dramatically and remain elevated for longer if the conflict disrupts oil production or hampers oil trade, particularly if the Strait of Hormuz — through which nearly 20% of the world's oil flows — is threatened or closed. 'We have seen what happens when major oil producers in the Middle East intentionally cut supply. In such cases, oil prices could potentially almost double to reach US$130 (about R2 300) a barrel, which could result in a R3/ℓ fuel price hike,' Roodt said. Such a sharp rise would have significant global repercussions, driving up inflation and interest rates, which would, in turn, impact global economic growth. This would be particularly bad news for South African agriculture, by pushing up the cost of fuel, fertiliser and other essential input prices, while increasing transport expenses — especially if alternative, longer sea routes had to be used because of the conflict. Additionally, weaker global economic growth would likely dent demand for agricultural exports, as consumers abroad would have less disposable income, according to Roodt. Roodt said a similar pattern usually ensued with the rand. 'We generally see the rand weakening in response to these types of geopolitical conflict, stabilise, and then move back to where it was.' Wandile Sihlobo, the chief economist at Agbiz, told Farmer's Weekly the South African agriculture sector was highly exposed to rising shipping and transportation costs, exchange rate fluctuations and the impact of geopolitical tension on trade, as roughly 98% of agro-chemicals and 80% of fertiliser and machinery were imported. The recently announced ceasefire between Israel and Iran was a positive movement, according to him, but risks nevertheless remained that could continue to impact the exchange rate and oil prices. 'Our hope is for oil prices and the exchange rate to normalise at least from October onwards, when the summer planting season and the winter harvest seasons start and the industry uses higher volumes of fuel,' he said. He noted that fuel and fertiliser represented 13% and 30%, respectively, of grain farmers' input costs. Breaking news at your fingertips… Follow Caxton Network News on Facebook and join our WhatsApp channel. Nuus wat saakmaak. Volg Caxton Netwerk-nuus op Facebook en sluit aan by ons WhatsApp-kanaal. Read original story on At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
IOL News
25-05-2025
- Business
- IOL News
A critique of the proposal to close public universities and convert them into colleges
Dawie Roodt, an economist, should keep in mind that, universities are not narrowly designed as he would think; to produce immediate job-ready graduates, but to fulfil a broader mandate that includes critical thinking, foundational knowledge, research and public service. says the writer. Dawie Roodt, an economist at the Efficient Group, has advocated that certain state universities in South Africa be closed and converted into colleges, claiming that they are not creating the "right skills" in comparison to private institutions. This concept stems from a worry about the skills mismatch in the South African employment market. However, the plan to close public institutions indicates a fundamental misunderstanding of the varied functions within the post-secondary education and training system, and it risks jeopardising public higher education's long-term developmental, democratic, and intellectual missions. Misunderstanding the Role of Universities Roodt should keep in mind that, Universities are not narrowly designed as he would think; to produce immediate job-ready graduates, but to fulfil a broader mandate that includes critical thinking, foundational knowledge, research and public service (CHE 2016, Badat 2010) and according to Manuel Castells, each with their own specific expectations and internal logic. Castells argued (2001:206) that 'universities perform a major role in the generation of new knowledge'. I assume that Roodt would have known that public universities are grounded in the idea of knowledge production, and innovation contributes to national development in ways that are not reducible to short-term market needs. A university graduate and, by his own admission, of UNISA, our land university, would have known this. His reckless claim that Unisa is underperforming was without facts. At least he should be aware that, in the last few years that UNISA, out of its 151-year history, has emerged as one of South Africa's and the African continent's premier scientific research and innovation institutions. As a dispute to his assumption and weird disinformation about UNISA, the institution has identified ten catalytic niche areas (such as Autotmotive Studies, Energy Studies, Space studies and the Square Kilometre Array, Fourth Industrial Revolution and digitization, etc) that will activate and enhance its academic agenda while remaining focused on the institute's vision of building Africa's Intellectual capacity. My view is that the role of public universities goes beyond 'immediate' skills production; their purpose includes fostering critical thinking. The failure of Roodt's argument was to realise that the skills gap cannot be solved by solely changing from public to private and from a public university to a private university.
