By Prof. Busisiwe Mavuso
- South Africa has completed all Financial Action Task Force requirements and is on track to exit the grey list in October, following a comprehensive overhaul of anti-money laundering frameworks that reversed damage from the state capture era.
- Exiting the grey list will remove a major economic headwind, eliminating enhanced due diligence burdens on international transactions and restoring severed relationships with global financial institutions, providing crucial momentum for economic growth.
- South Africa faces a jump from 10% to 30% US tariffs on 9 July unless Minister Parks Tau secures an extension at this week’s US-Africa Summit, with manufacturing and agriculture sectors most at risk.
- China’s duty-free access offer to African nations increases pressure on America to secure its strategic interests on the continent, as the US risks losing access to critical minerals and Africa’s growing consumer market to Chinese influence.
South Africa’s completion of all Financial Action Task Force requirements is a significant achievement for our economy. I congratulate National Treasury for orchestrating a complex, multi-agency effort that has fundamentally strengthened our anti-money laundering and counter-terrorism financing frameworks. The final hurdle – demonstrating 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.
This progress cannot come soon enough. Grey listing has imposed crushing costs on our economy. 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 has 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. The Financial Intelligence Centre’s vast data reserves are finally being leveraged by investigators to build prosecutable cases. Our law enforcement agencies have 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.
National Treasury’s remediation process has begun reversing this institutional decay, with important economic implications. As I’ve 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.
Critical steps remain before October’s official exit, but 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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However, we face a 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.
Progress has been disappointing since Presidents Trump and Ramaphosa’s Washington discussions, where South Africa tabled proposals including mineral access and potential US liquified natural gas acquisitions. The US has not given formal feedback and the clock is ticking. The minister and his team must break the log jam.
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.
This matters profoundly for two reasons. Africa remains a crucial source of critical minerals essential to the American economy. Also importantly, 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.
South Africa must present a materially different proposition, one that clearly serves American interests as well as our own. In this transactional environment, incremental gestures won’t 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.
This week’s meetings will be defining. We need a deal that recognises economic realities while serving mutual interests. The stakes are high.
