Dancing on the edge of a cliff

The scenes in parliament following the approval of the fiscal framework last week were unusual – ANC MPs broke into celebratory singing and gesturing, treating the vote as a political triumph.

But this was not a victory for South Africa. It was a celebration of failure.

The truth is this: the latest fiscal framework is the worst since the dawn of democracy. It does not contain any austerity measures at a time when they should be a priority. At the same time, it proposes to improve the fiscal position through increased taxation, which will further harm the already struggling economy.

Despite this, the ANC scrambled to secure sufficient support from ActionSA and other minor parties to pass it, trumping the Democratic Alliance’s (DA) no-vote.

ALSO READ: Mbalula says DA’s future in GNU can’t be ANC’s burden as MK party clarifies missing MPs in budget vote

The DA

The DA must reflect on how it was outmanoeuvred to this extent.

Not only could it not influence the vote outcome or secure significant amendments to the framework, but it is now on the verge of being removed from the government of national unity (GNU).

This raises a broader question about the DA’s role in the GNU. It seems it cannot influence policies and find common ground with the ANC, which means its influence in the GNU is minimal.

Yet it has made a difference – the party managed to improve the efficiency of the departments in which it has ministers, most notably Public Works and Home Affairs.

The DA should look long and hard in the mirror while reflecting on these developments. There are many possible reasons: poor leadership, poor negotiation skills, grossly inflated arrogance, or the fact that its policies are simply too far removed from the ANC to ever result in a middle-ground solution. Perhaps it is a combination of all these factors.

Unless the DA can secure formal mechanisms to influence fiscal and economic direction – beyond operational improvements in its portfolios – its continued presence in the GNU may hold more symbolic than strategic value.

ALSO READ: Budget vote fallout: Is the DA’s future in or out of GNU?  

ActionSA’s position

ActionSA also needs to reflect on its actions. I was hopeful that ActionSA could become a major party in South Africa by attracting disillusioned ANC supporters. Still, the party will remain a fringe player at best due to its unpredictability and how quickly it changes positions.

The ANC has played the party like a fiddle, and I am willing to bet a good bottle of claret that the Vat increase will be implemented on 1 May and that the tax brackets will not be adjusted.

The ANC’s excuse will likely be the impact of US President Donald Trump’s tariffs or some other justification.

The reality is that ActionSA was instrumental in having a poor budget approved. While it has gained visibility, its contribution to the fiscal framework has raised questions about its consistency and reliability as a future coalition partner.

ALSO READ: Budget battle should be about citizens, not power plays

Trade tensions with the US

This brings me to the second significant development of the week – Donald Trump’s announcement of 31% tariffs.

The US justified its decision by alleging that South Africa imposes an average tariff of 60% on American goods. In truth, it seems the actual average is between 7% and 8%. Even adding 15.5% Vat, the effective rate is around 23% – still far short of the claim.

It doesn’t matter how Trump calculated the 31% tariffs.

Arguing with the Trump administration about the numbers is like arguing with a drunk – facts are irrelevant, emotions are high, and the more you protest, the more volatile the situation becomes.

These tariffs will not just impact economic forecasts but will directly affect jobs and income. South African car exports to the US, previously duty-free under Agoa, will now face a 25% tariff.

This could result in cancelled contracts, supply chain disruptions, and job losses – especially in manufacturing regions like the Eastern Cape. The agricultural sector may also be hit.

In light of these developments, the government’s immediate priority must be to shut up.

Public commentary or retaliatory rhetoric – such as past remarks by ANC Secretary-General Fikile Mbalula or former ambassador Ebrahim Rasool – will only exacerbate tensions.

South Africa should send its best diplomat to the US to help rebuild the relationship. It should not be an activist, a current or former politician, or – heaven forbid – a cadre.

ALSO READ: National Assembly passes budget after heated debate

Business sector’s concerns

The private sector has also intervened. A group of prominent business leaders has written to President Cyril Ramaphosa and DA leader John Steenhuisen, urging them to salvage the GNU.

Their letter argues that the GNU’s collapse would reverse progress made under the government-business partnership and risk investor confidence at a critical time.

Their message is clear: political cohesion and policy certainty are essential for economic recovery. Disunity, they warn, would stall reforms and derail any prospect of growth.

Hopefully, the country’s leaders will listen to this sound advice.

South Africa currently faces simultaneous internal and external challenges.

Domestically, political infighting may lead to the implosion of the GNU. Externally, the Trump tariffs have opened a new front in an international trade war.

Both events may have a profound negative impact on South Africa, which we can ill afford.

Now more than ever, South Africa needs leadership, discipline, and cooperation. These will have to come soon, as the alternatives – economic decline and political fragmentation – are no longer theoretical but are already taking shape.

This article was republished from Moneyweb. Read the original here.