MEDUPI LAMOLA | Why SA’s greatest competitive advantage lies at home

The US’s decision to impose a 12.5% tariff on selected South African exports effective from July 24 should not be viewed simply as another trade dispute.

It is a stark reminder that global commerce has entered a new era, one in which markets are increasingly influenced by geopolitics rather than economics.

For decades, countries competed primarily on productivity, comparative advantage and price. Today, political alignment, strategic interests and national security concerns increasingly determine access to markets. Trade has become an extension of foreign policy. SA cannot change this reality. What it can change is how it positions itself within it.

This is no longer just a trade conversation. It is fundamentally a marketing challenge. Countries, much like organisations, compete for investment, talent, technology and confidence. Every policy decision, infrastructure investment, diplomatic engagement and regulatory reform contributes to a country’s brand.

The question is no longer whether SA has world-class opportunities. The question is whether the world believes it is the easiest, safest and most reliable place in which to invest.

“Leadership on the continent cannot coexist with narratives that alienate the very partners with whom we seek deeper economic integration.”

—  Dr Medupi Lamola

Tariffs undoubtedly increase costs for exporters and reduce competitiveness in affected sectors. Businesses that depend heavily on the US market may experience declining orders, delayed investment decisions and shrinking profit margins.

While the economy is unlikely to experience an immediate collapse, the cumulative effect of constrained exports is likely to be felt elsewhere, and that is in employment.

SA already faces one of the highest unemployment rates in the world. Export-orientated industries such as manufacturing, agriculture, automotive production and mineral beneficiation support thousands of direct and indirect jobs.

When exports become more expensive, firms often respond by reducing production, postponing expansion or freezing recruitment. In some instances, retrenchments become unavoidable. The greatest cost of tariffs, therefore, may not be measured in customs duties but in lost livelihoods.

This makes economic competitiveness not merely a business issue but a social imperative. Yet external pressures should not distract us from confronting our own internal constraints. It is tempting to point fingers at shifting geopolitical dynamics, but investors make decisions based on factors far closer to home.

• They assess whether ports function efficiently.
• Whether freight rail can move goods reliably.
• Whether the electricity supply is dependable.
• Whether regulations are predictable.
• Whether permits can be obtained without excessive bureaucracy.
• Whether contracts are respected.
• Whether skills are available.

These are all elements of what marketers would describe as the customer experience. In this case, the customer is the investor.

SA cannot control tariff policy in Washington. It can, however, control the experience of doing business in Johannesburg, Pretoria, Durban, Gqeberha and Cape Town. This is where our national brand is either strengthened or weakened.

Country branding is often misunderstood as slogans, tourism campaigns or international advertising. In reality, a country’s reputation is earned through consistent performance. Investors are persuaded less by promotional campaigns than by evidence that a country is stable, efficient and capable of delivering on its promises.

Marketing can create awareness, but only competitiveness sustains credibility. Diplomacy therefore remains essential, but diplomacy alone cannot restore competitiveness. Productive engagement with the US and other trading partners should continue, yet foreign policy must be complemented by domestic reform.

Reducing the cost of doing business, modernising logistics infrastructure, accelerating industrialisation and creating regulatory certainty will ultimately do more to attract investment than any diplomatic communiqué.

Equally important is how SA positions itself within Africa. Recent anti-immigration rhetoric and xenophobic comments circulating on social media and in public discourse present a significant reputational risk.

While frustrations around unemployment and economic hardship are understandable, directing those frustrations towards fellow Africans undermines SA’s long-term strategic interests.

The irony is difficult to ignore. At the very moment SA seeks to diversify export markets beyond traditional partners such as the US, relationships with neighbouring African countries have become more important than ever. The African Continental Free Trade Area offers one of the world’s largest emerging trading blocks, presenting significant opportunities for South African businesses to expand across the continent.

Those opportunities depend not only on trade agreements but also on trust. Perceptions matter. If SA is increasingly viewed as hostile towards African migrants or businesses, regional cooperation becomes more difficult.

Investment decisions are influenced by political stability, social cohesion and diplomatic goodwill. Negative perceptions spread quickly in today’s digital economy, where reputational crises often travel faster than official policy statements.

National branding therefore extends beyond investment conferences and international roadshows. It is reflected in how a country treats its neighbours, welcomes skilled professionals, supports regional integration and demonstrates its commitment to shared African prosperity.

SA has long positioned itself as a gateway to Africa. That positioning carries responsibilities. Leadership on the continent cannot coexist with narratives that alienate the very partners with whom we seek deeper economic integration.

The global economy is fragmenting, but fragmentation should not lead SA to become inward-looking. Instead, it should strengthen our resolve to become more competitive, more collaborative and more attractive as an investment destination.

Ultimately, the most effective response to geopolitical uncertainty is not fear but resilience. Resilience means investing in infrastructure that reduces logistics costs. It means reindustrialising the economy to produce higher-value goods.

It means creating a predictable regulatory environment that inspires investor confidence. It means equipping young people with the skills required by a changing global economy. And it means protecting SA’s reputation both internationally and across the African continent.

Tariffs may be imposed from abroad, but competitiveness is built at home. In an era where trade increasingly follows geopolitics, SA’s greatest competitive advantage will not lie in trying to influence decisions made in foreign capitals.

It will lie in consistently marketing and delivering a compelling value proposition: a country that is efficient, innovative, regionally connected and open for business.

Because in today’s global economy, nations are no longer competing only on what they produce. They are competing on the confidence they inspire.

• Dr Lamola is a marketing and communication manager at Wits Business School. He writes in his personal capacity.

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