The South African rand fell to a record low against the US dollar on Friday after the US accused President Cyril Ramaphosa’s government of covertly supplying arms to Russia, imperilling trade ties with South Africa’s second-largest trading partner.
The rand breached 19.35 against the US dollar in early trading, past its previous low at the start of the coronavirus pandemic in 2020, a day after the US ambassador to South Africa claimed that Pretoria loaded weapons and ammunition on to a Russian ship under US sanctions in Cape Town last year.
Reuben Brigety said on Thursday that he would “bet my life” that South Africa placed arms on the Lady R, owned by a Russian fleet company. “The arming of the Russians is extremely serious, and we do not consider this issue to be resolved,” he added.
Ramaphosa’s government was blindsided by the US warning and was unable to deny the allegations on Thursday. It has announced an inquiry, to be led by a retired judge, into the vessel’s docking at South Africa’s main naval base in December.
The rand was already under pressure this week because of investor concerns about indefinite rolling power blackouts that have throttled growth in Africa’s most industrial nation and brought the risk of a total grid collapse closer.
But at stake in the diplomatic storm in the US is South Africa’s preferential access to US markets through the African Growth and Opportunity Act, a law which allows specified African nations to export goods duty-free.
South Africa’s participation was already on the line over US criticism of signs that Pretoria has sought closer ties with Russia since its invasion of Ukraine, despite officially professing a non-aligned stance in the war.
Ramaphosa recently sent Sydney Mufamadi, his national security adviser, to the US to explain South Africa’s position on the war and preserve its US trade access.
Despite Ramaphosa’s announcement of an inquiry, a minister in his presidency categorically denied on Friday that arms had been loaded on to the vessel and hit back at the US.
“We cannot be bullied by the US . . . the US doesn’t co-manage or co-govern with South Africa,” Khumbudzo Ntshavheni told South Africa’s 702 radio.
South Africa’s defence minister said last year that the Lady R had delivered a consignment for the country’s defence forces, but it has never been disclosed what may have been then loaded on to the vessel for its return trip.
The US state department said Washington had raised the issue directly with South African officials. Spokesman Vedant Patel said: “The US has serious concerns about the docking of a sanctioned Russian cargo vessel at a South African naval port in December of last year.”
Ramaphosa’s ruling African National Congress is also under pressure at home to explain the incident much faster given the economic stakes.
“Our government’s lack of transparency on allegations of armament supplies to Russia . . . has brought South Africa very close to a chain of events that will spark significant economic hardship for our nation,” said Wayne Duvenage, chief executive of the Organisation for Undoing Tax Abuse, a South African transparency watchdog.
“This is not rocket science,” Duvenage added. “The authorities just need to tell us if anyone in government authorised the loading and supply of whatever it was on to the Lady R and, if so, whether the inventory included armaments and/or ammunition.”
