Ramaphosa said the strategic partnership between SA and the EU has evolved in scope and substance over the years.
Though South Africa is locked in a struggle over a trade deal with the US, the European Union (EU) made good on its promise to support the country with a €11.5 billion (about R233 billion) investment package to boost the struggling economy.
The Global Gateway Investment Package initially announced in March this year was a €4.7 billion package, but the latest package — confirmed during President Cyril Ramaphosa’s visit to Brussels last week — boosted that figure.
The latest package also expands investment from just the country’s green energy transition into strategic investment projects in energy, vaccines and connectivity.
EU support beyond trade
This marks the first major investment announced since SA began seeking alternatives when the Trump administration launched a global trade war centred on trade tariffs.
The EU, which was also a target of strict tariffs imposed by US President Donald Trump but has since reached a tariff agreement with Washington, has maintained cordial trade and diplomatic relations with SA.
It also pledged to back SA in the midst of an attack by Trump, who withdrew aid to the country, which he falsely accused of violating Afrikaners’ rights.
The EU also pledged to support SA’s hosting of the G20, which Trump has decided not to attend. His Secretary of State, Marco Rubio, boycotted the G20 foreign ministers’ meeting in Cape Town in May.
The Global Gateway deal was announced by EU Commission president Ursula von der Leyen and Ramaphosa during the latter’s Brussels visit.
It involves European investment of about R173 billion in a just energy transition, with R24 billion dedicated to that component, R20 billion to infrastructure and connectivity and R6 billion to developing the pharmaceutical value chain.
The previous package of €4.7 billion held that just €303 million would be direct, non-repayable aid, while the balance was in the form of soft loans and blended finance instruments.
The latest €12 billion package was announced without any details of the grant and aid component specified.
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Labour response: A vote of confidence
The investment package was welcomed by the Congress of SA Trade Unions as a response to job losses.
Cosatu parliamentary coordinator Matthew Parks said the investment was a “vote of confidence in South Africa”.
“These will be invaluable boosts to local jobs and communities, businesses and value chains. They will be an important investment to boost energy generation capacity, reduce carbon emissions and expand critical economic infrastructure.”
He added: “It is important that these financial commitments be in the form of investments and grants, not loans. South Africa needs to manage our debt trajectory very carefully and avoid further indebtedness, in particular foreign currency denominated debt that threatens to place us in a dangerous debt trap.
“Foreign currency denominated debt needs to be particularly tightly managed, given the appreciation of the euro and other currencies against the rand and political conditions lenders may attach.”
Ramaphosa: Deepening SA-EU strategic partnership
Ramaphosa told the Global Gateway Forum in Brussels last week that the strategic partnership between SA and the EU has evolved in scope and substance over the years.
This year reaffirmed shared values and further deepened cooperation between the two sides.
It offered an opportunity to strengthen resilience by promoting investments in digital and green infrastructure, fostering innovation, securing supply chains and encouraging diversification that supports sustainable and inclusive growth.
He noted development advances made in transport networks, a just transition and climate resilience, pandemic preparedness and vaccine production and digital connectivity.
SA and the EU must also address issues that hinder a more robust, diverse and impactful trade and investment between African and European countries.
“We need to work together to overcome the tariff and non-tariff barriers that constrain the breadth and the scale of African exports to the EU.
“We must use investment and trade as effective instruments to foster industrialisation on the African continent.
“SA is undertaking far-reaching economic reforms in energy, water, logistics and telecommunications that are making our country more competitive and improving the investment environment,” Ramaphosa said.
It was key that the G20 addresses the debt burden that holds back the growth of many developing countries, especially in Africa, he said.
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