The immediate market reaction to the allegations made by the United States of America’s ambassador in South Africa relating to South Africa supplying arms to Russia was a dramatic fall of the rand against the dollar, indicating how serious the international markets consider these claims.
Vinpro and Wines of South Africa (WoSA) believe the Government's response is unsatisfactory and brings intense uncertainty that will put our economy – which is currently reeling under the enormous impact of load shedding and which is expected to shrink by as much as 2% of the GDP growth forecast – under even more pressure. This is something South Africa and especially the wine industry cannot afford right now.
South Africa is the ninth largest wine producer in the world and produces approximately 4% of the world's wine. The wine industry annually contributes more than R55 billion to the country's GDP and employs 269 069 people across the value chain, of which 80 173 work on farms and in cellars.
These allegations, if true, will have a significant negative impact on the economy, and may jeopardise our trade relationships, especially our much-needed continued access to US markets created under the Africa Growth Opportunity Act (AGOA), which will be renegotiated for a further period soon.
Wine exports are a much-needed lifeline for the South African wine industry. South Africa annually exports R10.5 billion worth of wine to more than 125 countries worldwide and the USA is one of South Africa's top 5 exporting countries with wine exports to the value of R800 million in 2022. However, it is not only the value of the AGOA agreement of R57 million of benefit that is currently in place that can be negatively affected. These allegations may also pose a risk to the wine industry in terms of tourism, continued wine exports and our reputation as a credible role-player in the international trade environment.
Vinpro and WoSA urgently calls on President Ramaphosa and the Government to take immediate and effective action to ensure that these allegations do not build any further momentum and are thoroughly investigated and completed thereby protecting South Africa and the wine industry, and our collective economic interests, at all cost.