Minister Enoch Godongwana: National Treasury Dept Budget Vote 2023/24 closing remarks

Madam Speaker, it is important to note that these allegations are being addressed.

From National Treasury perspective we have been dealing with this matter since US Treasury Secretary Yellen raised it with me during her visit in January 2023. Treasury officials have had consistent engagements with officials from the US Treasury, which is responsible for OFAC, the body that deals with anti-money laundering and proliferation sanctions.

We are fully aware of the harmful effects of any US or EU sanctions and will work with US authorities to prevent such measures against any key institutions in South Africa.

This is in addition to the President sending an envoy (Dr. Sydney Mufamadi, together with Dep Min Botes and DG Dangor) to meet with Secretary Blinken and National Security Advisor Jakes Sullivan. We value our political and economic relationship with the USA, even where we may differ on issues.

For the record, it should be noted that SA is non-aligned, and our policy is not to sell arms or ammunition to any party in the Russia-Ukraine conflict.

We have a body established in law, the National Conventional Arms Control Committee (NCACC) which has to approve all sales of arms and ammunition sold to any party outside of South Africa. The government has classified that no such arms sales have been approved, however, there is an inquiry by the President into the matter to determine the fullest set of facts.

Such activities and actions may attract punitive measures from the US or EU. There are at least four principal channels by which the South African economy will be affected by the mishandling of this issue.

The currency channel has already played out, merely on allegations or perceptions of such activity having taken place. There is still the trade channel potentially disrupting key supply chains, the investment channel through the FDI. There is also the liquidity channel. At this stage, we are assessing the quantitative sizeable impacts of these channels.

We must be alive to the fact that uncertainty elevates the risk premium of South Africa, increasing the cost of borrowing and the cost of doing business with South Africa. Further, the impact on any of our export-oriented sectors (agriculture, automotive, and other manufacturers), will also have labour market consequences especially as the sectors face the biggest disruption. Handling this matter poorly will affect the livelihoods of many people who are employed in the relevant companies and sectors.

In terms of AGOA designation we trust that the work being done by DTIC, DIRCO, and the Envoys, will yield positive outcomes that exert undue impact on the South African economy.

In conclusion, let me reiterate that South Africa supports a rules-based international order and the principle that it must be applied consistently. As the government, we have a policy guideline document (easily accessed on the DIRCO website) that sets out what our national interest is and how we will pursue it.

We must carefully consider our actions in the fractured global environment. We view the developments in a very serious light because we are running an economy that is already in junk status and grey listed, and any further action by the international community will exacerbate the problem. Our actions and the things we say on behalf of the government here at home have unintended consequences.


The Office of Foreign Assets Control is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives.

Source: Government of South Africa