Fikile Mbalula has made an effort at explaining to the Americans why South Africa will not alter its black economic empowerment (BEE) policies. What he produced was a tragic but fascinatingly Kafkaesque insight into exactly why the economy grows at only 1% and the unemployment rate is six times the global average. And in the end, all he told them was that oligarchy was the name of the game and that if they were not prepared to sign up for that, they might as well ship out.

According to Mbalula, “Ambassador Bozell critiques our […] BEE policies, labelling them a ‘burdensome and inefficient race-based regulatory environment’. Yet, in the same breath, he admits that American companies operate here at a massive scale, creating jobs and building infrastructure.”

That is only true for the companies, American and other, that do operate in South Africa. They have either been established here historically or weighed up the risks and costs and decided to invest. The point is that there are very many more that weighed up those risks and costs and decided to give South Africa a skip.

How many more? Well, it is easy to tell. South Africa’s economy grows at just 1% and its emerging market peers at 4%. The difference is accounted for by the lower levels of investment South Africa attracts. Its investment rate is just under 15% of GDP. That is close to care-and-maintenance levels. The figure needs to be at least 10 percentage points higher to get the growth rate to 4%. And the unemployment rate is over 30% when the global norm is under 5%, which is because the growth rate is so low.

Yes, South Africa does have some companies that invest, but it has a great many more that do not, and that is the problem.

Mbalula goes on to say, “One would expect an administration led by business-minded leaders to celebrate this mutual prosperity. Instead, the impatience seems targeted. Looking closely at the telecommunications and mining sectors that Ambassador Bozell highlights, the true objectives become clear, which is to secure unfettered access for ventures like Starlink and the extraction of rare earth minerals.”

Yes, clearly, but that is what investors do. This is where a view into the economic mind of the African National Congress (ANC) turns Kafkaesque. The party says it is open to investment, but then, literally a paragraph later, says the Americans’ “true objectives” are to come to South Africa to extract minerals and provide access to Starlink. What did he think the Americans’ objectives were? Or what would he rather have them invest in? You can see why Washington has been driven to near madness after 18 months of this stuff from Pretoria.

The way he frames it is almost as if he has exposed them … they say they want to invest, but they actually want to invest in mining and telecoms!

And what mutual prosperity is Mbalula writing about? The United States (US) is prosperous, yes, but South Africa? There is nothing prosperous about it.

Then Mbalula goes on in the very next line to write that his party welcomes investment only where “such investments […] respect the laws of the Republic and contribute to the empowerment and economic inclusion of the historically marginalised”.

In other words, he is now saying only investment that complies with South Africa’s empowerment laws will be welcomed, but that is the crux of the issue and the very thing the Americans are trying to discuss in the first place.

He then changes tack a bit, writing, “The ANC remains committed to broad-based black economic empowerment as a necessary instrument to redress centuries of deliberate exclusion. However, we have also always understood that the form such empowerment takes must be responsive to economic realities. Equity equivalents already exist within South Africa’s empowerment framework, and many US companies are complying without any negative impact on their operations and bottom line.”

OK, so maybe the ANC is open to amending the rules in the name of “economic reality”, and at least there is a suggestion of an understanding that, without “economic reality”, “centuries of economic exclusion” cannot be addressed.

Getting warmer, Mbalula now writes, “The government has indicated that it intends to pursue legislative change to allow such programmes to complement ownership requirements. Those proposals must be judged by whether they expand connectivity and meaningful participation by South Africans who were excluded from ownership for generations. Mining likewise requires careful attention to the rights and opportunities of workers and host communities.”

That will be very well received in Washington, as will the following paragraph, “Finally, we are willing to discuss how our rules can work better and attract more investment.”

That’s the clincher, as it were. South Africa is prepared to sit down with the Americans and thrash out a new deal. This is exactly what the Americans have been trying to get to with Pretoria for the past 18 months.

Tragically that idea lasts only a line, as in the very next sentence Mbalula closes that door, saying South Africa will not do this because “sector rules cannot be waived by diplomatic agreement, nor can they be imposed from Washington”.

He then doubles down on the closed door with this absurdity, “The question is not whether foreign companies can operate in South Africa – they have and continue to do so successfully. The question is whether they are willing to do so as partners in our national project, rather than as extractors.”

And that, this newspaper is afraid, sums up the ANC’s approach to investment economics for much of the past decade. What he is really saying is that you are welcome into South Africa, of course, but only on the condition that you hand over a chunk of your firm to a local oligarch. Do that and we will be the best of friends. Short of that however, your investment is at odds with “our national project”, and we will justify keeping the door closed on the absurd proposition that investment without an oligarch partner is nothing but “extractive”. And if the cost of that must be that the growth rate is 1% and the unemployment rate over 30%, then those are costs the ANC is willing to go along with.