By South Africa and Saudi Arabia have enjoyed trade relations over the years and have proved beneficial for both countries showing export growth amounting to R8.1 billion in 2023.
Addressing the South Africa-Saudi Arabia Business Forum at the Sandton Convention Centre on Monday, 14 October 2024, the South Africa Minister for the Department of Trade, Industry and competition (DTIC) Mr Parks Tau said both countries are committed to enhancing and deepening economic relations which should lead to increased investments and trade flows in both directions.
Tau made mention that though trade is good between the two countries; it is however skewed in favour of Saudi Arabia and that has to be adjusted to equitable beneficiation.
Parks Tau said the cornerstone of economic relations between South Africa and Saudi Arabia has been guided within the structured framework of the Joint Economic Commission (JEC).
“Within the Joint Economic Commission, we have the South Africa – Saudi Arabia Joint Business Council which has cemented and strengthened our commercial and economic linkages,” said the Minister.
The Minister has positioned South Africa as the gateway for Saudi Arabia to access the 1. 3 billion population market in Africa across 54 countries with a combined GDP value of US$3.4 trillion; in turn, Saudi Arabia is the doorway for South Africa to access the Middle East market.
South Africa has firms operating in Saudi Arabia in a number of sectors including mining, technology and the healthcare sector. According to Minister Parks Tau, the companies include:
The MSA Group in the mining sector, which has a joint venture with the Al-Rusahid Group. AFRO-Zonke in the chemicals sector who has signed an MOU and discussions at advanced stage in setting up a facility. iXEngineers is finalising its set up of IX Enegineers in Saudi Arabia. The women owned company is focused on projects in the infrastructure and energy sectors.
Aspen Healthcare has an active presence in Saudi and recently moved its regional headquarters to Jeddah through project Alula. Dimension Data has made a significant investment in Saudi in data centres and is considering to further explore data centre co-investments and innovation opportunities with Saudi. They have also moved their regional headquarters to Riyad.
And Karan Beefwhom is exporting beef into Saudi and will continue to export to the Saudi market
“Our collective efforts over the years have shown notable growth in overall trade. South Africa’s exports to Saudi Arabia showed an increase from R6.6 billion in 2022 to R8.1 billion in 2023. Trade, however, still remains very much commodity based and skewed in favour of Saudi Arabia.
As a country we want to enhance our exports of value-added goods and services to Saudi Arabia. It is important that as we strive for a mutually beneficial trading relationship, we intensify cooperation in value-added sectors such as agro-processing, infrastructure, minerals beneficiation, services, technology and skills transfer, health care, automotive and aquaculture,” said Parks Tau.
The Minister has positioned South Africa as the gateway for Saudi Arabia to access the 1. 3 billion population market in Africa across 54 countries with a combined GDP value of US$3.4 trillion; in turn, Saudi Arabia is the doorway for South Africa to access the Middle East market.
Parks Tau said South Africa is ready to increase the overall export of a basket of goods to Saudi Arabia, to bring greater balance to the trade account.
“While we do our best as government to unlock new market opportunities for our businesses, as the drivers of our commercial agenda, the onus is now upon business to seek a more balanced trading portfolio.
The establishment of an African Continental Free Trade Area (AFCFTA), which came into effect in January 2021, has created the world’s largest free trade area, connecting 1, 3 billion people across 54 countries with a combined Gross Domestic Product value of US$ 3.4 trillion.
As South Africa, we would encourage Saudi companies to utilise South Africa’s strengths and take advantage of the free movement of goods, services and people from our country to other parts of Africa,” invited the Minister.
Tau extended his invitation to businesses from Saudi Arabia to invest in South Africa, to further tickle their fancy, he pointed out some of the lucrative opportunities to invest in the country. Tau said key drivers for investing in South Africa include:
Quality infrastructure and logistics; a well-developed and diversified manufacturing base; a lucrative emerging market and favourable market access to the global market; an innovation and technology hub; abundant natural resources; Africa’s leading financial hub; a young labour workforce; and an excellent quality of life.
“The Saudi Arabian business sector has already taken advantage of the above-mentioned factors through ACWA Power International, a firm that has made a strong imprint in our country since 2016. ACWA Power has taken advantage of our abundant Renewable energy potential through two concentrated solar power (CSP) projects. The first in Bokpoort which is a R5 Billion solar power plant in the Northern Cape.
The second is the 100 MW Redstone concentrated solar power (CSP) at R11, 6 billion in total investment and is the largest renewable investment in South Africa to date, which will have the largest level of thermal storage in the world,” said Minister Parks Tau.
