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Saudi-South African economic relations on a steady upward trajectory

IOL | 18 October 2022

Saudi-South African economic relations on a steady upward trajectory

by Mushtak Parker

London - President Cyril Ramaphosa must be elated by the success of his state visit to Saudi Arabia at the weekend, returning home with 11 deals signed to promote investment in the renewable energy, water, green hydrogen, waste diversion, logistics, and aerial survey sectors.

The kingdom has been a must-visit port of call for South African presidents since democracy in 1994. Ramaphosa and his delegation, which included six ministers – Naledi Pandor of International Relations; Thoko Didiza of Agriculture; Ebrahim Patel of Trade and Industry; Gwede Mantashe of Mineral Resources and Energy, Fikile Mbalula of Transport and Thandi Modise of Defence – had a three-track mind.

These included selling Brand South Africa; attracting Foreign Direct Investment (FDI), especially a major contribution from Saudi public and private investors towards Pretoria’s US$70 billion FDI target; and promoting South Africa as the gateway for African markets in the context of the African Continental Free Trade Area.

Saudi-South African economic relations are on a steady upward trajectory albeit the potential is much higher. Khalid Al-Falih, Saudi Minister for Investments, said South Africa is the kingdom’s second largest trading partner in Africa after Egypt, and Saudi-South African trade increased from US$4.6bn in 2019 to US$4.8bn in 2021, and is on track to exceed US$5.3bn (R97.3bn) this year.

Both sides are prioritising renewable energy, mining, agriculture and food processing, manufacturing, defence and aerospace industries, tourism, communications and information technology.

Pretoria and Riyadh are rightly keen on expanding socio-economic co-operation. The Saudi government has access to $1.213 trillion (R22 trillion) in assets under management (AUM).

PIF aims to have an AUM of more than $2 trillion by 2025 topped up from proceeds of a planned sell-off of a minority stake in Aramco, the Saudi state oil company and the world’s largest oil producer and exporter. South Africa has a history of mining, minerals, agri-commodities, food processing, defence equipment and systems, and more recently renewable energy, IT and payments solutions. Both sides are keen to “activate the two countries’ great commercial and logistical capabilities”.

Here’s the catch though. In the spirit of the Struggle, does Pretoria follow any notion of an ethical foreign, trade and investment policy?

When Ramaphosa met Crown Prince Muhammed Bin Salman (MBS to his friends and de facto strongman of Saudi Arabia) on Saturday, did he raise concerns about the kingdom’s human rights and free speech record and the brutal killing of dissident Saudi journalist Jamal Khashoggi at the Saudi Consulate in Istanbul in 2018, which a CIA report said was ordered by the very MBS our president and bevy of ministers are now wooing? Is it a question of political, trade and investment expediency at any cost?

In a world full of moral ambivalence in geopolitical, diplomatic, economic, business and societal affairs, of which no nation is spared, no one is suggesting Pretoria unilaterally cuts economic and trade ties with Riyadh.

On the contrary, strengthening ties is paramount, but not at the cost of Madiba’s values that set the moral compass for his successors, and which sadly have been trampled upon during the state capture era. Madiba would have brought this up without any fuss.

Notwithstanding, Ramaphosa came with a shopping list of potential investment opportunities in mining and industry, agriculture and food processing, tourism, and renewable energy.

Pretoria should also consider applying for membership of the 57-member Jeddah-headquartered multilateral OIC and Islamic Development Bank, which would eventually pave the way for billions of dollars of concessionary development finance and inward investment. If Uganda, Mozambique and Tanzania can be members, why not South Africa?

 source: IOL