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Saudi Arabia and SA – reviving business relations with the Gulf region

Saudi Arabia and SA – reviving business relations with the Gulf region
President Cyril Ramaphosa (Photo: GCIS)
Peter Fabricius
By Peter Fabricius
20 Nov 2022
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President Ramaphosa completed a successful visit to the Gulf state, focusing on economic diplomacy and reviving a business council. The focus will be on reviving relations in the areas of: mining and commodities; healthcare and pharmaceuticals; tourism, entertainment and leisure; agribusiness and food; and energy.

Like most countries, South Africa shelves any geopolitical differences it might have with Saudi Arabia to pursue stronger relations with the wealthy, oil-rich Gulf State because of the large economic opportunities it offers.

President Cyril Ramaphosa, who has been sharply focused on economic diplomacy, visited Saudi Arabia with a team of Cabinet ministers and business leaders last month on a mission to revive relations, which had lapsed a little in recent years.

The Saudis put a great deal of effort into the visit, which convinced South Africa that Riyadh was equally committed to growing relations, said Stavros Nicolaou, group senior executive, strategic trade, at Aspen Pharma Group, who has just been appointed as head of the newly revived South Africa-Saudi Arabia Business Council.

He told DM168 the big advantage of commerce with Saudi Arabia was that so much of its economy was complementary to South Africa’s, rather than competitive.

The business council identified five priority sectors where such complementarity was strongest, and so where it deemed the potential for boosting business between the two countries to be the greatest. These are mining and commodities; healthcare and pharmaceuticals; tourism, entertainment and leisure; agribusiness and food; and energy.

From a purely political perspective, the warmer relations with Saudi Arabia might seem surprising. South Africa’s ruling ANC has historically been wary of Saudi Arabia, regarding it as an ally of the US in the Gulf – and also as a major Middle East rival of Iran, an important ANC ally.

Strategic partner


But an official points out that “South Africa sees Saudi Arabia as a strategic partner in the region, given its increasingly important role as an emerging regional power.

“Iran is equally important. We need to balance our options in the region, advancing our interests irrespective of which perceived camp a country may be aligned to.”

Abba Omar, who was South Africa’s ambassador in the Gulf (in Oman and the United Arab Emirates) for 10 years, believes Ramaphosa’s Saudi Arabian initiative in fact represents continuity rather than change.

Omar, now director of operations at the Mapungubwe Institute for Strategic Reflection, notes that the ANC government has always been pragmatic in its diplomatic relations with the Gulf states, pursuing them mainly in the light of attracting investment.

Another former diplomat notes that some Western countries have been vocal about human rights abuses such as Saudi Arabia’s gruesome murder of critical journalist Jamal Khashoggi in its consulate in Istanbul in 2018, while Pretoria has remained silent. Nevertheless he notes that those Western countries have not allowed such human rights scruples to impair their drive for better relations with Riyadh.

The Saudi initiative could also be seen in the light of some political reforms in Saudi Arabia and as an expression of a greater economic imperative in Ramaphosa’s diplomacy. The state visit was part of a broader campaign for greater trade and investment internationally. Last month his spokesperson Vincent Magwenya issued a full programme of foreign visits by Ramaphosa or incoming visits by foreign leaders for the remainder of 2022. “South Africa’s programme of economic diplomacy is a key lever for the realisation of the Economic Reconstruction and Recovery Plan to rebuild the economy,” Magwenya said.

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His programme included outgoing visits to Britain, Kenya, the G20 summit in Bali and the COP27 international climate change conference in Egypt as well as incoming visits by Spanish Prime Minister Pedro Sánchez and Venezuelan President Nicolás Maduro.

“Venezuela is a strategic partner of South Africa in Latin America, especially in the context of South-South cooperation as well as the potential for future economic partnership due to its abundant oil and gas reserves,” Magwenya noted.

President Cyril Ramaphosa (Photo: GCIS)


Pretoria puzzled


Some diplomats in Pretoria are puzzled by the president devoting so much time to foreign engagements on the eve of the elective ANC conference, where he faces a fight for re-election and also when the country is facing so many domestic challenges.

“He still has to run the country and these are very much trade-related foreign engagements,” Magwenya explained, noting that some of the meetings had been put off because of the pandemic, while Ramaphosa’s visit to Saudi Arabia had been postponed by the floods in KwaZulu-Natal. And the G20 and COP27 meetings were obligatory, he added.

Nicolaou sees the political aspect of the Saudi visit partly in the light of “some geo-political, geo-strategic reorganising globally as a consequence of Ukraine, the energy crisis [and] climate change.”

He notes that Saudi Arabia “intend[s] becoming the gateway to the Gulf and more broadly to the Middle East. So if we look at South Africa still being one of the gateways into Africa, sub-Saharan particularly, there are a number of synergies and complementarities that are emerging that we don’t … have with the other more traditional relationships.”

Saudi Arabia, though well developed in oil, is in some ways undeveloped in other sectors where South Africa is strong – such as mining and the other four priority sectors identified by the business council, which present opportunities for partnerships.

Nicolaou says the state visit was extremely successful. The two countries signed 17 memoranda of understanding, elaborating on how the relationship would be developed.

“When you meet them they’re not the Saudi ministers of 20 years ago. They’re mainly US educated. A very different and more modern approach. There is some reform taking place.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.

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