Given fragmented trade dynamics and South Africa’s pursuit to diversify exports, the Middle East emerges as a region of interest. The Economist article titled “The Gulf’s scramble for Africa is reshaping the continent” in March 2024 highlights increasing geopolitical ties and investments in infrastructure across African nations, particularly by the UAE, Saudi Arabia, and Qatar.
For South Africa, the Middle East’s engagement offers potential for attracting investments and expanding export markets, especially within agriculture. Eastern South Africa and former homelands face challenges like poor land governance and inadequate infrastructure, hindering integration into formal value chains. High transaction costs due to the lack of roads, rail, and storage facilities further exacerbate these issues.
Middle Eastern investments could address these challenges by forming business ventures with local stakeholders. Partnerships with South African agribusinesses needing capital for expansion could be mutually beneficial. Government involvement is crucial, as significant funds from the Middle East often include governmental participation. Therefore, South Africa’s DTIC and DIRCO should lead the creation of a “Middle East-South Africa Agricultural Investment Strategy” to engage Middle Eastern stakeholders and introduce South African firms.
South Africa’s export-oriented agriculture reached US$13.2 billion in 2023, with the Middle East accounting for 28% of exports. However, South Africa’s role remains peripheral in key Middle Eastern markets. To enhance market share, targeted product promotion and addressing phytosanitary barriers are essential. A comprehensive Agricultural Investment and Trade Strategy, involving the Department of Agriculture, could prioritize investment products and outline paths aligned with the Agriculture and Agro-processing Master Plan.
Source: AET
