{"id":822235,"date":"2025-04-25T09:00:00","date_gmt":"2025-04-25T07:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=822235"},"modified":"2025-04-25T08:40:45","modified_gmt":"2025-04-25T06:40:45","slug":"money-flooding-into-south-africa-from-saudi-arabia","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/822235\/money-flooding-into-south-africa-from-saudi-arabia\/","title":{"rendered":"Money flooding into South Africa from Saudi Arabia"},"content":{"rendered":"\n

A flurry of meetings between Saudi Arabia and South Africa over the past year has culminated in discussions about or signed deals worth billions of dollars into Africa\u2019s most industrialized country \u2014 and more corporate action is in the pipeline.<\/p>\n\n\n\n

The rush of deal-making is part of a broader Gulf drive into Africa, with the United Arab Emirates and Saudi Arabia in particular investing in mining, renewable energy and agriculture. <\/p>\n\n\n\n

Mineral-rich South Africa is attracting investors because it\u2019s the continent\u2019s most-industrialized nation, boasts developed-world infrastructure and has a bevy of well-run companies at bargain prices compared with firms in other regions.<\/p>\n\n\n\n

\u201cThere is a disconnect between valuation levels in South Africa compared to other markets, so if you are a strategic investor taking a long-term view \u2014 you will see the value and opportunities,\u201d said Ruven Naidoo, head of mergers and acquisitions at Investec Bank Ltd. <\/p>\n\n\n\n

\u201cWe have really high-quality management teams and intellectual property and companies that are very good at what they do, so it\u2019s a good place to look for opportunities.\u201d<\/p>\n\n\n\n

Delegations of officials and business leaders have been visiting either country every few months since a 2022 meeting between Saudi Crown Prince Mohammed bin Salman and South African President Cyril Ramaphosa \u2014 along with hundreds of businessmen \u2014 in the kingdom.<\/p>\n\n\n\n

It\u2019s resulted in about $5 billion in deal talks and investment in renewable energy, logistics, gas stations and real estate \u2014 some signed, some still in discussions.<\/p>\n\n\n\n

The 10-hour journey between the capitals is becoming so popular that South African Airways is discussing a direct route between Riyadh and Johannesburg, according to people familiar with the matter. An SAA representative said no official announcement has been made. <\/p>\n\n\n\n

Chrispin Phiri, spokesman in South Africa\u2019s international affairs ministry, said bilateral relations had \u201cstrengthened significantly over the past years,\u201d with Saudi investment \u201cgrowing exponentially.\u201d <\/p>\n\n\n\n

South Africa\u2019s trade minister will co-chair the 10th SA-Saudi Joint Economic Committee meeting next month in Riyadh, he added.<\/p>\n\n\n\n

The governments are collaborating at a high level on trade and business, said Hussam Algheraimil, Saudi Arabia\u2019s commercial attach\u00e9 in Johannesburg.<\/p>\n\n\n\n

But challenges remain. \u201cWe don\u2019t have bilateral investment treaties yet,\u201d he added. \u201cSome government opportunities requires a lot of bureaucratic procedures and requirements for the Saudi companies.\u201d<\/p>\n\n\n\n

Meanwhile, the kingdom is also facing a fresh fiscal squeeze due to subdued oil prices that could complicate efforts to invest abroad. Saudi Arabia\u2019s sovereign wealth fund \u2014 a key driver of investment in the local economy \u2014 is already allocating more money at home than abroad and may consider selling international assets to come up with more cash, analysts have said.<\/p>\n\n\n\n

Renewables, Ports<\/h3>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Saudi companies including ACWA Power and ports operator Red Sea Gateway Terminal International, both backed by the kingdom\u2019s $925 billion sovereign wealth fund, have invested in South Africa or are bidding for assets in the country. <\/p>\n\n\n\n

Thanks to the Public Investment Fund\u2019s 44% stake in ACWA, the kingdom is now the largest investor in South Africa\u2019s renewable-power sector, according to Standard Bank Group.<\/p>\n\n\n\n

South Africa\u2019s current coalition government \u201cbrings economic and policy certainty and renewed confidence,\u201d while \u201chigh local banking capacity\u201d makes it easier for companies to expand, said ACWA South Africa country manager Nandu Bhula. <\/p>\n\n\n\n

The company has invested $1.9 billion in its three plants so far, with the\u00a0stabilization<\/a>\u00a0of power supplies also helping attract foreign investment, he said.<\/p>\n\n\n\n

ACWA plans to invest as much as R7 billion ($378 million) in South Africa\u2019s water and energy sectors over the next five years, according to people familiar with the matter.<\/p>\n\n\n\n

Red Sea Gateway Terminal International is prepared to make a bid that may exceed $600 million for sub-Saharan Africa\u2019s biggest port in Durban, according to people familiar with the matter. <\/p>\n\n\n\n

That deal is pending a\u00a0legal challenge<\/a>\u00a0against a tender award two years ago.<\/p>\n\n\n\n

\u201cSouth African container terminals represent some of the most attractive investment opportunities in the sector globally,\u201d said RSGTI director of global investments Gagan Seksaria. The group would also be interested in bidding for Cape Town\u2019s port, should a tender come up, he said.<\/p>\n\n\n\n

Logistics, Gas Stations<\/h3>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Last month, the Jeddah-based Zahid Group reopened talks with Barloworld Ltd. shareholders to increase its stake in the sole distributor of Caterpillar Inc. equipment on the continent, valuing the firm at $1.25 billion. <\/p>\n\n\n\n

The Saudi Arabian Oil Co. is also competing to buy Shell Plc\u2019s downstream gas stations in South Africa for about $1 billion, as previously\u00a0reported<\/a>\u00a0by Bloomberg.\u00a0<\/p>\n\n\n\n

Saudi billionaire Ajlan Bin Abdulaziz Al-Ajlan has plans to invest $500 million in a platinum smelter and refinery in South Africa\u2019s Limpopo province. Saudi Telecom last year completed the acquisition 49% of CMC Networks South Africa for an undisclosed amount.<\/p>\n\n\n\n

This month, the South Africa-Saudi Business Forum met the kingdom\u2019s deputy minister of economic planning Al-Baraa Al-Iskandarani in Riyadh. <\/p>\n\n\n\n

That followed an earlier meeting in February, where a half dozen Saudi officials including Al-Iskandarani visited South Africa\u2019s Johannesburg Stock Exchange, the Industrial Development Corporation and other businesses.<\/p>\n\n\n\n

The group agreed to compile a new list of potential deals in South Africa, according to people familiar with the matter who asked not to be identified as the information is private.<\/p>\n\n\n\n

The deals dovetail with the crown prince\u2019s Vision 2030 plan to diversify his country\u2019s economy away from oil.<\/p>\n\n\n\n

Earlier this year, the kingdom announced $41 billion in investments across various sectors \u2014 focusing on natural resources, food security and renewable energy \u2014 in Africa until 2030, as it positions itself on the continent to compete with Middle East rivals.<\/p>\n\n\n\n

Win-Win<\/h3>\n\n\n\n

The current deal-flow will boost South Africa\u2019s finances and provide stronger links to other Gulf and Middle Eastern countries, said Saudi-South Africa Business Forum co-Chairman Stavros Nicolaou.<\/p>\n\n\n\n

Overall, Gulf countries have invested more than $100 billion in Africa since 2014, according to the World Economic Forum.\u00a0<\/p>\n\n\n\n

Plans are in place for the kingdom to partner with South African pharmaceutical companies, while talks are ongoing over exports of South African automotive, financial services, commodities and agricultural products, he said. <\/p>\n\n\n\n

South African exports to Saudi Arabia increased to R7.3 billion last year, from R6.6 billion the previous year.<\/p>\n\n\n\n

\u201cWhen you look to grow your economy, as is the case for South Africa, and you look toward high value markets \u2014 a market such as the European Union is attractive, but it\u2019s a mature market,\u201d said Nicolau.<\/p>\n\n\n\n

\u201cWith Saudi, which only started to diversify away from oil more recently, you find a big market where you have quite a bit of complementarity.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A flurry of meetings between Saudi Arabia and South Africa over the past year has culminated in discussions about or signed deals worth billions of dollars into the country\u2014with more coming.<\/p>\n","protected":false},"author":59,"featured_media":822236,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[543,6073,853],"class_list":["post-822235","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-investment","tag-saudi-arabia","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=822235"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822235\/revisions"}],"predecessor-version":[{"id":822238,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/822235\/revisions\/822238"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/822236"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=822235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=822235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=822235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}