Saudi Investment Wave Brings Billions to South Africa Amid Gulf’s Africa Push

A steady wave of Saudi investment is washing over South Africa, bringing with it billions of dollars in deals, a flurry of high-level meetings, and growing economic ties between the two countries. The movement is part of a broader Gulf strategy to deepen roots in Africa — and South Africa, as the continent’s most industrialised economy, is quickly becoming the crown jewel.

Since a pivotal meeting in 2022 between Saudi Crown Prince Mohammed bin Salman and South African President Cyril Ramaphosa, corporate and government delegations have been crossing paths almost monthly. These engagements have already sparked deal talks worth over $5 billion, with agreements spanning renewable energy, logistics, gas stations, and real estate — and more are on the way.

According to Ruven Naidoo, head of M&A at Investec Bank, South African companies offer strong value propositions: “We have really high-quality management teams and intellectual property. If you’re a strategic investor with a long-term view, you’ll see the value here.”

Why South Africa?

South Africa’s combination of first-world infrastructure, industrial capacity, and skilled workforce makes it a compelling investment destination — especially when compared with its African peers. While the country does face bureaucratic challenges and lacks a bilateral investment treaty with Saudi Arabia, business leaders remain optimistic.

“There’s exponential growth in Saudi investment,” said Chrispin Phiri, spokesperson for South Africa’s international affairs ministry. The upcoming SA-Saudi Joint Economic Committee meeting in Riyadh is expected to unlock more opportunities.

Who’s Investing and Where?

• ACWA Power, backed by Saudi Arabia’s Public Investment Fund (PIF), has invested nearly $1.9 billion in renewable projects and plans to inject up to R7 billion more into water and energy sectors over the next five years.

• Red Sea Gateway Terminal International, also PIF-backed, is eyeing Durban’s massive port with a bid of over $600 million, and may also go after Cape Town’s port if tendered.

• Zahid Group is looking to expand its stake in Barloworld, a Caterpillar equipment distributor, in a deal valuing the company at $1.25 billion.

• Saudi Aramco is among the contenders to acquire Shell’s gas station business in South Africa, estimated at about $1 billion.

• Ajlan Bin Abdulaziz Al-Ajlan, a Saudi billionaire, has pledged $500 million for a platinum smelter and refinery in Limpopo.

• Saudi Telecom acquired a 49% stake in South Africa’s CMC Networks last year, reinforcing tech and connectivity ties.

Air Routes, Energy Hopes, and Future Talks

So frequent are the visits between the two nations that South African Airways is exploring a direct flight route between Johannesburg and Riyadh — a 10-hour journey that’s fast becoming a corridor of commerce.

Talks are also underway to establish joint ventures in the pharmaceutical, agricultural, financial services, and automotive sectors. South African exports to Saudi Arabia rose to R7.3 billion last year — up from R6.6 billion in 2022.

Saudi Arabia’s massive Vision 2030 agenda is fuelling this momentum. The kingdom recently pledged $41 billion for investments across Africa, focusing on food security, resources, and renewables as it seeks to diversify away from oil and compete with Gulf rivals like the UAE.

A Win-Win Partnership

“This is more than a short-term capital influx,” said Stavros Nicolaou, co-chair of the Saudi-South Africa Business Forum. “It’s about building long-term, strategic relationships that benefit both nations.”

Despite some headwinds, including oil-linked fiscal pressures back home and red tape in South Africa, the outlook remains bullish. With over $100 billion in Gulf investments flowing into Africa since 2014, and South Africa at the center of the action, the future of Saudi-Africa economic collaboration is just getting started.

{Source: Money Web}

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