Image Credit: Corbis

Ever since the early 1990s when South Africa emerged victorious from the battle against apartheid, the UAE has shown its bilateral support to the Rainbow Nation. Recognising each other’s strengths, the two nations swiftly established mutually beneficial ties, with the UAE being the first GCC nation to recognise the new government and established its embassy in Pretoria in 1995. A move that has been much appreciated by South Africa and served to create a solid foundation for cooperation between the two sides in the new millennium.

A country with rich diverse resources that benefit many industries, South Africa is among one of the key emerging markets with a low tax rate and sophisticated financial market. Often the country of choice for global companies to set up their Africa headquarters, South Africa serves as the perfect platform to access the broader continent.

South Africa clocked in at 18th place, out of 144 nations, in the World Economic Forum’s latest Global Competitiveness Index 2012-2013, serving only to further enhance the country’s competitiveness in attracting FDI, including from those countries that want to use South Africa as a base for their African operations.

Acknowledging the strides and successes that the UAE has achieved in the past four decades, South Africa believes that both the countries can exchange ideas and skills in their field of expertise.

From popular South African brands to a strong expat population and bilateral trade, GN Focus looks at the various aspects of the strong ties that bond the two nations.

Trade

South Africa’s exports to UAE experienced a strong and steady increase from 2009 to 2013, with an average annual growth of 22.94 per cent largely due to 37.79 per cent annual growth in exports between 2012 and 2013. “The trend in exports is overshadowed by the trend in imports, which have shown a continuous increase from 2009 to 2013. South Africa’s exports grew to R11.7 billion in 2013 from 5.1 billion in 2009 reflecting a positive average growth of 22.94 per cent,” says Mpetjane Kgaogelo Lekgoro, South African Ambassador to the UAE.

Imports increased to R9.2 billion in 2012 from R4 billion in 2009 reflecting average growth of 24.72 per cent, with an annual growth of 3.98 per cent. Total trade increased to R21 billion in 2013 from R17 billion in 2012, reflected with 23.09 per cent average growth and a 20.54 per cent annual growth. South Africa’s trade deficit amounted to R511, 1 million in 2012 but recorded a positive trade surplus of 2.5 billion in 2013.

“Comparing these figures with those of the previous years, bilateral trade is increasing rapidly. The trade figures are not favouring one country but rather the figures show both countries complement each other with regards to commodities and goods required,” adds Lekgoro.

The larger GCC market and the UAE in particular are very important to South Africa. “The UAE remains our largest trade partner in the region, with total bilateral trade equaling $2 billion. The UAE is our 21st largest export market and our 6th highest supplier of oil. FMCGs to the UAE continue to dominate South Africa’s exports, whilst oil is the biggest import,” adds the ambassador. Exports to the UAE primarily constitute agricultural products, machinery, automotive parts, gold, raw diamonds and financial services.

Investment

The areas of investment are across varied sectors such as metals, mining, agro processing and IT. South Africa offers a host of incentives to further attract foreign direct investments. Investment flows have been increasing between the two countries and today there are approximately 200 known registered South African companies in the UAE. “These firms that range from construction, finance, IT services, hospitality, retail and trading have enjoyed a favourable reputation in the UAE,” says Lekgoro.

In the Construction sector, South African companies include, amongst others: Murray & Roberts, Group 5 and Aurecon; the Retail sector has Woolworths, @ Home and De Beers; while F&B outlets include Nando’s, the Meat Co, the Butcher Shop & Grill and Mugg and Bean. In the financial space Standard Bank, First Rand and Nedbank Private Wealth have created a niche for themselves.

Aviation

“Tourism has witnessed tremendous growth over the past few years, especially following the establishment of direct air services between the two countries by Emirates, Etihad and South African Airways,” says Lekgoro. Leisure related travel has gone up by leaps and bounds and today there are approximately seven flights daily between South Africa and the UAE.

Emirates operate 42 flights weekly to three South African destinations – Johannesburg, Cape Town and Durban. Since 1995 to present, Emirates has flown more than 6.5 million passengers and 350,000 tonnes of freight to and from South Africa.

On the other hand South African Airways (SAA) is looking to expand its partnership with Emirates or Etihad and add a stop in Dubai or Abu Dhabi on its Mumbai and Beijing services, reported CAPA Centre for Aviation this June.

Tourism

A popular tourist destination featuring on most people’s bucket list, South Africa has something to offer for everyone. “Our country offers a huge variety of locations and activities to tourists from the Gulf – from beautiful wildlife parks with a huge variety of big game to exciting holiday resorts. South Africa is also a major participant at various exhibitions held in the UAE. Dubai has become a major attraction for South Africans with thousands visiting the emirate for tourism and for exploring business opportunities,” says the ambassador.