CONNECTING
AFRICA TO THE WORLD
South Africa has been at
the forfront of business matters in Africa by establishing
an unquestioned supremacy in its business ventures. A report...
The
United Arab Emirates and South Africa have enjoyed a close
commercial and political relationship right from the time
the "rainbow nation" emerged from the dark shadows
of apartheid to take its rightful place on the world stage.
Recognising each other’s strengths, the two countries
moved quickly to establish mutually beneficial ties, spanning
not just the areas of trade and commerce but also high level
government-to-government contacts that culminated in the
visit of President Nelson Mandela to the UAE. The UAE was
the first GCC country to recognise the new South Africa
by establishing its Embassy in Pretoria in 1995. This early
show of support by the leadership of the UAE for the newly
emerging country is much appreciated in South Africa and
has laid a solid foundation for cooperation between the
two sides in the new millennium.
According to Mahdi Basadien, South African Charge d'Affaires
(former) in Abu Dhabi, healthy economic and trade ties underpin
the strong relationship between South Africa and the United
Arab Emirates. The fact that these ties are growing exponentially,
is as much due to the support such activities receive from
the authorities in the two countries, as it is to the fact
that both the UAE and South Africa are trading and distribution
hubs for their respective regions. The UAE is now undoubtedly
the trading centre of the entire Middle East, just as South
Africa is the gateway to the African hinterland. Both the
countries are economically vibrant and have enterprising
business communities.
Overall trade between the two countries,
excluding arms sales has been growing each year. According to Basadien, gold is a major
export commodity and has been the focus of attention for
the Standard Bank of South Africa Group. Standard
Bank London, a Group subsidiary, opened its representative
office in Dubai and was able to import gold valued at
R2.1 billion to the emirates, thus taking the overall
South African gold export figure to the UAE to well over
R3 billion for the year. Apart from gold, South Africa
is also a major exporter of steel to the emirates and
South African construction, consultancy and service sectors
are also playing a big role in the rapid development of
the UAE. A company that merits special mention in this
context is the construction giant Murray and Roberts which
is closely associated with the construction of the prestigious
Chicago Beach Tower in Dubai. According to Basadien, South
Africa is very keen to attract investments from the UAE.
The Embassy will hold a series of investment workshops
in the UAE later this year with the aim of garnering a
larger share of UAE overseas investment. "Many UAE
businessmen are looking at short-term investments at the
present moment and real estate could be a major attraction,"
he said.
Pointing out the various attractions of
South Africa as a destination for foreign investment,
he points out that the country has a modern industrial
and distribution infrastructure. It offers skilled labour,
well established legal system, world-class financial systems
and state-of-the art telecommunications. With the large-scale
economic reforms now being carried out, the earning capacity
of large numbers of the country's population is expected
to go up in the coming years, leading to a burgeoning
market. Referring to growing cultural and educational
contacts between the two sides, Basadien said that over
70 UAE students went to various colleges and educational
institutions in South Africa. "We are planning
to bring groups of students from South Africa to the UAE
on familiarisation trips," he added.
Tourism is another area that has witnessed
tremendous growth over the past few years. Following the
establishment of direct air services between the two countries
by Emirates and South African Airways, leisure-related
travel has gone up by leaps and bounds. “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
such as the Lost City and Sun City, we have attractions
to suit all tourists," Basadien said. South Africa
is also a major participant at various exhibitions held
in the UAE.
Sophisticated
Infrastructure
SOUTH AFRICA: THE
AFRICAN GIANT
South
Africa is a middle-income developing country with an abundant
supply of natural resources, well-developed financial,
legal, communications, energy, and transport sectors,
a stock exchange which ranks among the ten largest in
the world, and a modern infrastructure supporting an efficient
distribution of goods to major urban centers throughout
the region. With over four years having passed since the
historic election of President Nelson Mandela in the country’s
first multi-racial elections in April, 1994, South Africa
remains the most advanced, broadly-based, and productive
economy in Africa, with a Gross Domestic Product (GDP)
nearly four times that of Egypt, its closest competitor
on the African continent After more than four years of
negative real GDP growth, the South African economy has
seen steady growth since the onset of non-racial democracy.
A primary objective of South Africa's government
has been to redress the historical inequities in political,
economic, and social opportunities between black and white
South Africans bequeathed by apartheid-era regimes. While
much remains unfinished in eliminating apartheid’s
legacy and meeting the black community’s aspirations,
some progress has been made in reducing economic distortions
caused by past racial policies. Legal restrictions which
prevented black South Africans from owning businesses,
obtaining skilled jobs, or living in major urban centres
have been eliminated. Black trade unions have been recognised
and spending on socio-economic development for blacks,
including education and health care, has increased substantially.
A nascent but growing black middle class with disposable
income now exists. Nonetheless, the disheartening effects
of apartheid-era policies, particularly the "bantu"
education system, will be felt for years to come.
However,
the rainbow nation has used its new-found freedom to make
huge strides in diversifying its economy and to create
new business partners all around the world. The United
Arab Emirates was one of the first countries in the Middle
East to realise South Africa's potential as a trading
partner soon after sanctions were lifted in the early
1990s. Formal links between the two countries go back
to the middle of 1992, when a delegation led by the Dubai
Chamber of Commerce and Industry - and comprising representatives
of Dubai Government departments and Emirates Airline -
first visited South Africa and laid the foundations of
the relationship that is now blossoming into a mutually
beneficial partnership. In the short span of five years,
the two countries have come together in a productive partnership
of mutual benefit - trade flows are booming and businessmen
from both sides are busy capitalising on the lucrative
avenues that have been opened up for them.
The
importance that the UAE attaches to its relationship with
South Africa can be ascertained by the fact that it is
one of the first GCC countries to open a full-fledged
diplomatic mission in Pretoria, headed by a senior diplomat,
Ambassador Ali Thani Al Suwaidi. The political stability
in South Africa is unprecedented and the economy is growing
faster than it has in a decade. South Africa, with its
confluence of both first and third worlds, was once a
middle-income developing economy founded on gold and diamonds,
but has diversified over the past 50 years and is now
much more broadly-based. South Africa has the most sophisticated
free-market economy on the African continent. The country
represents only 3% of the continent’s surface area,
yet it accounts for 40% of all industrial output, 25%
of gross domestic product, over half of generated electricity
and 45% of mineral production. Manufacturing represents
the largest sector of the economy, contributing 26 percent
of GDP, followed by finance and business services (16
percent), commerce (13 percent), mining (11 percent) and
agriculture (6 percent). The UAE's proximity to the country
means the Emirates is posed to take advantage of the rich
resources South Africa has to offer.
"While
South Africa represents a whole new market of continental
dimensions, the UAE is the undisputed gateway to the Arabian
Gulf and the Middle East. Growing numbers of South African
businesses are setting up offices and distribution facilities,
not just in Dubai and Abu Dhabi but in the Jebel Ali Free
Zone as well," says Mahdi Basadien, Charge d’Affaires
at South Africa’s embassy in Abu Dhabi. "South
Africa's domestic manufacturing base is ranked 30th in
the world and exports 40 per cent of its manufactured
goods within Africa - a clear indication of the country's
impeccable credentials as an established trading entity,"
he says. A well developed manufacturing base means that
the country is constantly scouting for new markets world-wide,
among them the Gulf region and the Middle East stand out
as attractive propositions. The Indian Ocean rim, which
includes Iran, Pakistan, India and the Gulf States, is
a very important area for South African products and services.
President Nelson Mandela has called on Gulf investors
to enter joint ventures with black South African businessmen
to give the majority a bigger stake in the white-dominated
economy. While the Gulf states are very rich in oil, South
Africa is very rich in minerals, gold, diamonds, manganese,
platinum and coal. Thus trade between the two sides is
poised for a longterm mutually beneficial course.
"While
South Africa is opening up new channels for UAE exports,
goods from the UAE are increasingly being re-exported
to countries such as Zimbabwe, Zambia, Botswana, Swaziland
and Lesotho through South Africa's well established distribution
network," says Mahdi Basadien. South Africa has become
the re-export centre for southern Africa. UAE’s
exports to South Africa mainly comprise textiles and oil-related
products. "South African exports to
the UAE have registered an amazing increase as a result
of an increase in exports of raw materials such as steel
and chemicals, as well as finished consumer products from
South Africa," he said.
South
African exports to the UAE comprise base metals and allied
products, steel - for both construction and general engineering;
machinery, electronics equipment, minerals; defence equipment;
chemicals, plastic goods and foodstuff. In the reverse
direction, the emirates exports machinery, transportation
equipment, consumer electronics, home appliances, ball
bearings, computer accessories and textiles, among other
products to South Africa. The UAE is particularly attractive
to South African businesses as it is represents a market
of huge demand, not just for domestic consumption, but
also for re-export. It is also known for timely payments
and reliable partners, is the ideal staging-post for business
ventures throughout the region and has excellent communications
and transportation links to South Africa.
Dubai
has become a major attraction for South Africans with
thousands visiting the emirate for tourism and for exploring
business opportunities. The trend is evident as last year
over 30,000 South Africans obtained visas to visit the
UAE.
This growth is testimony to the success of the campaign
launched by the Department of Tourism and Commerce Marketing
to promote Dubai in south Africa. Gulf ties with Pretoria
were almost non-existent during apartheid because the
Arab League backed the Organisation of African Unity's
position of no contact with its white rulers. But with
South Africa entering a new political era, trade restrains
were expeditiously lifted. The past few years have seen
a significant number of South African companies - prominent
among them being Woolworths, African General Trading,
Genrec, Jostin Trading, Emirates Paper Mills, Almar, Amalgamated
Reinforcing and Blastrite Gulf - set up operations in
the UAE.
In
addition to direct trade, there is heightened interest
from Dubai businesses interested in investing in both
commercial and residential property, especially in the
Cape area. Quite a few Gulf nationals have already invested
in property in South Africa, where real estate prices
are about 25 per cent below projected levels. As the relationship
between the two countries develops in scope and stature,
plenty of opportunities are becoming available to South
African as well as Gulf investors, entrepreneurs and holiday
travellers. Given such a positive climate, the joint efforts
of the UAE and South African governments and private sector
organisations to create an ever-greater economic bond
between the two countries are also expected to keep pace.
South
African Business Group
PROMOTING TWO-WAY TRADE
Growing
trade ties between the United Arab Emirates and South
Africa have resulted in the formation of the South African
Business Group in the UAE with the objective of promoting
business between the two countries. The Group aims at
helping both UAE and South African businessmen establish
useful contacts and increase bi-lateral trade. “A
growing number of South African businessmen are now coming
to the UAE in search of new markets and new sources of
supply. We try to help these people during their visit
to the UAE by introducing them to the right people,”
says Ian Brown, chairman of the informal South African
Business Group.
The Middle East holds a special attraction for South African
businessmen because of its huge domestic market and as
a connecting point to bigger markets beyond. Steel, chemicals,
paper, foodstuff, plastic goods and defence equipment
are among the major products exported from South Africa
to the UAE. With increased trade activity between the
two countries, more and more South Africans are realising
the immense potential of the UAE market not only as a
regional hub of trade and commerce but also as the biggest
re-export centre in the Middle East.
“We are receiving a large number of inquiries from
South African companies wanting to set up some kind of
operation in the UAE. An increasing number of businessmen
from South Africa are also now coming to the UAE on fact-finding
trips, looking for avenues to expand their operations
in the UAE. We try to provide guidance and assistance
to these people," says Ian Brown. According to Brown,
many South African businessmen are looking for trade and
investment opportunities in the UAE. The country’s
booming economy, excellent infrastructral facilities and
strategic location are some of the main incentives that
are attracting an increasing number of South African businesspeople
to the UAE. Tax-free income and a reliable and efficient
banking system offered by the UAE further add to this
attraction. In the absence of a commercial attache (till
1998) at the South African Embassy in the UAE, the Business
Group had been playing an instrumental role in helping
South African businessmen during their forays to the UAE.
EVENT ANNOUNCEMENT
The Autoparts South Africa Exhibition is being held in Durban between 24-26 July, 2008 at the Durban Exhibition Centre, South Africa. The event will attract buyers, importers, distributors from all across Africa. Global suppliers of automobile parts and accessories can book a stall at theis premier exhibition.
