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...

T he 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.

 

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