SA must engage with Middle East for agriculture investment as its interest in Africa rises, says Agbiz

Wandile Sihlobo, the chief economist at Agbiz, said agriculture was one sector that needed investment and the broadening of export markets. Photo: Reuters

Wandile Sihlobo, the chief economist at Agbiz, said agriculture was one sector that needed investment and the broadening of export markets. Photo: Reuters

Published Mar 19, 2024


For countries like South Africa, with diverse interests worldwide, the Middle East’s growing interest in Africa requires proactive engagement, particularly for drawing in investments and opening up the market for exporting sectors of the economy, says the Agricultural Business Chamber (Agbiz).

The leading countries with growing interest in the African continent’s agricultural produce were the United Arab Emirates (UAE), Saudi Arabia and Qatar.

Wandile Sihlobo, the chief economist at Agbiz, said agriculture was one sector that needed investment and the broadening of export markets.

He said when considering the eastern regions of South Africa and the former homelands, these areas typically were on the periphery of agricultural progress because of poor land governance and weak infrastructure, which rendered them effectively isolated from the formal value chains of the food, fibre and beverage sectors.

“In some areas, the transaction costs of moving agricultural produce to the consumption points become too high because of the lack of roads, rail and storage facilities. In the regions historically part of the commercial farming sector, the deteriorating network infrastructure is also increasingly a significant cost driver for businesses. These include roads, rail, water, dams, storage facilities, and the on-farm infrastructure,” Sihlobo said.

It was in these areas of South Africa’s agriculture, food, fibre and beverages value chain that one should ask whether it would be worthwhile to assess if the Middle Eastern countries that were in search of investment would not, with the help of local stakeholders, form commercially viable business ventures that responded to the above challenges.

“Some investments would form part of joining ties with South African agribusinesses and farming enterprises that aim to expand their operations and require capital for such activities. The significant funds in these Middle Eastern countries also have some form of government involvement,” he said.

The South African government, particularly the Department of Trade, Industry and Competition (Dtic) and the Department of Agriculture, Land Reform and Rural Development (DALRRD), should lead the way in the formulation of a South Africa-Middle East Agricultural Trade and Investment Strategy.

Such a strategy would be helpful in formally starting a conversation with the Middle Eastern stakeholders and introducing South African firms and farming businesses, he said.

It would also help rank the priority list of products for investments and map up any barriers that should be addressed within the government’s official channel with timelines.

Sihlobo said while South Africa faced challenges of drought in the near term, the goal of growing the agricultural sector should remain a priority for all stakeholders.

The document would also outline possible investment paths aligned with industries highlighted in the Agriculture and Agro-processing Master Plan, as well as the opportunities in the Proactive Land Acquisition Strategy and the former homelands, among other opportunities, he added.

He said the DALRRD should appoint attachés in the Middle Eastern region to communicate and lobby for South African agricultural products in the area while the Dtic needed to engage with International Relations officials to actively promote South Africa's agriculture and agro-processing as an investment destination.

“The private sector and organised agriculture should be involved in all the above stages.”

He said when one focused on the key economies in the Middle East, South Africa played a peripheral role in agricultural markets.

“For example, Saudi Arabia imported US$29.5 billion (R559.76bn) of agricultural products in 2022, according to data from Trade Map. South Africa was one of the most minor exporters, accounting for a mere 1% of the Saudi Arabian imports, and ranked 31st in the agricultural imports list. Moreover, the UAE is a large agricultural market that imported US$23.3bn of agricultural products in 2022.

“South Africa had a 2% share and was the 16th largest supplier. Qatar imported US$3.9bn of agricultural products in 2022. But here, South Africa also plays a small role, ranked 10th in the list of suppliers to Qatar and with a 2% market share in Qatar’s agricultural imports,” Sihlobo said.