Trading places: South Africa trades with the Gulf

Last week saw just the latest chapter in the improving investment ties between South Africa and the Gulf.

The African nation’s second-biggest private healthcare operator bought the remaining stake in Emirates Healthcare Limited that it did not already own. The deal, worth $224m, saw Mediclinic International take a 49.63 percent stake in Dubai’s largest private healthcare provider.

There is much that the two regions have in common. In the recent World Economic Forum’s Global Competitiveness Index, South Africa fared remarkably well. After slipping nine places last year — from 45 to 54 — it recovered to 50 in 2011-2012, thanks mainly to impressive gains in accountability of private institutions, strength of investor protection and technological readiness. South Africa’s superior ratings in these areas of sustainability were seen as indicative of a highly positive long-term outlook for the South African economy, and of trust in South Africa at a time when it is returning only slowly in many other parts of the world.

In the same index, the Gulf nations also scored highly. Qatar retained its status as the Middle East’s most competitive economy, with the country ranked 14th on the list, climbing three places.  Qatar was joined in the top 20 by Saudi Arabia, which rose four places to 17th position. The UAE fell two places to 27th despite being seen as a safe haven amid the uprisings associated with the Arab Spring during the first half of 2011. Oman rose two places to 32nd while Kuwait rose one place to be ranked 34th.

Bahrain, the Gulf country worst hit by uprisings, retained its position at 37th.

Both are emerging markets, and both are working hard to push their way out of the downturn that has so affected more traditional economies. This blossoming relationship was symbolised by the high-level visit of South African president Jacob Zuma to the UAE and Oman late last year.

“During this visit we expect that greater investment opportunities for both countries can be identified. We are pleased that institutions such as the Abu Dhabi Investment Authority are committed to investing in South Africa,” Zuma said at the time.

During the president’s visit, five bilateral agreements were signed, and a further five are being negotiated.

From the numbers perspective, the growth in trade between the UAE and South Africa has also been promising. South Africa is the 19th largest investor in the Gulf state. In 2011, bilateral trade was valued at close to $2bn, surpassing the peak of 2008.

That figure was a significant hike on the $1bn figure from 2011. Right now, the traffic is heavily weighted on South Africa’s side, both due to oil exports and Dubai’s growing position as a re-export location for goods being forwarded to African markets.

But there is also significant interest from the corporate side as well. In December last year, dnata, the Dubai-based air services provider, bought a 50 percent stake in Wings Inflight Services, an airline catering outfit with operations in Johannesburg and Cape Town. At around the same time, Aramex acquired local logistics firm Berco Express for $55.5m, as part of its push into African markets.

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