Frost & Sullivan Comment: Establishment of South Africa- Saudi Arabia Holding (SASAH)
The minister of Trade and Industry, Dr Rob Davies, announced the establishment of the holding company, Saudi Arabia South Africa Holding (Sasah), which would aim at creating opportunities in mining, petrochemicals and agriculture.
According to statistics from Trademap, in 2011 total South African Imports from Saudi Arabia amounted to $4.45 billion (R35.6 billion at R/$ of 8) of which 84.0 percent of the imports were for crude oil. South African exports to Saudi Arabia amounted to $360.5 million (R2.88 billion). This represents approximately R38 billion of trade between the two countries, estimates Frost & Sullivan.
“South Africa’s main exports to Saudi Arabia have been predominantly agricultural produce and metals”, states Chemicals Materials and Food Research Analyst Tatenda Zingoni, at global consulting firm Frost & Sullivan. “Fruits (with oranges being the main) accounted for 28.7 percent of total 2011 exports. Metals which encompasses ores, slag and ash, iron and steel along with aluminium and article of aluminium, contributed 38.6 percent of total exports”.
Saudi Arabia is South Africa’s fifth largest import source. China, Germany, USA and Japan are the top 4 import source regions. The top five import sources account for 42.1 percent of South Africa’s $41.9 billion 2011 imports. South Africa’s main export destinations were China, USA, Japan, Germany and the United Kingdom. These countries accounted for 41.0 percent of the countries destination of exports.
South Africa is the continent’s leading economy, with a 2011 Real GDP of $422.0 billion, and the services sector contributing 65.6 percent of the GDP. Although the country has a more developed industrial sector relative to other countries, the major exports of the country are still mainly primary products, and imports are predominantly value-added products. South Africa’s balance of trade, therefore, mirrors other African countries.
The collaboration between South Africa and Saudi Arabia is anticipated to see doubling of trade between the two countries in the coming five years, according to the Ministry of Trade and Industry.
“South Africa needs to step up its value addition (beneficiation) of primary produce, such as food products, minerals and metals, in order to significantly benefit from the partnership with Saudi Arabia” concludes Zingoni.
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