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Wandile Sihlobo: Saudi visit could signal important developments for SA agriculture

Mar 05 2019 06:01
Wandile Sihlobo

A delegation from Saudi Arabia was in SA this week, and seemingly had an interesting engagement with Minister of Agriculture, Forestry, and Fisheries Senzeni Zokwana.

The main purpose of the visit was to discuss a Memorandum of Understanding (MoU) on technical cooperation in the field of agriculture, fisheries and aquaculture, and also to identify potential areas for investment (side note: The Ministry should be thankful we are not the United States – President Trump is apparently not a fan of MoU’s; see here).

In terms of the MoU, South Africa and Saudi Arabia agreed that the focus should be on trade, investment, capacity building, research and development in the fields of agriculture, fisheries and aquaculture.

From a trade perspective, there is really not much going between South Africa and Saudi Arabia at the moment. As illustrated in Figure 1, Saudi Arabia constitutes less than 2% of South Africa’s agricultural exports, although the value of exports has been increasing in the recent past. Therefore, a focus on a trade that would boost this figure is a welcome development.

graph 2

Given that South Africa is planning to expand the production of these products in the near future, and the Saudis are already buying a bit, perhaps this visit could be a beginning of what could be an important market in the future.

Furthermore, South Africa has a positive agricultural trade balance with Saudi Arabia – not surprising, as it is a desert country (see Figure 2).

graph 2

Overall, my reading of this particular visit is positive, in line with South Africa’s broad ambition of export-led growth, in which agriculture is central.

But there was one important point in the official statement from South Africa’s Ministry of Agriculture, Forestry and Fisheries, which noted that "[t]he Saudi delegation expressed a desire to lease land in South Africa to produce a wide range of agricultural commodities, provided they can sign a lease of 99 years or more."

There were no further details offered, so I am not sure what to read into it at this point. Watch this space for more structured commentary.

Wandile Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz). Follow him on Twitter: @WandileSihlobo

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