Saudi Arabia is fast becoming one of South Africa’s biggest investors, with deal talks and agreements worth over $5 billion taking shape in the past year alone.
From renewable energy to logistics and real estate, the wave of interest marks the latest chapter in the Gulf’s wider push into Africa, driven by nations like Saudi Arabia and the UAE seeking new frontiers for growth.
This burst of activity follows a landmark 2022 meeting between Saudi Crown Prince Mohammed bin Salman and South African President Cyril Ramaphosa in the kingdom, attended by hundreds of business leaders.
Since then, officials and executives from both countries have exchanged visits every few months, strengthening economic ties and accelerating corporate deals.
Saudi Arabia’s sovereign wealth fund, with assets worth $925 billion, has taken center stage in the expansion.
Through companies like ACWA Power and Red Sea Gateway Terminal International, both backed by the fund, the kingdom has either invested or is bidding for major assets in South Africa.
ACWA, in which the Public Investment Fund holds a 44% stake, is now the largest player in South Africa’s renewable energy sector, according to Standard Bank Group.
“South Africa’s current coalition government brings economic and policy certainty and renewed confidence,” said Nandu Bhula, country manager for ACWA in South Africa.
He added that the country’s high banking capacity is also helping investors scale more easily.
ACWA has already invested $1.9 billion across three plants and plans to inject another 7 billion rand ($378 million) into water and energy projects over the next five years.
Meanwhile, Red Sea Gateway Terminal International is eyeing a bid exceeding $600 million for the port of Durban, the largest in sub-Saharan Africa.
The bid is subject to a legal challenge tied to a two-year-old tender decision.
“South African container terminals represent some of the most attractive investment opportunities in the sector globally,” said Gagan Seksaria, director of global investments at RSGTI.
The company is also interested in Cape Town’s port if a tender becomes available.
Saudi interest doesn’t stop at ports and power.
Last month, Jeddah-based Zahid Group reopened talks with shareholders of Barloworld Ltd., aiming to raise its stake in the company, the exclusive distributor of Caterpillar Inc. equipment in Africa, valuing it at $1.25 billion.
Saudi Aramco is also in the running to acquire Shell’s gas station business in South Africa for around $1 billion.
Saudi Telecom has taken a 49% stake in CMC Networks South Africa, though financial details remain undisclosed.
Meanwhile, Saudi billionaire Ajlan Bin Abdulaziz Al-Ajlan is planning a $500 million investment in a platinum smelter and refinery in Limpopo province.
The momentum is also driving change in air travel, with South African Airways reportedly considering launching a direct route between Riyadh and Johannesburg, reflecting growing demand.
While no formal announcement has been made, people familiar with the discussions confirmed the route is under consideration.
“Bilateral relations have strengthened significantly over the past years,” said Chrispin Phiri, spokesperson for South Africa’s international affairs ministry.
He confirmed that the country’s trade minister will co-chair the 10th SA-Saudi Joint Economic Committee meeting next month in Riyadh.
“Saudi investment [is] growing exponentially,” he said.
Despite the progress, hurdles remain.
“We don’t have bilateral investment treaties yet,” said Hussam Algheraimil, Saudi Arabia’s commercial attaché in Johannesburg.
“Some government opportunities require a lot of bureaucratic procedures and requirements for the Saudi companies.”
Complicating matters further, Saudi Arabia is dealing with a budget squeeze as lower oil prices weigh on state revenues.
Goldman Sachs estimates the kingdom could face a $67 billion deficit.
Analysts say the sovereign wealth fund may consider selling international assets to reallocate funds domestically.
Still, Saudi Arabia is pushing ahead with its Vision 2030 plan to diversify the economy beyond oil.
Earlier this year, it committed $41 billion to investments across Africa, focused on sectors like food security, natural resources, and clean energy.
Backed by this strategy, business links with South Africa continue to deepen.
The Saudi-South Africa Business Forum recently held meetings with the kingdom’s deputy minister of economic planning, Al-Baraa Al-Iskandarani, in Riyadh.
A previous session in February saw Saudi officials visit the Johannesburg Stock Exchange and key financial institutions, with both sides agreeing to identify new deal opportunities.
“There is a disconnect between valuation levels in South Africa compared to other markets, so if you are a strategic investor taking a long-term view, you will see the value and opportunities,” said Ruven Naidoo, head of mergers and acquisitions at Investec Bank Ltd.
“We have really high-quality management teams and intellectual property and companies that are very good at what they do, so it’s a good place to look for opportunities.”
The investment surge is also expected to boost South Africa’s economic outlook.
“When you look to grow your economy, as is the case for South Africa, and you look toward high-value markets, a market such as the European Union is attractive, but it’s a mature market,” said Stavros Nicolaou, co-chair of the Saudi-South Africa Business Forum.
“With Saudi, which only started to diversify away from oil more recently, you find a big market where you have quite a bit of complementarity.”
Trade between the two countries is already on the rise.
South African exports to Saudi Arabia grew from 6.6 billion rand to 7.3 billion rand last year, and further cooperation is expected across pharmaceuticals, financial services, automotive products, and agriculture.
