JUL 21, 2018 (BE2C2): South Africa has secured billions of dollars in investment agreements with Saudi Arabia and UAE which will bolster Africa’s second biggest economy marred by over 36 percent unemployment rate and may also be aimed at disrupting Pretoria’s close relationship with Iran.
The state visit of South African president Cyril Ramaphosa to Saudi Arabia has secured an agreement on part of the Saudis to invest $10bn in the republic’s energy sector.
In March, the Kingdom had announced plans to become the world’s solar energy industry by investing $200 billion in 200GW plants by 2030.
Saudi developer ACWA Power and the state-owned Central Energy Fund of South Africa are aiming to develop solar projects in the republic. Other Saudi projects will include the construction of refineries and petrochemical plants.
Mohammad Abunayyan, the chairman of ACWA Power, said the aim would be to make use of “the most advanced and versatile solar technology solutions which can efficiently and reliably produce clean energy throughout the 24-hour period”.
The first project will be the 100MW Redstone concentrated solar thermal power (CSP) plant, to be located in the country’s Northern Cape Province. This will be capable of supplying power to 210,000 homes once operational.
President Ramaphosa also visited UAE and Nigeria.
Following the visit, the UAE announced plans for $10bn worth of investments into Africa’s second biggest and most industrialized economy over the next five years.
Ramaphosa said on Saturday this would be aimed at mining, tourism and “sustainable development”.
In return for the investment, the Arab states are looking for access to South Africa’s market, the second largest in Africa, and may also be aimed at disrupting Pretoria’s close relationship with Iran, according to Global Construction Review.
Ramaphosa is seeking $100bn in investment to address a series of economic and social problems in the republic.
South Africa’s economy shrank 2.2% in the first quarter of 2018 owing to declining production in the agriculture, mining and steel production sectors.
More generally, it faces structural problems with inadequate electricity generation and an overreliance on primary production, which exposes the economy to changes in commodity prices. The country is facing a daunting set of social problems, including a 36% unemployment rate.
A record-high fuel prices, inflation-busting pay increases for government workers and demands for bailouts by broke state companies stymie Ramaphosa’s efforts to turn around the flagging economy.
Ramaphosa’s investment drive has also met with another success. Mercedes-Benz AG announced last month it will invest $700 million in expanding its plant in the coastal city of East London.
Ramaphosa took office in February after the ruling African National Congress forced Jacob Zuma to resign following a scandal-tainted tenure that lasted almost nine years.