The oil-rich kingdom of Saudi Arabia is experiencing infrastructure development on a scale not seen anywhere since China’s early 21st-century modernisation. This offers opportunities for SA’s skilled professional class, a potential increase in exports (mostly agri-goods including fruit) and potential for SA to benefit from inward investment.
In June 2018, the Kingdom of Saudi Arabia allowed women to legally drive cars on its roads for the first time. Among those granted a licence was Loujain al-Hathloul, a well-known campaigner for women’s driving rights in the country. Given that Saudi Arabia had long been a by-word for conservative social mores, this was a revolutionary measure. For outside observers, it was a signal that the country was serious about its reform and development agenda, championed by heir apparent Mohammed bin Salman and encapsulated in Vision 2030, which was published in 2016.
Saudi Arabia has consistently been the world’s biggest oil exporter since at least the 1960s. The national oil company, Saudi Aramco, is among the largest companies in the world by revenue. It is also the most profitable major corporation in the world, generating a net income of $121.3 billion in 2023.
Alongside Saudi Aramco, Saudi Arabia possesses one of the world’s richest sovereign wealth funds, the Public Investment Fund of Saudi Arabia, established in 1971 and currently valued at a little less than $1 trillion.
Oil revenues have made a considerable difference to the quality of life of the king dom’s 36.5 million people. Its younger urbanised population are citizens of the world. It is no coincidence that Al-Hathloul documented her experiences in detention on what was then Twitter (now X), which spread them around the world. It is to pre cisely this tech-savvy, globally aware class that Bin Salman looks to for support.
Saudi Arabia has embarked on a massive programme of economic development and social liberalisation since the publication of Vision 2030. The programme intends to break the shackles of resource dependency. Bin Salman said at the time that ‘the Saudi addiction to oil has disturbed the develop ment of many sectors in part years’.
Vision 2030 has led to vast development projects, centring on Neom, a $500 billion plan to build 10 futuristic cities in a desert region in the north-west of the country.
Construction of the first of these, known as the Line, a ‘carbon-free linear city’ intended to ‘redefine urban living’, commenced in 2021. This is a dramatic continuous building of two parallel components, 500m high but with a combined width of only 200m. It is visualised as eventually being 170 km long although only the first 2.4 km is scheduled for completion by 2030. It is to include parks, walkways and futuristic elements such as flying taxis and robot maids. There will be no cars, with residents expected to travel by high-speed light rail.
Other projects include an entertainment city on the outskirts of the capital, Riyadh; multiple island luxury resorts in the Red Sea; and a cluster of other tourist and cultural destinations. Vision 2030 explicitly targets tourism, as well as the development of military manufacturing capacity and improved govern ment efficiency as development vectors.
These offer opportunities for SA business to build beyond the rather straightforward exchanges that previously existed. SA has exported agri-products, including fresh fruit, to Saudi Arabia for many years. In 2023, SA red meat producers regained access to the Saudi market after a 21-year ban.
‘Saudi Arabia has not featured prominently in South Africa’s beef export markets in the past, with only small volumes last exported in the early 2000s,’ according to Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa.
Exports were banned as a result of foot-and-mouth disease threats. Sihlobo adds that ‘the renewed access to this market is critical to South Africa’s ambition to expand beef exports, as the Saudi beef market is sizeable and will be worth over $647 million’.
Saudi Arabia exports oil and oil-based products to SA. Oil exports alone were valued at more than $2 billion in 2023. Significantly, refined petroleum products surpassed SA’s crude oil imports in 2021, reflecting a crisis in SA oil-refining capacity, with three of the country’s six oil refineries being shuttered since 2020. The biggest of these is Sapref in the South Durban Basin. Previously a joint venture between Shell and BP, it was respon sible for 35% of the country’s petroleum production up until 2022. The facility, which was in need of modernisation, was sold to the state-owned Central Energy Fund (CEF) for just R1 in 2024. The CEF is looking for a buyer, and Saudi Arabia’s Aramco is said to be among interested potential investors.
This fits neatly with recent developments negotiated between the two countries at a state-to-state level. At the South Africa-Saudi Arabia Business Forum, held in Johannesburg last year, Cabinet ministers from the two regional powers agreed to strengthen trade and investment relations. This follows a 2022 pledge by Bin Salman to invest $15 billion in SA.
In December 2024, it was announced that Ajlan & Bros Company for Mining would be investing R9.5 billion in a new platinum and palladium smelter to be built in the Waterberg region in Limpopo. The Saudi company is to invest under the ‘strategic guidance’ of the kingdom’s Ministry of Investment. The mining asset is licensed to Canada-based Platinum Group Metals, which is involved in developing the use of platinum and palladium in lithium-ion batteries, in collaboration with Anglo American Platinum.
A further transaction involving a Saudi player is the mooted sale of venerable SA logistics and construction equipment company Barloworld to Zahid Group for R23 billion. Unlike the greenfields invest ment into the platinum mining sector, this is an outright purchase of an underperforming SA asset. Barloworld is an agent for global construction equipment giant Caterpillar and has branches as far afield as Mongolia. The current construction boom in Saudi Arabia offers further market expansion.
In many respects, the Kingdom of Saudi Arabia is following the trajectory pioneered by smaller hydrocarbon-rich Middle Eastern states. Leon Ayo, co-founder of business advisory and recruitment firm Sterling Bell, points out that the investment proposition offered by Saudi Arabia ‘lends itself to bigger companies’. Investment regulations favour capital-intensive investments, and big com panies are better placed to deal with red tape.
Ayo argues that Vision 2030 is intended, among other things, ‘to compete with Dubai’. In practice, Saudi Arabia is ‘offering incentives for corporate head offices to relocate from places like Dubai’. It remains to be seen if global corporates that have their regional head offices in Dubai – SA giants Vodacom and MTN among them – will be tempted by the Saudi Arabian offer.
‘What the implementation of Vision 2030 does is open up opportunities for South African professionals who want to work offshore,’ says Ayo. But the ‘work culture’ in Saudi Arabia is very different to what South Africans may be used to. ‘This was a closed economy until six or seven years ago. There were no women in the workforce.’
Ayo adds that in the Saudi market ‘there is not that sense of “can do” resilience that is so common in South African business – the “boer maak ‘n plan” sort of approach. This can be a frustration’.
Bin Salman’s Vision 2030 has already raised the profile of Saudi Arabia in the inter national economy. The plans are huge, but some analysts admit they are ‘stretch targets’. This internal boom is where Saudi wealth is now being spent. SA needs to ensure it does not miss the opportunity.
By David Christianson
