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January 2018, No. 86


Trade & Business

Pretoria Hosts South Africa-Iran Business Forum


Trade between Iran and South Africa during the last ten years shows there has been a growing trend since fiscal year March 2014-15, in which $49 million worth of commodities were exchanged between the two countries – its lowest level during the period under review.


The South Africa-Iran Business Forum was held in Pretoria, South Africa (Oct. 23), with Iran Foreign Minister Mohammad Javad Zarif addressing the opening ceremony.

Zarif who headed a senior delegation of political and economic figures comprised of business representatives from the automotive, agriculture, agro-processing, mining, energy, pharmaceuticals and, oil and gas sectors, arrived in South African administrative capital city of Pretoria a day earlier.

He delivered a brief speech at the forum, voicing Iran’s keen interest in expanding relations with the African country, noting that Iran enjoys a high level of security for foreign investment. He also announced President Hassan Rouhani’s upcoming visit to South Africa in a few months.

Also speaking at the forum was South Africa’s Minister of Small Business Development, Lindiwe Zulu, who stressed that doing business with Iran guaranteed full security.

She called for strengthening of banking cooperation between the two sides, adding “South Africa sees no obstacle to expanding relations with Iran.”

The private sectors of the two countries also discussed issues related to economy, trade, and commerce during the event and exchanged views on ways to remove obstacles to investment.

“The Middle East features as a pivotal trade and investment partner for South Africa and Iran, in particular, offers vast trade and investment opportunities for South African businesses. Iran is the second largest economy in the Middle East region in terms of gross domestic product totaling $438 billion in 2016 and the largest market in terms of population (80 million people). It ranks second in the world in terms of natural gas reserves and fourth in proven crude oil reserves,” said South African Minister of Trade and Industry Rob Davies a few days before the forum.

Following the forum, Zarif held a bilateral meeting with his South African counterpart and took part in the 13th meeting of Iran-South Africa Joint Economic Commission.

Since the last joint commission meeting held in Iran in May 2015, a number of high-level interactions between the two countries have occurred, the most recent being the state visit to Iran by President Jacob Zuma in April 2016.

An analysis of trade between Iran and South Africa during the last ten years shows there has been a growing trend since fiscal year March 2014-15, in which $49 million worth of commodities were exchanged between the two countries – its lowest level during the period under review.

However, bilateral trade grew to reach $55 million and $92.8 million the two following years respectively. The figure had peaked at $129 million in March 2010-11.

Latest figures show Iran exported $25.85 million worth of goods to South Africa during the six months to September 22 and imported $3.5 million in return.

Iran’s ambassador to South Africa Mohsen Qomi Movahedi says Zuma and Rouhani decided to increase two-way trade to $2 billion by 2020. 

Rouhani to Visit South Africa

Zarif held talks with President Zuma in Pretoria (Oct. 23) and conferred on bilateral, regional, and international issues.

Earlier, Zarif hailed the good opportunity for boosting the level of trade transactions between Iran and South Africa, saying that President Rouhani is scheduled to visit South Africa in the coming months.

Six agreements are ready for signature or are at an advanced stage of completion, and it’s hoped they will be inked during Rouhani’s state visit to South Africa. 

Solar Plant

A South African solar power developer has joined the growing list of international companies investing in Iran’s renewable ventures.

Phelan Energy Group will spend €14 million ($16.4 million) to build a 10-megawatt solar plant in the city of Khusf, South Khorasan Province.


Six agreements are ready for signature or are at an advanced stage of completion, and it’s hoped they will be inked during Rouhani’s state visit to South Africa.


“The photovoltaic power plant is planned to be built by Phelan Energy Group in four months,” Mohammad Shafiei, the governor of Khusf, was quoted as saying on the sidelines of the project’s groundbreaking ceremony (Oct. 23). Speaking on the government’s incentives to expand renewable energy production capacity, Shafiei pointed to 13-year tax exemption plan for renewable ventures as well as a budget of around $1.5 billion.

Paschal Phelan, the managing director of the foreign PV producer, also said that following the completion of the project, the company will implement a similar project in the city of Sarbisheh in South Khorasan.

“Phelan Energy Group aims to install 200 MW of solar power plants per annum in Iran,” Phelan said, adding that Iran has the potential to generate 25% of its power demand from solar energy by 2022. Established in 2005, Phelan Energy Group is a leading international developer and innovator in the renewable energy sector.

According to the company’s website, it exclusively focuses on investments in large solar plants, ranging from 10 MW to 200 MW. It has built a 175-MW solar farm in De Aar, South Africa, which is said to be the largest in the Southern Hemisphere, Africa and the Middle East.

The deal comes shortly after Norway’s Saga Energy signed a preliminary deal worth €2.5 billion ($2.94 billion) with Iran’s state-owned Amin Energy Developers in Tehran to build solar power plants in Iran.

Pretoria is Keen on Investing in Iran

Former Iranian ambassador to South African, Javid Ghorbanoghli, believes that the resumption of crude oil exports to South Africa and the reestablishment of banking brokerage relations are the main obstacles in the way of economic and trade relations between the two countries after the sanctions on Iran were lifted in 2015.

“We hope that we will have South Africa’s support for the resumption of banking brokerage relations within the framework of the Joint Comprehensive Plan of Action (JCPOA), and take a big step forward in developing cooperation between the two countries’ private sectors,” Zarif said after the Joint Commission meeting. 

What follows is an interview with Ghorbanoghli: 

How effective has been the holding of joint commission meetings for Iran?

I can say relations between Iran and South Africa, since the liberation of South Africa from the apartheid regime and resumption of relations between Tehran and Pretoria, have been growing especially in the field of politics. We have had very good ties in terms of economic relations too. Politically, relations between the two countries have been good and fruitful; diplomatic exchanges occur regularly and international support for one another’s policies continues.

As a clear example, I can refer to the full support of the South African government for Iran at international assemblies regarding the nuclear case. Even before the negotiations that led to the JCPOA, namely during the period when Tehran faced a tough challenge and a large portion of the international community stood against us, Pretoria was fully alongside the Islamic Republic of Iran. Even the South African representative at the IAEA, whose country was also a member of the Board of Governors, supported the position of Iran in line with the general policy of his government and announced that Pretoria was ready to cooperate with Iran, in accordance with an agreement to host Iran’s enriched uranium. But this deal was never implemented due to the opposition of the Western powers and their lack of cooperation. 

How about economy and trade?

Economically, since the beginning of our relationship until the end of President Mohammad Khatami’s second term, relations were very good. Specifically, I can say that two investments by South Africa in that period actually became a symbol of the economic relations between the two countries, and perhaps even an unprecedented pattern of foreign economic participation in Iran after the 1979 Islamic Revolution. One of these contracts was the investment of South Africa’s Sasol Company in the huge petrochemical project in Assaluyeh. This contract was conducted on a 50-50 basis. According to the oil and petrochemical sector officials of Iran, we did not have a project at this level in the form of joint venture in the country. Even after this contract, unfortunately, I did not see a joint venture deal of this magnitude in the oil and gas sector. Other investments that took place in the country by companies such as Total were either buyback or finance. Fifty-fifty investments have their own particular terms and a foreign company brings its capital, money and technology to Iran by accepting all the risks involved. The deal was closed during Mr. Khatami’s term, Sasol came to Iran, and today Arya-Sasol petrochemical company is active as one of the most successful symbols of foreign investment in Assaluyeh.

The second successful example of South African trade cooperation was the second-largest mobile phone operator project. I recently heard from the governor of the Central Bank, Mr. Valiollah Seif, that this project was called the largest foreign investment in the country. This project too was launched under the reformist government (Khatami administration) when I was ambassador to South Africa. Negotiations were held with MTN South Africa and a few years later, the contract was finalized. This investment was also one of the most successful foreign investments in Iran. I have personally heard this from the country’s telecommunication authorities that MTN South Africa today has become the engine of Iran’s mobile and telecommunication services, and it imports modern global technologies to Iran. 

Do you think it’s possible to return to the prosperous economic relations between the two countries?

With the coming to power of the Rouhani administration in 1992, a positive development was noticed in relations between the two countries. Since then, this is the third joint commission that has been held. This is while under part of the 9th and 10th governments (under Mahmoud Ahmadinejad) the joint commission was shut down, and the South African foreign minister was not interested in continuing to hold the meeting for certain reasons. But as soon as the 11th government (Rouhani’s first term) came into power, the commission resumed its activity immediately. As I said, in the first year of the 11th administration, Foreign Minister Zarif went to South Africa to attend the joint commission meeting. He also attended the joint commission meeting in Pretoria a couple of days ago at the first year of the 12th government. After Mr. Rouhani came to power, two important events occurred in Tehran-Pretoria relations including the visits of the South African Vice-President Cyril Ramaphosa and President Zuma to Tehran. Of course, over the past five years, shuttles have continued between the two states at various levels from the foreign minister to the energy minister, but those two visits were particularly significant in breaking this downturn in bilateral trade and economic ties. Since most of the companies in South Africa are private, they have much fear and concern to attend the Iranian market. Unfortunately, although two years have passed since the Iran nuclear deal was inked, the shadows of the sanctions still threaten the relations between the two countries.

 

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