The Media Line: South Africa Courts Gulf Money While Its Iran Ties Unsettle Investors

South Africa Courts Gulf Money While Its Iran Ties Unsettle Investors

By Waseem Abu Mahadi/The Media Line

Pretoria is courting Saudi, Emirati, and Qatari money to revive a stalling economy, even as its alignment with Iran, Russia, and China rattles the investors and trade partners it cannot afford to lose

[CAPE TOWN] South Africa needs billions of dollars from the Gulf’s oil monarchies to rescue a stalling economy. This year, its ministers toured the region asking for it. They also sent the navy to drill alongside Iran.

Pretoria is trying to manage both at once. South Africa has deepened ties with Saudi Arabia, the United Arab Emirates, and Qatar while drawing closer to its BRICS partners Russia and China, pressing a case against Israel at the International Court of Justice (ICJ), and defending engagement with Iran under the banner of non-alignment.

BRICS, the bloc of emerging economies South Africa joined alongside Brazil, Russia, India, and China, has become central to its diplomacy and a growing source of friction with the West.

“Our foreign policy of non-alignment is not anti-West or anti anyone,” International Relations Minister Ronald Lamola said at a Pretoria foreign policy event on Monday, calling it a “sovereign choice grounded in the constitution and international law.”

South Africa is the continent’s most industrialized economy, but its factories are in trouble, and the war over the Strait of Hormuz is making it worse. Manufacturing once drove growth. Its share of output has fallen by half since the early 1980s, from about 23% to just over 11%. Factory production shrank again late last year, with steel, machinery, and car plants all cutting output and jobs.

Now oil is becoming the problem. In February, the International Monetary Fund expected inflation to ease and economic growth to gradually recover. Then the Gulf conflict disrupted shipping through the Strait of Hormuz, pushing Brent crude above $100 a barrel. The South African Reserve Bank now warns that inflation could move back toward 5% later this year if oil prices remain elevated, while the rand has become increasingly sensitive to developments in the Gulf.

Government debt has reached 77% of the economy and continues to climb. Unemployment sits above 32%. Power cuts and broken rail and port lines have left factories running at about two-thirds capacity, slowing the exports South Africa needs most. Reforms meant to address these problems were already overdue before the Hormuz Crisis added pressure.

Earlier this year, Public Works and Infrastructure Minister Dean Macpherson toured the Middle East seeking investment from Saudi Arabia, Qatar, Kuwait, and the UAE for infrastructure, logistics, and real estate. Officials cast the trip as part of a push to attract outside capital that the government can no longer raise on its own.

The Gulf is interested, and it has the money.

The UAE has become Africa’s largest foreign investor, putting more than $110 billion into the continent between 2019 and 2023, by its own government’s count. In South Africa, Abu Dhabi’s International Resources Holding signed a strategic agreement with the Public Investment Corporation covering mining, rail, logistics, and green energy.

Saudi Arabia’s ACWA Power has explored multibillion-dollar hydrogen and renewable projects with South African partners. The UAE says its own investments in the country topped $1.3 billion in 2024 alone.

Early this year, South Africa hosted naval exercises with China, Russia, and Iran off its east coast, near the Indian Ocean routes that link the Middle East, Asia, and Africa.

The drills, called Will for Peace, drew sharp attention in Washington. Iran took part just as Pretoria was courting the same Gulf states that see Tehran as their main regional threat.

The exercise also exposed a split inside South Africa’s own government.

The African National Congress lost its parliamentary majority in 2024 and now governs in a coalition with the Democratic Alliance (DA), which favors closer ties with the West. The DA’s defense spokesman, Chris Hattingh, said hosting and training with heavily sanctioned forces involved in active conflicts could not be called neutral. “It is a political choice, whether the government admits it or not,” he said.

Critics inside and outside the country asked whether South Africa was still non-aligned or drifting into an anti-Western posture. In January, it abstained at the UN Human Rights Council on a resolution condemning Iran’s deadly crackdown on protesters, refusing to censure a government it has long defended.

“I don’t think anyone still regards South Africa as truly non-aligned,” Darren Olivier, director of the African Defence Review, told The Media Line. “It has virtually ceased military exercises with Western countries and now primarily conducts them with fellow BRICS states, while investing far more heavily in military relationships with Russia, Iran, Cuba, and China over the past decade.”

“At this point, it’s less of a complete realignment and more a case of testing the waters,” he added.

Olivier said the costs are already appearing. “South Africa’s closeness with Iran and Russia has already affected investment, international partnerships, and confidence in the country,” he said. “It frequently comes up in investor discussions, creates friction around trade relationships with Western countries, and has become an issue the current US administration increasingly uses against Pretoria.”

That friction is sharpest with Washington, South Africa’s second-largest trading partner after China. South Africa mostly sells the United States platinum-group metals, vehicles, steel, aluminum, and farm goods such as citrus and wine. Cars and farm produce rely heavily on the African Growth and Opportunity Act (AGOA), which provides duty-free access to the US market for African goods; vehicles alone accounted for about two-thirds of South Africa’s AGOA exports last year.

That access has unraveled as the administration of President Donald Trump let AGOA lapse on Sept. 30 and renewed it only in February, and only through the end of 2026. The month before it lapsed, Washington imposed a 30% tariff on South African goods, the steepest rate on the continent. Vehicle shipments to the United States fell by about three-quarters in 2025, though stronger mineral exports kept the overall total from sliding.

The US Supreme Court struck down the broad reciprocal tariffs in February, and the administration replaced them with a flat rate of roughly 10% to 15%, putting South Africa back on a par with most other exporters but well short of the duty-free access it once had.

Even so, Trade Minister Parks Tau told parliament on Tuesday that exports to the United States rose from 238 billion rand ($13 billion) in 2024 to 260 billion rand ($14 billion) in 2025, despite the political strain.

President Trump boycotted the 2025 G20 summit South Africa hosted in Johannesburg, repeating unproven claims, rejected by Pretoria, that “white farmers are being killed”  and their land seized.

In January, South Africa said it would temporarily withdraw from the group as Washington took over the presidency for 2026. At the same Johannesburg summit that the United States shunned, the UAE pledged $1 billion to expand artificial intelligence infrastructure across Africa. The most widely cited South African government land audit found that whites—who are less than 8–10% of the population—still own roughly 72% of individually held agricultural and farmland. Black South Africans, who are more than 80% of the population, own about 4% in that category.

Siphamandla Zondi, a politics professor at the University of Johannesburg, said the ANC’s approach is principled, not opportunistic. “South Africa’s approach to BRICS and non-alignment is rooted in long-held traditions of South-South cooperation,” he said, tracing it to the Bandung Conference and the Non-Aligned Movement.

The party presents its Israel case as both a legal claim over Gaza and a matter of national identity, and President Cyril Ramaphosa said in March that South Africa “would keep defending international law under the Genocide Convention.” The stance has won it standing across the Arab world and much of the Global South, even as it unsettles Western governments and investors focused on geopolitical risk.

Nigeria, Africa’s other giant, shows the limits of a friendlier posture. It kept its embassy in Tel Aviv and full ties with Israel through the Gaza war, brought no genocide case to the ICJ, and, like South Africa, courts Emirati money; the UAE lifted a visa ban on Nigerians in 2023 and pledged billions in new investment.

Even so, the warmer line bought Abuja little in Washington. The Trump administration designated Nigeria a Country of Particular Concern over the killing of Christians, threatened military action, and had already hit it with a 10% tariff.

Meanwhile, Saudi Arabia and the UAE are expanding fast across Africa in ports, logistics, renewable energy, food security, and critical minerals, looking for influence beyond oil and a place in future supply chains. But their biggest recent bets have gone elsewhere, with tens of billions committed to projects in Egypt and Mauritania over two years, far more than the UAE has put into South Africa.

South Africa still remains one of the continent’s largest economies. It produces more platinum than any country and supplies much of the world’s manganese and chromium, minerals that both the Gulf and Western supply chains need.

The bigger risk for South Africa is less the loss of Gulf money than a reputation for unpredictability among risk-wary investors. It is trying to hold positions that do not fit easily together: leaning on Western markets, aligning with America’s foes, staying close to Russia and China, and courting Gulf states that fear Iran.

“Investors want certainty and long-term predictability,” said Darren Bergman, the DA’s former shadow minister for international relations. “There is still uncertainty about where South Africa actually stands internationally, and investors dislike uncertainty.”

“The danger is antagonizing major trade partners such as the United States and possibly the European Union,” Bergman said. “South Africa has to balance both sides carefully.”