Middle Eastern tensions could test South Africa’s diversification strategy

South Africa’s push to diversify its trade and investment partners has increasingly turned toward the Middle East and tensions could test the country’s export desk. Yet as geopolitical tensions simmer across the region,  the key question policymakers will be observing is how resilient these partnerships are to instability.

Pretoria’s economic diplomacy in recent years has sought to move up the mineral value chain by expanding into emerging economies in the Global South. Middle Eastern economies, abundant with sovereign wealth, and ambitious pursuits to diversify and build strategic trade relations with the continent, have become attractive partners.

The UAE, in particular, has positioned itself as a gateway for African trade and investment. Recent investment initiatives demonstrate this alignment, such as the $1-billion initiative aimed at expanding artificial intelligence development across Africa, with the potential to support sectors ranging from digital infrastructure to logistics and energy innovation. 

During his recent visit to the UAE on 12 January 2026, President Cyril Ramaphosa commended the region’s dual approach to development, where he emphasised economic growth and climate protection. Ramaphosa participated in the Abu Dhabi Sustainability Week (ASDW) aimed at fostering cross-sector collaboration and encouraging advanced solutions to sustainable development. 

“One of the advantages was, we were able to raise finance smartly; we were able to raise fairly good, blended finance initiatives, grants, concessional financing…so the blended finance architecture was quite good and innovative,” said Ramaphosa. 

Bilateral trade between South Africa and the Gulf states has grown steadily over the past decade, supported by logistics connectivity through ports and aviation networks. However, regional volatility raises questions about the resilience of trade partnership.

Conflicts in Gaza, tensions involving Iran, and disruptions to key shipping routes such as the Red Sea and Strait of Hormuz have heightened global concerns about trade stability. For countries seeking deeper integration with the region, these developments pose potential risks.

Despite this uncertainty, policymakers and investors increasingly view economic engagement with Gulf states as structurally resilient. Much of the region’s economic strategy is anchored in long-term transformation plans, such as the UAE’s push to develop knowledge economies driven by artificial intelligence, renewable energy and advanced manufacturing.

The UAE’s ‘AI for Development’ initiative which pledged $1 billion at the November G20 summit, seeks to modernise African digital architecture and further align agreements with institutional capacity. Officials have hailed it as groundbreaking in capitalising on the continent’s youth dividend.

“The initiative aims to support and finance artificial intelligence projects in African countries in order to strengthen digital infrastructure, improve government services, and enhance productivity and quality of life for citizens. This reflects a comprehensive development vision that relies on technology as a fundamental driver of growth and supports the use of technology in social development fields,”  said Sultan Mohammed Al Shamsi, Assistant Minister of Foreign Affairs for Development and International Organizations.

Trade diversification also intersects with South Africa’s efforts to move up the value chain. Rather than exporting primarily raw commodities, policymakers have increasingly emphasised beneficiation, the processing of minerals and resources into higher-value products, as a top priority.

Gulf economies are investing heavily in industrial development, agriculture and energy infrastructure. These sectors require urban developmental inputs such as food processors, specialised metals and manufactured components that South Africa could potentially supply if domestic industrial policy succeeds.

Energy cooperation is another area where interests converge. Speaking at the Africa Energy Indaba on Wednesday, Minister of Electricity and Energy Kgosientsho Ramokgopa highlighted the continent’s energy future amid global geopolitical tensions. 

His remarks reflected the continent’s need to “strengthen resilience” and pursue partnerships that can support Africa’s infrastructure expansion while navigating an uncertain international environment. 

“Energy is not an isolated sector. It is the foundation of growth, the enabler of trade, the engine of industrial development and the guarantor of dignity for South Africa and for the continent as a whole,” said Ramokgopa. 

Geopolitical instability does not necessarily undermine these partnership investments in infrastructure development and renewable energy. Although trade agreements experience ebbs, flows, volatility and uncertainty, economic alignment can weather the storm.

Policymakers and civil servants can converge at the intersection of economic diversification in the Gulf states and modernisation programmes of African countries.