In addition to helping with numerous necessary evils, such as advice on tax, regulation and visas, the newly launched South Africa-Iran Trade Desk (SAIRTD), promises to introduce South African companies to a “dream market” of young, educated, urban Iranians newly freed from the restrictions of global sanctions.
As Hameed Amouhadi, the SAIRTD’s chairman, told the audience at the launch at Cape Town’s One & Only Hotel, nearly three quarters of the country’s population of 80 million people are urban and more than 60 percent younger than 30, most of them members of the so-called mobile-first generation.
As Bongani Ndodana-Breen, SAIRTD director and MC for the evening, said: “That is a lot of people to sell your goods to.”
The trade desk was launched with the ambitious goal of increasing the value of annual trade between the two countries from the $400 million recorded in 2015 to at least $2 billion by 2020.
Guests at the function included the Iranian embassy to South Africa’s commercial attaché, Mehrdad Syadatnasab; South Africa’s Secretary for Parliament, Gengezi Mgidlana; and Dr Laurine Platzky, representing the Western Cape government, as well as a host of local business leaders.
They heard from Iran’s ambassador to South Africa, Mohsen Movahedi Ghomi, about a wealth of opportunities for South African businesses in Iran. Sharing borders with Turkey, Iraq, Pakistan, Afghanistan, Azerbaijan and Turkmenistan, Iran is also a gateway to Central Asia’s population of 400 million.
The ambassador set the scene describing great potential between the two countries whose friendship went back a long way, even to the time of the Shah.
He reminded the audience that the Islamic Republic of Iran, formed after the revolution in 1979, had decided early on to cut ties with the apartheid regime and instead “support the people of South Africa”.
Support from Iran during the anti-apartheid struggle was one of the reasons that South Africa’s much-loved former president, Nelson Mandela, had a soft spot for the country.
In August, South Africa’s Ambassador to the Islamic Republic of Iran, Archie Whitehead, referred to this when he addressed a group of people gathered at Allameh Tabatabaee Educational Centre in Tehran to commemorate Nelson Mandela Day. Whitehead said that he, as a comrade of Madiba, could confirm that the great man was a big fan of Iran’s.
Whitehead said this was because of Iran’s dedication to fighting for justice and empowerment of the poor and oppressed, as the country did in sacrificing so much to support the anti-apartheid struggle.
“This is why he visited Iran very soon after his release from prison to personally say ‘thank you’,” he added.
Amouhadi, SAIRTD’s chairman, told the audience that, friendship and mutual respect aside, procedures and regulation combined with language barriers and cultural differences had been obstacles to flourishing trade in the past.
“Strict banking and business regulations means a thorough understanding of the Iranian laws are required when doing business in the country,” he said.
He added that sanctions had been lifted, but some companies were still hesitant to do business without any inside knowledge or understanding of the markets.
The trade desk, a networking, web-based platform, would help Iranian and South African companies who wanted to do business by providing information, advice, assistance and connections. It would also be a good matchmaker, he said, matching the right client to the right product.
Amouhadi added that the lack of international investment in Iran’s $400 billion economy, the Middle East’s second largest, created opportunities aplenty for foreign investors.
“With a population of 80 million, the demand metrics are strong,” he added.
The trade desk – which is approved by South Africa’s Department of Trade and Industry and Iran’s Chamber of Commerce, Industry and Agriculture – is designed to be a legal and secure channel through which South African, Iranian and Central Asian companies can trade.
It is an association that will facilitate bilateral trade and investment, skills transfer and the exchange of expertise between South Africa and Iran, as well as Central Asia and the countries in the Southern African Development Community and the Southern African Customs Union.
The chairman flagged up a number of sectors that might be of particular interest to South African exporters or investors. For example, Iran’s automotive industry, which is the second most active industry in the country, after oil and gas.
Amouhadi told the audience that there were more than 25 automakers in Iran, producing both light and heavy vehicles. He named Peugeot, Citroen, Volkswagen, Toyota and Kia Motors, BMW and Mercedes Benz as among those with a presence there.
He also mentioned the phramaceuticals and cosmetics sectors as of particular interest. In 2014, he said, the Iranian pharmaceutical market was estimated to be worth U.S.$2.35 billion; it is predicted to be worth $3.31 billion by 2019 driven by high medicine consumption rates amongst Iranians.
He said the average citizen used approximately 340 units per year, which amounts to almost one unit of medicine each day. This makes Iran the second largest consumer per capita in Asia and the 20th in the world, but Amouhadi was quick to point out that the statistic included supplements, suggesting a healthy side to this number too.
Annual sales of beauty products in Iran reached more than $3.86 billion in 2014, he said, and it was forecast that the beauty and personal care market would treble in the next five years to more than $10 billion. He also mentioned that there was a big market for plastic surgery.
Skipping across a few sectors, he mentioned another kind of construction, the real thing, which accounts for a large proportion of private investment in Iran and is considered one of the most important sectors in the country.
In this sector, Amouhadi said, limited red-tape and hurdles allowed for technological advances, new construction materials and mass development projects, making this industry extremely popular amongst investors
Expanding and upgrading infrastructure over the coming decade in Iran is expected to create investment opportunities in the region of U.S.$250-300 billion in transport (rail, road, aviation and maritime) and another U.S.$120-150 billion in the area of power generation, water supply and waste-water treatment.
The SAIRTD launch event flagged enormous possibilities and there was much talk about borderless trade between South Africa and Iran. And an obvious next step, direct flights between Iran and South Africa as well as a direct sea route, is already on the cards, we were told.
More info at www.sairtd.com