South Africa: Is South Korea An Outlier For Trade In South Africa?

Last Updated: 18 June 2014
Article by Niel Coertse

Most Read Contributor in South Africa, July 2019

South Africa may be missing out on opportunities to attract well known and internationally reputable South Korean engineering and construction companies such as GS E&C, Daewoo, Samsung, and Kumho E&C. If we consider the projects that these South Korean organisations have undertaken in various fields such as shipbuilding, petrochemical plants, oil and gas projects, power plants and civil engineering, it becomes clear that they possess and could transfer enormous breadth and depth of skill and technical know-how when it comes to significant infrastructure-related projects. What follows is a synopsis of how South Africa may benefit through strengthening its ties with South Korea.

South Korea's relationship with Africa has always revolved primarily around the pursuit of diplomatic recognition and political legitimacy. Until quite recently, South Korea has maintained a rather limited and low-key engagement with various jurisdictions across Africa. Chun Doo-hwan, who served as president of South Korea from 1979 to 1988 made only one visit to Africa in 1982. A further diplomatic visit did not reoccur until 2006 when the then South Korean president, Roh Moo-hyun, visited various African countries. Five years later, in 2011, President Lee Myung-bak visited Africa.

Essentially, Moo-hyun's visit in 2006 was the start of South Korea's efforts of what has since become known as their 'resources diplomacy'. Notably, during his visit, Moo-hyun was accompanied by key figures from major Korean industrial businesses, including representatives from the Korea Electric Power Corporation and the Korea National Oil Corporation. Their visits focused on Algeria, Egypt and Nigeria and led to several bilateral agreements, resulting in the linkage between overseas development assistance funded projects, resource concessions and large scale infrastructure bids. In addition to these bilateral agreements, the delegation signed several industry specific agreements with the relevant African countries, such as the agreement with Algeria to develop and deepen commercial relations, the agreement with Egypt to strengthen co-operation in information technology, energy and resources, and the agreement with Nigeria to develop Nigeria's offshore oil fields. Although South Korean officials have not often visited African jurisdictions, it is proven that when they do, they reap economic rewards.

The very same year that these agreements were being concluded, the very first Korea-Africa Forum was held in Seoul under Moo-hyun's leadership. It was at this forum where the United Nations' General Secretary Ban Ki-moon stated that 'co-operation between Korea and Africa is very important in that it has boundless potentialities'. The general consensus at the forum was that South Korea had the potential to become a key player on the African continent and would be able to contribute to Africa's economic development while boosting its own prospects.

At the third Korea-Africa forum which was held in 2012, the 'Seoul Declaration' was adopted and acknowledged the role of industries in improving productivity, competitiveness and promoting economic transformation and diversification across Africa. Moreover, the Seoul Declaration called for further efforts by all parties concerned to strengthen existing ties. In addition, a specific action plan for the period 2013 to 2015 unambiguously declared South Korea's intentions to 'support the formulation of economic development strategies which are essential for Africa's development and strengthen Africa's capacity for developing and managing industrial policies.'

In the spirit of the aforementioned Seoul Declaration and action plan, a most recent diplomatic mission to Tanzania led by the Chairman of the Foreign Affairs and Unification Committee of the National Assembly of the Republic of Korea, Ahn Hong Joon, called for the deepening of diplomatic ties between the two countries. Reciprocating his call, the Speaker of the Tanzanian Parliament, Anne Makinda, conveyed the intention on the part of the Tanzanian Government to open an office in Seoul with an aim to deepen relations between the two countries. According to Makinda, there was a need for the Parliamentary Committees of the two countries to forge closer ties.

It must be borne in mind, however, that Tanzania is not the only African jurisdiction that South Korea is interested in. It is thus not particularly surprising that the Korean Institute for International Economic Policy ("KIEP") has predicted increased growth for Africa, diverse economic development, and, with continued political reform, significant prospects for commercial engagement with Korean corporations. KIEPhas identified Africa as an enormous opportunity in terms of resources and future market development, and given Korea's growth projections, KIEP noted that South Korea cannot afford to ignore Africa.

Another example of South Korea's plan to strengthen Africa's development is the recent announcement that the South Korean government will, through its Korea Cooperation International Agency ("KOICA"), build a $4.5 million ultra-modern vocational training institute in Kampala, Uganda. This facility is aimed at increasing hands-on training in various industrial sectors of the economy. Kang Younhwa, the KOICA resident representative in Uganda was optimistic that the vocational training institute would bridge the gap of youth unemployment and help nurture and develop skills that are fundamental in the process of transforming the country from peasantry to modernity.

In the light of the above, South Korea is clearly seeking to broaden its diplomatic initiatives and strengthen its ties with the Continent while actively promoting its economic and technological strengths and skill-set. The foundation of South Korea's diplomatic and commercial engagement with Africa is to gain access to its natural resources in exchange for technology and manufactured products. Hand-in-hand with these steps taken by the South Korean Government, private South Korean companies have been encouraged to build long term and mutually beneficial business models with their African counterparts.

In sum, the above demonstrates that South Korea has significant expertise and know-how relating to infrastructure projects and it is actively exploring opportunities and pursuing its interests on the Continent. South Africa will stand to benefit greatly from the skills that South Korean businesses have to offer. We therefore have to ask ourselves what we are doing to attract South Korean businesses to South Africa, if we are doing anything at all. Perhaps South Africa could take a leaf from the Tanzanian and Ugandan books and seek to establish ties with South Korea and to establish South Africa as an attractive investment opportunity for their businesses to partake in our construction and engineering projects. As South Korea cannot afford to ignore Africa, we can similarly not afford to ignore South Korea.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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