South Africa boycott may be looming, Israel’s foreign trade insurer warns exporters
Government-owned Ashra insurance company says growing political instability could lead Pretoria to impose to trade restrictions similar to those Turkey has slapped on Israel
Israel’s government-owned foreign trade risk insurance company Ashra has issued a warning to local exporters that growing political instability in South Africa ahead of this month’s elections is likely to harm trade ties between the two countries, similar to the boycott recently begun by Turkey.
Ashra is urging exporters to prepare accordingly and ensure that they are not overexposed to customers in South Africa and that they are not already facing any delays in the payments due to them.
Turkey started to impose trade restrictions on Israel in April in response to the ongoing war in the Gaza Strip after President Recep Tayyip Erdoğan’s party suffered a significant defeat in municipal elections. Earlier this month, the Islamic state put a trade ban with Israel in place.
South Africans will vote in a national election on May 29 and polls suggest that the country’s ruling party, African National Congress founded by Nelson Mandela will lose its majority after 30 years in power, which in turn is expected to lead to political instability.
“In response to concerns that Israeli exporters will be harmed, and in light of growing demand, Ashra is working on increasing the scope of state-guaranteed credit insurance for exporters,” said Ashra CEO David Klein.
Ashra’s warning comes as South Africa last week asked the International Court of Justice (ICJ) in The Hague to order Israel to withdraw from Rafah amid the war in Gaza against the Hamas terror group.
“Various sources estimate that the hostile conduct of the South African government against Israel, and especially the case submitted to The Hague, stems, in part, from fear of this [election] outcome and from a desire to divert the discussion from the economic and social situation in the country,” Ashra stated.
South Africa has in recent years become one of Israel’s most vituperative critics, calling the Jewish nation an “apartheid state” and late last year filing a charge of “genocide” at the ICJ over Israel’s war against the Hamas terror group in Gaza.
War erupted when Hamas-led terrorists launched the October 7 massacre on southern communities, murdering 1,200 people and taking 252 hostages to Gaza.
In January, in response to the South Africa application the ICJ ordered Israel to comply with a series of provisional measures based on its finding that there was plausibility that Israel’s actions in Gaza fall under the scope of the Genocide Convention. Israel has said that it is acting in accordance with international law, and that South Africa’s repeated requests for additional measures were an abuse of procedures.
Bilateral trade volume with South Africa is significantly lower than that with Turkey. Israeli exports to South Africa amount to more than $200 million and imports are about $150 million annually, compared with bilateral trade with Turkey worth $7 billion. Most of the Israeli exports to South Africa are in the fields of manufacturing, such as scrap copper; chemicals; and agriculture, including pesticides and fertilizers.
Ashra was established in 1957 to encourage exports from Israel and help minimize political and commercial risks. The government-owned company provides credit insurance services to finance large export transactions of Israeli companies, mainly with foreign countries for relatively long periods of up to 15 years. The insurance protects the exporter or the bank providing the credit against failure to receive payment from the customer due to economic difficulties or a political event.
State-guaranteed credit insurance services allow exporters to receive their money even in the case of a political event that leads to an imposition of a ban or prohibition of money transfers to Israeli companies. Moreover, so-called “pre-shipment” insurance, guarantees that in case a customer cancels an order even before it has been delivered, as in the case of Turkey, the exporter will receive financial compensation for the expenses that were already incurred.
Eligibility for state-guaranteed insurance and financing is conditional on at least 30 percent of the export deal having an Israeli component.
Klein added that since the outbreak of the war, Ashra experienced a significant increase in demand by exporters for state-guaranteed credit insurance.
“The increase in demand started at the end of 2023 and continues at a faster pace from the beginning of 2024,” said Klein.
In the first quarter of 2024, the scope of in-principle approvals for credit insurance that Ashra granted to Israeli exporters rose by about 10%, compared to the corresponding period last year, according to Klein.
The increase in demand is for export transactions in the areas of energy, infrastructure, agriculture, security and health, mainly to African countries such as Angola, Togo, the Ivory Coast, Uganda, as well as other countries such as the Dominican Republic, Kazakhstan, and Georgia.
At the end of 2022, Ashra’s insurance portfolio included export transactions of more than $2.5 billion in areas such as manufacturing, infrastructure, medical equipment, energy, communications, agriculture, security equipment, planning, and engineering services.