SMEs operating in the green energy sector and related industries could benefit from this week’s signing of a Memorandum of Cooperation on Decarbonisation between South Africa and Japan.
The memo focuses on decarbonisation to facilitate technology transfer and joint projects in areas like hydrogen and ammonia, as well as on water resource management to strengthen infrastructure cooperation.
The agreement, signed on November 19 in Sandton as part of ongoing activities at the G20 Summit, is set to strengthen an already long relationship between the two countries in trade, investment and industrial development.
The memorandum sets out clear focus areas which include hydrogen and ammonia technology, carbon capture, smart grids, automotive transformation, critical minerals, value chain development, AI-based decarbonisation tools and joint skills programmes.
Tau said these priorities align with the National Development Plan and the Just Energy Transition Investment Plan.
South African green energy SMEs in the renewable energy sector are small businesses that face challenges, including limited access to capital and skills. However, green SMEs also have opportunities in areas such as the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). They provide services in the energy value chain and leverage new models for renewable energy access.
Trade, Industry and Competition Minister Parks Tau said the partnership reflects decades of trust and shared progress.
“It is a milestone underlined by cooperation in investment, industrial development, technology transfer and skills development,” said Tau.
Tau noted that more than 62 Japanese companies operate in South Africa. He said they have invested more than 1.53 billion US dollars and created more than 5,600 jobs across sectors such as automotive, ICT, chemicals and logistics.
“This long-standing economic relationship provides a strong and credible foundation for today’s new chapter of strategic cooperation,” Tau said.
Earlier this year, the two countries signed a Joint Statement of Intent on Decarbonisation during the TICAD9 in Yokohama.
“We agreed that this statement of intent must be translated into structured and implementable cooperation,” he said. “The memorandum we are signing signals readiness to move into concrete and high-impact phases of work.”
Tau further noted that South Africa’s industrial goals align strongly with Japan’s Green Transformation strategy.
“Japan’s leadership in hydrogen, ammonia, carbon capture, advanced manufacturing and digital transformation resonates with our own focus on building green value chains,” he said. “It supports our efforts to upgrade industries and strengthen competitiveness.”
He highlighted the automotive sector as a central area of cooperation.
“Japanese companies have long been trusted partners in building South Africa’s automotive industry,” he said. “As Japan accelerates investment in electric vehicles and hydrogen mobility, this partnership becomes even more important.”
He added that companies such as Toyota and ISUZU will continue to help position South Africa as a hub for low-carbon vehicle production. He also noted strong cooperation in renewable energy, green hydrogen, ammonia, grid modernisation, AI tools and circular economy programmes.
“These collaborations are not abstract,” he said. “They translate industrial policy into practical outcomes such as new investments, local manufacturing, quality jobs and expanded export opportunities.”
He confirmed that the next step is a detailed Implementation Plan.
“Our governments will now work together to define specific workstreams and project pipelines,” he said.
Azwi@vutivibusiness.co.za
