South Africa on Friday formalised a R350-million economic aid agreement with Cuba.

At a ceremony in Pretoria, Trade and Industry Minister Rob Davies and Cuba's ambassador to South Africa, Angela Villa, signed a document that both said was aimed at stimulating trade between the two countries.

The signing is a follow-up to President Jacob Zuma's state visit to Cuba in 2010, at which time he announced an economic help package to that country.

The package comprises two direct grants and a repayable loan.

The grants include R40-million for the purchase of seeds, R5-million of which must be spent on the South African market; and a $14-million (R100-million) "solidarity grant".

The loan, for R210-million, includes credit lines in two tranches of R70-million and R140-million.

Responding to a question, Davies said the loan had been provided at a "lowish interest rate", but did not specify a percentage.

The signing of the agreement comes on the 50th anniversary of the imposition of the 1962 United States trade embargo on Cuba, an event which Villa said had caused great hardship for the Cuban people.

Davies said South Africa owed Cuba a "great debt" for the sacrifices it had made to help South Africa during the apartheid years, especially its efforts in Angola.

The two countries had enjoyed friendly relations since 1994. Trade between them totalled R73-million in 2010.

He said there were "huge" possibilities for increasing this, particularly in the field of medicines and vaccines where Cuba was a recognised world leader.

Villa hailed the agreement as "a new beginning in our economic and trade relations".

In 2010, South Africa wrote off two debts, to the tune of R926-million and R121-million, owed by Cuba.