Inside The Growth of UAE Investments in Africa

by Ameera Tameem, Gulf Regional Lead, Botho Emerging Markets Group

For the past decade, the UAE has been the leader in African investment within the Gulf Cooperation Council (GCC).  With investments in all four corners of the continent, the UAE is the largest  investor in Africa, second only to China as of 2016.

Nearly 140 Fortune 500 companies including AIG and Lockheed Martin, have established their MEA (Middle East and Africa) headquarters in Dubai as the city cements its reputation as an entry hub for Africa.

Numerous South African companies have also established offices in Dubai in an effort to enhance their international presence and be in closer proximity to attractive  North African markets. According to the Dubai Chamber of Commerce (DCC), over 12,000 African companies were registered in Dubai as of 2017.

Recognizing the plethora of opportunities for investment in multiple African sectors such as infrastructure, technology and energy, Dubai has increased  non-oil trade with the continent by 700% over the past fifteen years, according to the DCC.

Abu Dhabi, meanwhile, has focused heavily on investing in infrastructure. The emirate has lent considerable capital to the construction of large-scale projects such as the newly announced oil pipeline between Eritrea and Ethiopia, renewable energy projects in the Seychelles that include a solar farm, and an electric power grid on the island of Mahé, as well as the expansion of rural infrastructure in  Uganda and Tanzania, jointly funded by the Abu Dhabi Fund for Development (ADFD).

The ADFD, the emirate’s foreign aid agency, has invested over $50 million to encourage UAE companies to invest in Chad in alignment with the country’s National Development Plan 2021. The fund has also funded over 66 projects in 28 African nations including Benin, Comoros,Cape Verde among others.

In recent months, the UAE has also made inroads as a political actor in the Horn of Africa region. Abu Dhabi’s Crown Prince, H.H Sheikh Mohammed Bin Zayed, played an instrumental role in brokering the Ethiopian-Eritrean peace accord while Dubai Ports (DP) World has invested over $440 million to build and manage a world class port in Berbera, Somaliland over a 30 year concession period. The UAE has also pledged  to fund and train the breakaway state’s security forces, in response to mounting disagreements with Djibouti over the disputed concession of the Doraleh port.

Moreover, alongside Saudi Arabia, the UAE has also committed  funds and military expertise to help curb the rising wave of extremism in the Sahel by constructing a military school in Mauritania opened in early 2018.

The rapid investment in political, economic, and military capital in Africa sends a clear message: the UAE is poised to become a major player in Africa’s geopolitical future.