In 2010, McKinsey a global consultancy described the potential of African economies as “lions on the move”. Today, despite gradual global growth and the collapse of commodity prices, Africa’s economic lions are still moving forward.
The leading trading partner of Africa in the GCC which is UAE, could be set to benefit from a surge in the growth of gross domestic product (GDP) across the African continent in the forthcoming years.Africa's GDP will grow 2.6 percent this year, however is relied upon to increment and a few specialists figure it could surpass China in future.
The UAE has established itself as having excellent transport links with more flights to and from Africa than any other country and is also home to large ports that are well positioned to serve the continent. “Dubai has strategically positioned itself very nicely for this development,” says Jan-Willem Sudmann, Head of International Banking Group at Mashreq.
Hamad Buamim, President and CEO of Dubai Chamber of Commerce and Industry said that the continent’s main trading partners are China, Europe and India however, the UAE has steadily been increasing its share as Dubai is focusing heavily on Africa in the past three years.
“When you look at the trade, today it stands at around $35 billion. It is quite a sizable number, but what is also more important to us is that in the past 10 years it has grown almost three times. It was 3 per cent of Dubai’s total trade. Now it is 10 per cent. And it is growing not only in percentage figures but volume as well. We believe that this 10 per cent is going to go to 15 per cent or 20 per cent in the coming five to 10 years. Again, this is fueled by the growth in Africa and the demand,” Buamim says.
According to Bauman, there are currently 12,000 African businesses enrolled with the chamber, a number that has been rising fast over the past few years. Huge numbers of them have been utilizing Dubai as a base to draw in venture into their very own nations. “We have been collaborating with African countries in the past five years, creating big signature events for them,” he says.
“It has been very successful. We have been having a lot of investments announced. And this is where we allow the African countries to not only talk about the opportunities, but to also discuss the risks and challenges and how we can overcome them.”
Africa is also a major focus area for financial institutions like Mashreq, which sees the potential in supporting trade between the UAE and the continent. There numerous trading blocks in the continent, such as the oil driven economies of Nigeria, Angola, and Gabon. There is East Africa, which has traditionally focused on agriculture and dairy products, plus tea, coffee, flowers tourism and construction, and finally South Africa, which is to some extent comparable to the UAE.
Sudmann says that this offers the UAE and institutions like Mashreq a number of possibilities going forward. “Mashreq has traditionally been a trade finance bank, doing everything to execute, to support and to finance trade, which we have done for more than 50 years.”
“With the way the trade flows are going, and the way value chains are developing, there is a growing part Mashreq will play in financing these trade flows, mainly between Africa, India, China and Asia overall. We are very well connected to the African countries, to the major economies, and have all the ambitions to grow that," he said.