Africa is becoming an increasingly vital partner for the countries in the Gulf. With its strategic position at the nexus of Asia and Africa, Dubai has established itself as a regional hub for transport, logistics, trade and increasingly finance.
With stakes in all four corners of the continent, the UAE is the second-largest investing country in Africa. Abu Dhabi Fund for Development (ADFD) has been at the forefront of this activity, having funded more than 66 projects in 28 African nations to a value of $16.6bn.
In 2018, the state-owned fund allocated $50m for UAE companies that want to invest in the Central African nation of Chad and a $3bn development aid package for Ethiopia to boost the country’s economy.
Khalifa Fund for Enterprise Development, an independent agency of the Abu Dhabi Government, has also signed a $100m partnership agreement with Ethiopia’s Ministry of Finance to help fund prominent projects in the country.
Agribusiness in East Africa is also attracting GCC investors. One of the biggest investments in recent years has been Saudi Arabia’s acquisition of 500,000 hectares of arable land in Tanzania in 2009.
Food security remains a major concern for the GCC as demand is expected to grow 3.3% annually over the next five years, research from Dubai-based investment bank Alpen Capital shows. While countries in the region are increasing their local food production, they still import most of their food needs given the scarcity of arable land and water resources.
With 60% of the world’s arable land and its geographical proximity, the continent becomes an interesting partner for the GCC countries. “Africa in general, from Uganda, Rwanda and South Africa to Nigeria and Zambia, is very promising,” Khadim Al Darei, vice chairman and co-founder of Abu Dhabi-based agribusiness firm Al Dahra told UAE daily newspaper The National.
“Currently, only 5 percent of African land has been utilized for agriculture and there is a large local consumer base.”
While agro-investments remain a priority for the GCC, investors are looking at numerous other sectors.
African businesses are also keen to do business in the UAE. There are 12,000 African businesses registered with the Dubai Chamber of Commerce and Industry, and many of them have been using Dubai as a base to attract investment into their own countries.