Africa is fast emerging as one of the most important markets for the United Arab Emirates. As the world moves closer to achieving a global economy, Africa’s status as the most promising market of the new millennium can never be underestimated. The United Arab Emirates has been quick to recognise the immense potential in the emerging markets of Africa and is working diligently to penetrate newer markets within the African continent.
Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has singled out Africa as one of the most promising business partners for Dubai in the coming years. Trade between the United Arab Emirates and many African countries has been registering a steady growth in recent years.
According to data recently released by UAE’s Ministry of Foreign Trade, UAE’s overall trade with six non-Arab African countries alone (Angola, Kenya, Nigeria, Ethiopia, South Africa and Tanzania) reached a whopping US$ 6.2 billion in 2010.
However, trade patterns have been acquiring new dimensions in recent times. For example, a few years ago, UAE’s most important trading partner in Africa used to be South Africa. In recent years however, trade between South Africa and the UAE has been declining – dropping to US$870 million in 2009 compared to US$380 million in 2008 – a substantial fall of almost 77 per cent!
Other countries on the African continent, on the other hand, have been emerging as the new trade partners for the UAE. Nigeria, for example has become an important destination for UAE’s exports and re-exports. Notably, UAE’s trade with Nigeria recorded the biggest increase – among the six African countries mentioned above – doubling to US$863 million in 2009 from US$430 million the previous year.
Tanzania too has emerged as an important and noteworthy trade partner for the UAE in recent times. Trade between Tanzania and the UAE rose sharply last year to US$870 million compared to US$510 million the previous year – a substantial increase by any standards.
Kenya, often labeled as the ‘gateway to east Africa’ has always been an important trade partner for theUAE in the sub Sharan region. Renowned as the distribution and business hub of East Africa, Kenya has had long and fruitful trade relations with the UAE. Trade between Kenya and the UAE has continued to grow – rising to US$570 million in 2009 from US$500 million in 2008, according to recent data released by UAE’s Ministry of Finance.
Uganda too is making rapid strides to emerge as one of the leading commercial centres in East Africa. Realising the importance of Uganda as one of the most progressive economies in Sub-Saharan Africa, more than 600 participants from over 35 countries participated in the Uganda International Trade Fair held in Kampala recently. The trade fair was attended by many companies from the Middle East countries looking to promote their products in the lucrative markets of East Africa.
Bi-lateral trade between Uganda and the United Arab Emirates has been registering a steady growth during the last five years. Economic liberalisation policies adopted by the government of Uganda in recent years, coupled with the geographic proximity of the two countries has played an instrumental role in promoting direct trade between the business communities of the two countries.
COMESA TRADE BLOC
Trade between the UAE and countries that form the COMESA economic bloc has been on the increase in recent times. COMESA is the largest economic bloc of African countries with 19 member states that includes Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The COMESA market is expected to grow into one of the most lucrative markets in Africa with an estimated 500 million consumers by 2015.
“COMESA provides unparalleled opportunities for investors from all over the world,” says Hamad Bu Amim, Director General of the Dubai Chamber. Today, the COMESA region has a combined population of more than 389 million people and a total GDP of over $230 billion. The region’s annual imports are estimated at $32 billion and exports at $82 billion.
In May 2010, the Dubai Chamber of Commerce and Industry hosted a workshop for the fourth Common Market for Eastern and Southern Africa (COMESA) Investment Forum which is scheduled to be held in Dubai on 23rd – 24th March, 2011 at the Madinat Jumeirah. During this two-day high-level forum, representatives from the COMESA region will showcase their success stories and the business models that have been adopted to maximise the full potential of investments in the region. Participants will discuss ways to contribute to Africa’s long term economic growth through close collaborations between local and foreign investors and the public sector.
Dubai, recognising COMESA as a unique market, is paving the way to drive investment from all over the world to the COMESA region and beyond by positioning itself as the fundamental hub for trade into and from the region. “We are committed to strengthening our ties with the COMESA states and positioning Dubai as a promising gateway to the whole African continent,” says Hamad Buamim, Director General of the Dubai Chamber of Commerce & Industry. “Hosting the COMESA Investment Forum in Dubai in 2011 reflects our strategic commitment to strengthening our ties with the COMESA states and positioning Dubai as a promising gateway to the whole African continent,” Buamim added.
Interestingly, not only is the UAE one of the leading exporter of goods to several African countries, it is also among the top ten importer of goods and commodities for as many as 10 African countries – including Kenya. It is estimated that the UAE’s total non-oil trade with Africa is worth US$ 19.1 billion – and this figure is expected to further rise in coming years as the UAE authorities make concerted efforts to further diversify their trade and business interests in the African continent. In particular, the UAE seeks to play a larger role in developing several key sectors in African countries such as tourism, infrastructure, oil, gas, mining, energy, transport, logistics, ports, IT and mobile phones.
“The UAE has maintained close economic and commercial ties with Africa,” said Shaikha Lubna, UAE’s minister of Foreign Trade in a recent interview. “From a business perspective, the proximity of our region with the continent makes it a more convenient partner compared to Western companies,” she said.
The UAE is also one of the leading source of Foreign Direct Investments into Africa. The Government of Dubai has actively partnered with many African governments in key infrastructure, telecom and tourism projects. Dubai World, a government-owned organisation has a special investment arm for investments into Africa called Dubai World Africa which specifically focuses on the acquisition, development and management of prime assets on the African continent and the Indian Ocean Islands.
Dubai World has some 30 investment projects spread across Africa – which includes marine terminals in Djibouti, Algeria, Dakar (Senegal) and Maputo (Mozambique); wildlife reserves in Rwanda and South Africa – as well as a hotel project on the Comoros Islands.
Etisalat, UAE’s telecom operator, also has stakes in several African telecom companies in countries like Sudan, Tanzania, Benin, Burkina Faso, Togo, Niger, the Central African Republic, Gabon and Ivory Coast. On the other hand, Dubai Investments holds a stake in Tunisie Telecom. Other target countries are Zambia, Lesotho, Zimbabwe and Malawi and the Maghreb countries. FARMLANDS
GCC nations have also been investing in farmlands across Africa in a bid to reduce their reliance on import of foodstuff. Saudi Arabia is one of the biggest buyers of agricultural land, followed by the UAE, Qatar, Bahrain, Kuwait and Libya. All are reliant on massive food imports.
Sindiso Ngwenya, secretary general of Comesa, which counts Kenya, Egypt, Sudan and Madagascar among its members, said multimillion-dollar land deals aimed at securing the Gulf’s food supply provide crucial capital to overhaul poverty-stricken rural areas and build infrastructure.
“For the first time, these countries are receiving significant investment and help with infrastructure. This is a win-win partnership.”
According to the International Food Policy Research Institute, up to 20 million hectares of farmland has been offered up to foreign buyers since 2006, at a value of up to $30 billion.
Some of the largest deals include Saudi’s acquisition of 500,000 hectares of land in Tanzania, and the UAE’s purchase of 400,000 hectares in Sudan. In 2008, Qatar took 40,000 hectares of land from Kenya in exchange for a $2.5 billion loan to allow the African country to build a second deep-water port.
Across Africa, fertile farmland can cost as little as $3 per hectare. African economic affairs expert, Philippe H. Solomon, has predicted massive Arab investments into less developed countries in the African continent in the coming years. Solomon expects Gulf investors to pump billions into these countries.
“Africa can capitalise on the upsurge in international oil prices in recent years to attract Arab investments,” noted the Tunisia-born specialist. “We have seen Arab money flowing into other parts of the world even to countries such as Cuba, so why not in Africa?”
As an example he cites the recent announcement by Qatar-based investment company IAS International, which plans to invest in a number of development projects in Central African Republic worth $1.6 billion. TELECOMS SECTOR
The telecom sector in Africa has been particularly attractive for overseas investors. UAE telecom operator, Etisalat has been at the forefront of developing the African telecom sector. Etisalat owns 82% stake in Atlantique Telecom, which operates under the Moov brand and is operationsal in Benin, the Central African Republic, Gabon, Burkina Faso, Niger, Ivory Coast and Togo.
Etisalat has invested $4.5 billion in international expansion, will pump in another $5.5 billion in African markets. “This includes $4.1 billion in East Africa and $1.4 billion in West Africa,” said Mohammad Hassan Omran, etisalat chairman, while addressing the Telecoms World Conference. “We acquired seven of our eight international assets during the last three years, with a market value of $11 billion.”
Etisalat enjoyed a monopoly in the UAE’s domestic market until a few years ago and has registered over 6.3 million subscribers in the UAE, out of its regional subscriber base of approximately 33 million – making it the second biggest telecom operator in the Middle East region.
“In West Africa we are expanding our footprint with a commercial launch of operations,” he said. “We have submitted bids for a second telecom licence in Qatar and the third licence in Kuwait and hope to win them as well.”
Omran expressed confidence in the future of the African markets and underlined his firm’s expansion strategy in Africa, saying, “Expanding opportunities in Africa is absolutely the next big battleground,” he said. “Especially with the improving economies in Africa, you’ll have a lot more subscription and revenue growth. Technology is now ready for Africa,” he noted.
Etisalat’s Saudi subsidiary, Mobily, has recorded 7.2 million subscribers in Saudi Arabia, heading for nine million by the end of 2009. Etisalat, which had secured a third mobile licence in Egypt, has already registered three million subscribers in nine months.
“We will achieve 10 million subscribers in three years of commercial operations in Egypt,” said Omran. “We believe there will be more growth in Africa. There are opportunities.”
In an effort to further increase trade and investments between the GCC countries and Africa, UAE-based Gulf Research Centre and the Council of Saudi Chambers jointly organised the Africa Investment Forum 2010 in Riyadh recently.
The two-day event was attended by the presidents of Mozambique, Angola, Benin, Zambia, Kenya, Senegal and Ghana and several ministers and senior officials from other countries, including South Africa. The conference will focus on the investment environment in Africa, bilateral trade and trade financing, agriculture, minerals and natural resources, energy, telecommunications and infrastructure as well as tourism.
The main purpose of the forum was to create opportunities to network and establish working opportunities as the institutional relations between the GCC states and Africa are still in their infancy. This includes existing and emerging economic sectors about which there is little information available or which have not been widely publicised.
GCC-Africa trade relations are also strengthened by other similar high-level exchanges like the Africa-Arab Business Investment Forum that brings together business leaders and government institutions from Africa, the GCC countries and international institutions to discuss and explore investment opportunities. The organisation held a conference on November 17, 2010 in Dubai.
In another significant development, the Gulf Research Centre organised the first Gulf-Africa Strategy Forum in Cape Town, South Africa in 2010. The unique conference provided an unprecedented opportunity for governments, academics and the private sector to discuss the state of cooperation between the GCC countries and Africa and offer recommendations on how to further strengthen this partnership in the coming years. The conference is expected to be organised every year from now on.
In another new development, the Gambian government has embarked on a mission to attract foreign investment into the country and has been in talks with the UAE-based Emirates Investment Group (EIG). Gambian ambassador to the UAE, Mambury Njie, held talks with the chairman of the group, Sheikh Tariq Bin Faisal Al Qassimi, with the aim of enticing the group to explore investment opportunities Gambia has on offer.
The Emirates Investments Group LLC is an investment company with interests in the Middle East and Asia Pacific regions. With an initial focus on Financial Services and Real Estate, EIG expanded its interest with investments in Trading, Industry and Aviation.
During the meeting, the Gambian representative to the UAE presented the group’s chairman with a range of investment opportunities in Gambia. Ambassador Njie also used the opportunity to introduce the new business laws introduced by the Gambia with the aim of attracting more international investments.
Sheikh Al Qassimi acknowledged the viability of Gambia’s business environment, citing the reassuring opportunities the country’s new business laws offer. “Investors are always alert to fresh investment opportunities, and Gambia’s new business laws, designed to encourage foreign investment, certainly could make the country an enticing prospect,’’ he said.
Sheikh Al Qassimi said that the Gambia government’s focus on the sector of agriculture, among others, which he said is of interest to EIG, suggests that the West African nation is particularly promising.
With Africa predicted to emerge as one of the leading markets in the coming years for a wide range of consumer and capital goods, several new initiatives are bound to further focus on the growing importance of the lucrative African markets. As Africa comes under focus, several nations like China, India and Brazil are already jostling for position to make the best of the many business and investments opportunities that the continent has to offer.
Truly, Africa is now undoubtedly the market of tomorrow.