The United Arab Emirates (UAE) has joined the race for commercial influence in Africa, seeking to tap the immense market of 1.2 billion people for its products.
The UAE is the leading source of foreign direct investment (FDI) into the African continent among the Gulf Cooperation Council (GCC) countries, according to the latest report by real estate consultancy Knight Frank. The UAE's focus is on Africa's high-growth sectors, including infrastructure, energy, transportation, logistics and technology.
This rise in Abu Dhabi's influence is bringing increased competition to the African market, challenging the dominance of established players such as the US and the BRICS nations of India, Russia and China.
The White&Case report, in turn, reveals that between 2012 and 2022, FDI flows from GCC countries to Africa amounted to $101.9 billion across 628 projects, while flows from Africa to GCC countries totaled $3 billion spanning 141 projects. Notably, FDI flows from the Emirates to Africa reached $59.4 billion during this period, surpassing other GCC nations like Saudi Arabia ($25.6 billion), Qatar ($7.2 billion), Kuwait ($5 billion), and Bahrain ($4.2 billion).
Recent developments reportedly underscore the growing importance of Africa to Abu Dhabi, with $5.6 billion in investments slated for the continent in 2021 alone. Of these investments, the Agtech Park in Egypt stands out as the most significant project.
The main sectors attracting FDI were construction ($36.2 billion), environmental technologies ($31.7 billion), energy ($10.1 billion), transport and storage ($6.6 billion), and agribusiness ($3.2 billion).
Investors are also eyeing sectors such as seaports, telecommunications, airlines and airports. DP World, a Dubai-based port operator known for its significant role in global supply chain solutions, has invested more than $1.8 billion in Africa over the past decade.
In addition, DP World plans to invest a further $3 billion in the coming years. DP World currently operates seaports in Angola, Djibouti, Egypt, Morocco, Mozambique, Senegal and Somaliland.
With the UAE's entry into the African market, the landscape of global competition for trade and investment on the continent is set to intensify. As Africa's potential as a lucrative market continues to grow, the involvement of various global powers, including the Emirates, will shape the economic dynamics of the region.