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UAE trade with Africa rockets

UAE trade with Africa rockets

The United Arab Emirates (UAE) has always had strong ties with Africa. Given that about 65% of all Arabs are also Africans, it is no surprise that there is a close relationship between the two.

Yet these bonds were overwhelmingly with North Africa until relatively recently. The economic potential of the continent as a whole has now persuaded many Emirati firms to look south of the Sahara, while the UAE government is doing everything it can to support this investment.

The Dubai Chamber of Commerce puts total non-oil trade between Africa and the UAE for 2016 at $24bn, up from $17.5bn in 2014 and $5.6bn in 2005, on the back of investment in agriculture and banking but above all infrastructure: in ports, aviation and telecoms. The UAE is Africa’s biggest trade partner in the Gulf.

Egypt still attracts most Emirati investment and ties between the UAE and North Africa in general are particularly close because of a shared language, religion and culture. Agriculture is expected to become increasingly important, given that the UAE imports a very high proportion of its food requirements.

Jenaan Investment has set up a joint venture with the government of Sudan called Amtaar Investment to farm 10,000 hectares of land. In addition, Dubai’s private equity company Abraaj has more than $3bn invested in more than 60 African companies.

The governments of the UAE, including those of the two richest emirates, Dubai and Abu Dhabi, have backed a wide range of initiatives aimed at promoting trade with Africa. So much so that Dubai is now one of the most popular places in the world to hold African trade events.

The Global Business Forum on Africa was held in Dubai in September, followed by the Africa Legal Network’s (ALN) annual international conference, entitled “Africa: Bridging the Gulf”, in early October. ALN chairperson and the former acting prime minister of Mali, Cheick Modibo Diarra, told delegates that the Gulf states and Africa were good partners in an era of low oil prices. Gulf companies are looking for alternative investments and the African continent offers a wide range of opportunities.

Next up was the 4th Global Business Forum on Africa, again in Dubai, which was expected to gather over 1,000 top-level participants. In addition, there has been a growing African presence at the Abu Dhabi International Petroleum Exhibition and Conference (Adipec), which is the biggest oil industry conference in the world outside North America.

Speaking in March, Abdullah al-Saleh, the undersecretary for foreign trade and industry at the UAE ministry of the economy, said: “The latest reforms in some African countries are very attractive for us… The growth is there in these markets and there is big demand for services and goods. What we need to do is connect our business community with business communities in these countries.”

He named Kenya, Ethiopia, Tanzania, Namibia, Angola, Mozambique and Nigeria as being of particular interest.

Why such strong interest?

There are a variety of reasons for the UAE’s enthusiasm for stronger economic ties with Africa. The continent’s undoubted potential as a growing market and its vast natural resources undoubtedly play a role.

Moreover, the longer oil prices remain depressed, the more Gulf states are having to redouble their efforts to diversify their economies. This affects both Abu Dhabi and Dubai.

The UAE’s oil production may be concentrated in Abu Dhabi, but while Dubai has long looked to financial services and tourism to drive its growth, its long boom has been driven by the influx of oil revenues from neighbouring states.

The Gulf Cooperation Council states have made little headway on free trade talks with other economic powers, including India, China and the European Union, and so are keen to boost trade volumes with other parts of the world, such as sub-Saharan Africa.

Trade delegations from the UAE regularly visit Africa and the leaders of the country’s biggest firms are keen to strengthen ties with African governments as well as businesses. Most recently, in late September and October, the chairman and CEO of DP World, Sultan Ahmed Bin Sulayem, toured West Africa, holding talks on potential new investment in Mali, Ghana and also Senegal, where the company already operates Dakar Container Terminal.

Dubai’s Customs World recently signed a deal with the government of Ghana to provide customs clearing services in the country, following its purchase of West Blue Ghana.

The DP World CEO commented: “Integrating ports, customs and free zones in Ghana will benefit the country enormously, enabling business to trade faster and more efficiently than ever before. Dubai is a model for the world and we can support developing nations such as Ghana in the long-term implementation of such strategies as the recent agreement with Customs World demonstrates.”

The Qatar dispute

Different Gulf states have provided different levels of financial support to Africa states but those lines of delineation may become more defined as a result of a bitter political dispute in the Gulf itself. Saudi Arabia, the UAE and some other Gulf states have claimed that Doha is funding terrorist groups and is too friendly with Iran.

They have long been intensely irritated by its support for the Muslim Brotherhood and the refuge given to dissidents from their own countries. They imposed sanctions and a blockade on Qatar in June that UAE officials suggest could stay in place for years to come.

Several African countries have pared back their diplomatic ties with Doha: Mauritania, Chad, Senegal, Niger and Djibouti have all withdrawn their ambassadors from Qatar. However, Morocco, Algeria, Tunisia, Libya’s Tripoli government and Somalia have resisted pressure to support the Saudi position.

The dispute could open the way for the UAE to replace Qatar in some of its areas of African influence, while Doha may be keen to shore up its sources of diplomatic support through aid and investment.

Nigeria has called on the UAE and Saudi Arabia to end their blockade of Qatar, while Sudan has remained neutral. The latter broke off diplomatic relations with Iran in 2014 in support of Saudi Arabia and has also sent troops to the war in Yemen on the Saudi side. However, Qatar has invested heavily in the country in recent years and also helped negotiate the peace agreement between Khartoum and Darfur rebel groups, so the government of Sudan is trying not to side with either Riyadh or Doha.

Neil Ford

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