Why Gulf states are investing billions in Africa
Wealthy Gulf states are investing billions in African countries. But the nations involved all have different objectives. What's behind the investments and what's in it
Wealthy Gulf states are investing billions in African countries. But the nations involved all have different objectives. What's behind the investments and what's in it for African countries? The news came out just a few days ago: ADNOC Distribution, a petroleum retailer in Abu Dhabi, the capital of the United Arab Emirates, will take over energy giant Shell's petrol stations and fuel business in South Africa. The price is thought to be around $1 billion (€870 million). With this purchase Abu Dhabi has assured itself of a place in the African continent's fuel market. This billion-dollar deal is just one example of a larger trend. Even taking into account the occasional small declines, the Gulf states have been growing their economic presence in Africa for years now. According to the UK-based think tank Chatham House, the countries belonging to the Gulf Cooperation Council or GCC, have invested more than $100 billion in Africa over the past decade. Around $59 billion of that came from the UAE and another $26 billion from Saudi Arabia. "For the Gulf states, Africa isn't some far away region — it's right in their neighborhood," said Stephan Roll, a senior fellow in the Africa and Middle East division at the German Institute for International and Security Affairs. In eastern Africa, there are central trade routes and the two regions have had social and economic ties for decades. nobody should be surprised by the Gulf states' increasing engagement in Africa, he told DW. A recent UAE acquisition: Shell's oil business in South Africa Image: Laban Walloga/REUTERS Gulf economies diversifying "One of the biggest reasons why they started to look at Africa differently, especially over the past 10 years or so, has been the need to diversify away from hydrocarbons and also strengthen their own economic projection," Maddalena Procopio, a senior policy fellow in the Africa program at the European Council on Foreign Relations, explained.
"But they started to also see the rest of Africa as an incredible potential market, where they could basically have revenues in sectors that they haven't ventured into." According to analyses by a number of institutions, including the Brookings Institution, Chatham House and the African Development Bank Group, investment from out of the Gulf is focused on energy, ports, logistics, agriculture and critical raw materials. These investments make sense as they secure trade routes, strengthen food security and ensure access to raw materials like cooper, cobalt and lithium, which are needed for the development of electric vehicles and artificial intelligence. The countries involved are pursuing different strategies though. Saudi Arabia and the UAE are mainly investing in renewable energies and in the processing and distribution of petroleum products, Procopio noted. Qatar, which has played a less significant role in Africa up until now, is more focused on selected economic cooperation, she said. Why Saudi Arabia is redrawing its global alliances To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The UAE is seen by experts as the country most involved. "You need to see their policies as a whole package," Roll pointed out. Ports, logistics and economic interests cannot be separated from their foreign policy and security goals, he said. Having control over strategically located ports doesn't just offer the UAE an economic advantage, it also allows them political influence over important global trade routes. Procopio confirmed that the UAE's economic engagement with African nations was larger than that of other Gulf states because of its foreign policy and security interests. Saudi Arabia is a lot more selective, Roll added, and is concentrating on certain sectors, particularly energy. The Saudis also played an important role in development financing — on a bilateral basis as well as through multilateral institutions such as the Islamic Development Bank, he said.
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