Destination Africa
Gulf nations that are looking to diversify their domestic economies away from natural resources and oil, will get a chance to explore trade and investment opportunities at forthcoming Global Business Forum on Africa in November.
In November 2017, the Global Business Forum on Africa will examine the growing importance of trade and investment between Gulf countries and the African continent. Held under the Patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, the high-profile event will recognise the key business opportunities and investment climate in major African markets. This represents a golden opportunity for the GCC and Africa alike.
The timing is particularly serendipitous given the slowdown in economic activity in developed markets and the impact of fall in crude oil prices which has invariably impacted the domestic economies in Africa and the Gulf region. However, this represents significant opportunities for Gulf investors looking to explore additional revenue streams and new markets.
For Gulf nations that are looking to diversify their domestic economies away from natural resources, the forum will provide a unique insight in to the many asset classes and large-scale public and private sector investments emerging from the continent. For African nations, the Forum is a chance to showcase entrepreneurship and investment across the region — as well as learn from some of the best practices that have enabled GCC countries to grow and diversify over recent years.
Investors and other stakeholders from the Gulf will, however, recognise that China has already taken the lead when it comes to investing in Africa. Ernst & Young’s latest Africa Attractiveness report shows that China is now the single largest contributor of FDI, capital and jobs in Africa. The report indicates that around 130,000 jobs have been created directly by Chinese investment since 2005, from 293 FDI projects worth in excess of $66.4 billion. Importantly, the report also shows that China’s investments are well diversified, spanning natural resources, services, manufacturing and infrastructure development.
Gulf investors and sovereign funds face an ever-growing number of opportunities in these key developmental sectors in Africa, whilst many have already invested heavily. According to the Dubai Chamber of Commerce, total nonoil trade between the two regions is valued at about $24 billion, a 700 per cent increase over the last decade. The Investment Corporation of Dubai has placed $300 million in Dangote Cement of Nigeria, one of Africa’s fastest expanding companies; and Etihad Airways has acquired a 40 per cent stake in Air Seychelles.
To date, infrastructure has been and continues to be one of the most attractive segments. Right across Africa, roads, airports, dams, ports, railways and telecommunications networks have been coming to life and adding significant logistical capabilities to African economies. The Addis Ababa railway that links the city to the port of Djibouti, which was launched in 2016, received foreign investment worth $4 billion. On the other side of the continent, the west coast is soon to see its first major deep-water port open for business. Based in Angola’s northern Cabinda Province, the new Porto de Caio development will commence full operations one year ahead of schedule in January 2019. The project has received strong support from the Government of Angola, its Ministry of Transport, Provincial Government and China’s Export-Import Bank. The socio-economic contribution that the port makes will be deep and widespread. It will significantly boost cargo handling capacity making exports faster, easier and more cost-effective for national and regional manufacturers, while bringing the price of consumer products down over the long-term.
As a public private partnership (PPP) – the first of its kind in Angola – the port represents a transformational shift in the country’s determination to invest in long-term economic growth that positively impacts the local and national populations; and the wider region. For Africa, it represents an entirely new and transformational piece of infrastructure that has the potential to become the region’s foremost gateway between global markets and the African continent.
Business-critical infrastructure is also presenting opportunities for foreign investors across other fastgrowing sectors including hospitality, tourism and agriculture. These sectors are already attracting FDI from investment firms such as Quantum Global Group, which specialises in private equity investments in Africa’s growing markets. The Group’s hotel fund, QG Africa Hotel LP, based in Mauritius, recently acquired 100 per cent ownership of the Movenpick Ambassador Hotel in Accra from the Kingdom Holding Company (KHC) – the biggest open-market hotel transaction in sub-Saharan Africa to date. This transaction, like many others, is indicative of the growing vitality and attractiveness of key locations across the continent, which in the long-term will generate significant returns for investors. The sector has already attracted significant interest from GCC countries — Rani Investment, based in Dubai, is a key investor in Mozambique’s tourism industry where it operates luxury hotels.
Gulf investors should also be looking in to opportunities in the region’s biggest single employer — agriculture — which can be greatly enhanced through investment and the implementation of modern farming techniques. Successful agribusiness investments stimulate agricultural growth through the provision of new markets and the development of a vibrant input supply sector. Most importantly, welltargeted investments, alongside close collaboration between governments, donors, entrepreneurs, the international community and investors can make a significant and lasting contribution to Africa’s 2050 goal of being able to feed itself.
This year’s Global Business Forum on Africa represents an important moment in time for the deepening investment and trade dynamic between the two regions. For GCC companies, governments and investors, it is an opportunity to enter a market with major opportunities and contribute to some of the region’s greatest challenges such as food security, trade balances, entrepreneurship, infrastructure and job creation.