UAE tops GCC as Africa’s key FDI provider

The country remains focused on the continent’s high-growth sectors such as infrastructure, energy, transport, logistics, and technology: Report


Issac John

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Published: Wed 9 Aug 2023, 10:19 PM

The UAE has become Africa's largest provider of foreign direct investment (FDI) among the GCC states, investing $59.4 billion in the continent’s key growth sectors in a decade. The latest report by property consultant firm Knight Frank shows that the UAE remains focused on the continent’s high-growth sectors such as infrastructure, energy, transport, logistics, and technology.

Leading African publications, including Business Insider Africa and The East African, reported that the rapid rise of the UAE as a key FDI provider places the second-largest Arab economy in the ranks of global giants, sparking competition in the African market. As a result of the impact of the US, India, Russia, and China on the continent, as well as Abu Dhabi's rise, there will be greater rivalry in the African market of 1.2 billion people.

Africa is fast becoming one of the most important markets for Abu Dhabi, which invested $5.6 billion in 71 projects in the continent in 2021, with the most significant being The Agtech Park in Egypt, the reports said. Dubai’s DP World operates seaports in Angola, Djibouti, Egypt, Morocco, Mozambique, Senegal and Somaliland.

According to White & Case, FDI flows from the GCC states to Africa totalled $101.9 billion on 628 projects between 2012 and 2022, whereas FDI flows from Africa to the GCC states totalled $3.0 billion on 141 projects. While FDI from the UAE to Africa totalled $59.4 billion during the time, Saudi Arabia came in second ($25.6 billion), followed by Qatar ($7.2 billion), Kuwait ($5 billion), and Bahrain ($4.2 billion). The top five destination countries for FDI inflows from the GCC to Africa between 2012 and 2022 are Egypt ($69.8 billion), Morocco ($4.6 billion), Algeria ($3 billion), Nigeria ($2.6 billion) and South Africa ($2.3 billion).

The top five sectors of FDI inflows include construction ($36.2 billion), environmental technology ($31.7 billion), energy ($10.1 billion), transport and warehousing ($6.6 billion) and agribusiness ($3.2 billion).

India is also attempting to influence trade on the continent. It is now one of the top five investors in Africa, with about $ 74 billion of investments. In 2022 India organized a two-day investment conference in New Delhi that included around 40 African officials from 17 different countries to talk about how India and Africa might better improve trade and investment. While India seeks to strengthen trade ties through a strategic investment conference, Beijing has pumped billions of dollars into Africa, building roads, bridges, and power installations in return for access to markets and resources, during the past two decades. It has an estimated portfolio of $154 billion worth of infrastructure projects. China’s trade with the continent increased 35 per cent to $254 billion in 2021 mainly due to an increase in Chinese exports.

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