African countries and the Gulf States are developing stronger economic ties driven by mutual interests in diversification, investment, and sustainable development according to new projections by the World Economic Forum (WEF).
Over the past 10 years, the Gulf Cooperation Council (GCC) — namely the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman have collectively invested over $100 billion in Africa, the Davos-based organisation said as African leaders participated this week in the Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh.
“The UAE has invested $59.4 billion. Saudi Arabia and Qatar have invested $25.6 billion and $7.2 billion respectively. Notably, during this period, the UAE has been the fourth largest foreign direct investor in Africa, behind China, the EU and the United States,” WEF said.
To explain the extent of this evolving partnership, GCC companies for instance bought a 51% stake in Zambia’s Mopani Copper Mines. In January, the government of Saudi Arabia also signed deals with four African countries to explore mining partnerships, and in 2020 Qatar Airways invested $1.3 billion to acquire 49% of RwandAir and a 60% stake in the Bugesera International Airport, which has been under construction since 2017.
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But away from these Foreign Direct Investment (FDIs), the Gulf states have already pledged $53 billion in investments in Africa, which are earmarked for critical projects addressing food security, and energy.
“These investments and partnerships are timely and much needed. According to Africa Finance Corporation, Africa has a $150 billion infrastructure funding gap, and UNCTAD’s World Investment Report concluded that FDI flows to Africa declined to $45 billion in 2022 from the record $80 billion set in 2021.” WEF said.
The partnerships are driven by business expectations from the Africa Continental Free Trade Area (AfCFTA) and a growing decline in loans from China, one of the continent’s biggest lenders. According to data from the Global Development Policy Center, China’s investments and loans in Africa have dropped from $28.5 billion in 2016 to $995.5 million in 2022.
The AfCFTA it seems, offers a way out as companies from the Gulf States can have access to a “larger, unified African market.”
“The African Continental Free Trade Area (AfCFTA) creates a single market projected to grow to 1.7 billion people and $6.7 trillion in consumer and business spending by 2030. The preferential trade agreement will increase international exports and intra-African trade, unlocking tremendous opportunities for local and global businesses to enter into and expand throughout new markets across the continent,” WEF said.
