Ballim, the Chief Economist of Standard Bank, believes that the GCC will play an important part in Africa’s future.
In a recent editorial, Goolam Ballim, the Chief Economist of Standard Bank laid out a series of ways in which the GCC is becoming increasingly involved in Africa’s development.
Increasing investments driving Africa’s development
Ballim highlighted the fact that over the past decade, the Gulf Co-operation Council (GCC) has emerged as a major investor in Africa, with a notable surge in trade deals benefiting both regions. From 2012-2022, foreign direct investments from the GCC into Africa reached an impressive USD 101.9 billion, spanning 628 projects, he said. Conversely, African investment in the GCC during the same period amounted to USD 3 billion, involving 141 projects.
Strengthened partnerships and bilateral trade
According to Ballim, the GCC, particularly the UAE, has been actively establishing partnerships with African nations. In 2018 alone, the Abu Dhabi Fund for Development financed over 66 projects in 28 African countries, with a total investment of USD 16.6 billion. This substantial contribution has played a significant role in driving Africa’s development agenda, creating job opportunities, improving infrastructure, and stimulating economic activity in the 28 countries involved.
Bilateral trade between the UAE and ten African countries has witnessed a remarkable growth trend. The UAE ranks among the top ten importers of goods and commodities from these nations. The Middle East/Africa corridor presents a robust economic opportunity, with proximity, travel, and logistics playing a crucial role in facilitating trade and access to services, according to Ballim. As a result, an increasing number of African businesses are selecting the UAE as their operational base, with 1,600 new African member companies registering with the Dubai Chamber of Commerce since October 2021. This trend demonstrates the vast potential for leveraging the UAE as a gateway to global export opportunities.
Energy and infrastructure
Energy and infrastructure investments have emerged as pivotal drivers of the partnerships between the GCC and Africa. These investments not only foster business growth but also contribute to the UAE’s broader net zero strategy, said Ballim. He highlighted Zambia as an example of the energy challenges faced by many African nations. The UAE recently signed a deal with Zambia to develop solar projects capable of generating an additional 2,000MW of electricity, meeting the state’s energy needs.
Despite certain African nations facing financing constraints hindering their rapid transition to cleaner energy sources, this presents an attractive opportunity for alternative energy companies and investors, said Ballim. Africa, with its immense potential for green investments in renewable energy technologies, offers an ideal destination. The region’s possibilities for micro- and off-grid renewable systems are vast.
In addition to energy, Ballim highlighted the investments the UAE and other GCC countries such as Saudi Arabia and Qatar have across various sectors in Africa. Ballim noted sectors including agriculture, mining, telecommunications, infrastructure, real estate, and hospitality. He also noted that, GCC nations have established banking and financial institutions, contributing to Africa’s economic growth. Land acquisitions have played a significant role in reshaping the economic landscape, bringing new opportunities to GCC countries. Notable deals include Saudi Arabia’s acquisition of 500,000 hectares of land in Tanzania and the UAE’s purchase of 400,000 hectares in Sudan.
Addressing food security
Recognizing the pressing issue of food security, the UAE, which heavily relies on food imports constituting 89% of its consumption, has taken concrete steps to mitigate vulnerabilities, according to Ballim. By establishing trade ties with Kenya, the UAE aims to address food security concerns while providing opportunities for Kenya to leverage its agricultural prowess.
Creating enhanced business collaborations
Ballim highlighted two primary factors hindering socioeconomic development in Africa are domestic buying power and limited access to capital. Initiatives such as the UAE-Africa Investment Forum and the UAE-Africa Business Summit have played a significant role in facilitating dialogue, networking, and fostering business collaborations. As a result, bilateral trade with the GCC is increasingly instrumental in addressing these challenges and shaping a more prosperous future for Africa. With an estimated population of 1 billion, projected to double before 2050, Africa represents the youngest, fastest-growing, and fastest-urbanizing region globally. The GCC is well-positioned to play a pivotal role in their future.
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