The UAE has recognized the importance of the Red Sea as a trade route and is protecting its investments.
The UAE’s increasing focus on the Horn of Africa is driven by the strategic importance of the Red Sea as a vital maritime route. The country’s investments in this sector are safeguarded by an enhanced security presence, highlighting the UAE’s commitment to maintaining stability and protecting its economic interests. Analysts indicate that the UAE’s involvement in logistics and maritime trade is set to grow, supported by a robust security corridor in the region.
Key location and security measures
The Horn of Africa’s proximity to the Middle East, particularly its position opposite Yemen, underscores its strategic value to the UAE. Sayen Gohil, a Sub-Saharan Africa Country Risk Analyst at BMI, a Fitch Solutions Company, emphasizes that the UAE’s port expansions in the Red Sea and East Africa, coupled with its military presence in the Horn, the Red Sea, and the Gulf of Aden, align with its broader regional strategy. This presence is closely linked to the UAE-supported Southern Transition Council’s activities in Yemen.
The UAE has a national plan to focus on logistics and maritime trade as part of its diversification in a post-oil economy. This plan is likely to be paired with an increased security footprint in the Horn of Africa in the coming years. The importance of this maritime route is further underscored by recent Houthi attacks in the Red Sea, reinforcing the need for a consolidated UAE presence.
“Other emerging powers such as Saudi and Turkey are also seeking to ramp up engagement in the Horn, and it will be a defining theme for politics in the region and have an impact on intra-MENA relations for years to come,” Gohil said.
Economic ties and investments
Over the past decade, Africa has emerged as a significant investment target for GCC states, with the UAE leading the charge by investing approximately $60 billion, double the amount invested by Saudi Arabia. BMI estimates that the UAE’s assets under management globally exceed $1.8 trillion, with substantial investments channeled into strategic non-oil sectors both domestically and internationally.
Mariette Kas-Hannah, a senior analyst of country risk for the MENA region at BMI, highlighted that the UAE has signed numerous economic agreements with sub-Saharan African countries, strengthening its economic ties and enhancing its influence in the region.
Emerging trade partnerships
The UAE has positioned itself as the fourth largest investor in Africa, following the EU, China, and the US. In 2022, it became the third largest importer of goods from Africa, showcasing its growing role as a trading partner. Lara Wolfe, a senior analyst of country risk for sub-Saharan Africa, notes that the UAE is presenting itself as an alternative trade partner to the US and China.
A notable example is the UAE’s negotiations with Uganda for the development of an oil refinery, following the US’s removal of Uganda from the tariff-free Growth and Opportunities Act (GOA) program. Additionally, the East African Community’s decision to initiate free trade talks with the UAE signals a shift towards increased south-to-south cooperation.
Resource and security interests
The Democratic Republic of Congo (DRC) presents a significant opportunity for Emirati investments, particularly due to its vast untapped mineral wealth. However, the volatile security situation in the Eastern region, home to numerous armed groups, poses challenges. Gohil points out that the UAE has provided military aid to the DRC, aligning with its policy of combating Islamist groups spreading across Africa. This security cooperation is essential for the UAE’s economic integration into untapped markets.
Focus on renewable energy and food security
The UAE is also actively involved in financing renewable energy projects in sub-Saharan Africa. Dubai-based AMEA Power leads the efforts, developing over 1,200 MW of solar PV and wind projects. Sithobile Khoza, a senior analyst of country risk for sub-Saharan Africa, mentions that UAE companies have participated in 30 renewable projects, totaling $3 billion. The Abu Dhabi Fund for Development plays a crucial role in financing these initiatives, aligning the UAE’s financial packages to support renewable energy and food security projects in the region.
The UAE’s strategic investments and increased security presence in the Horn of Africa reflect its long-term vision of economic diversification and regional influence. As the country continues to expand its role in logistics, trade, and renewable energy, it is poised to become an increasingly important player in the Horn of Africa, shaping the region’s economic and political landscape for years to come.
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