Food can transform the Gulf’s trade relations with Africa

Eric Lafforgue/Alamy via Reuters Connect

In 2018 the government of Djibouti “nationalised” the Doraleh container terminal – and then handed it to China Merchants Port Company, a Chinese operator. The only problem was that the concession for the facility had previously been granted to DP World of the UAE.

A series of court cases followed. The dispute was partly settled in 2022 after a Hong Kong court ordered Djibouti to pay more than $600 million compensation to DP World. Other rulings are still pending in the United States. 

In Sudan, investment in the Merowe Dam has also been salutary. State-backed funds from Saudi Arabia, Abu Dhabi, Oman, Kuwait and Qatar put sizeable amounts into the hydro power-to-agriculture scheme in the north of the country. The results, according to a report by engineering and development academics in Spain, have proved sub-optimal.

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These episodes illustrate the difficulties of investing in jurisdictions where the rule of law is less than certain.

At the end of last month, however, Saudi Arabia hosted a World Economic Forum gathering that pointed to a more constructive future, following the successful launch of the African Continental Free Trade Area in 2019.

The Nigerian and Rwandan presidents and more than 35 ministers attended the WEF event in Riyadh, titled the Special Meeting on Global Collaboration, Growth and Energy for Development. 

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Africa is the fastest-growing continent both in demographic and economic terms. The African Development Bank expects economic growth across the continent of between 3.8 and 4.2 percent this year, against a global average of 2.9 to 3.2 percent.

Several countries are projected to record even higher growth, particularly Niger, Senegal, Libya, Rwanda, Ivory Coast, Ethiopia, Benin, Djibouti, Tanzania, Togo and Uganda. 

Over the past 10 years, the GCC states combined have invested more than $100 billion into African countries, according to the WEF. The UAE accounts for 60 percent of that total, followed by Qatar at 24 percent and Saudi Arabia at 7 percent. 

In 2023 alone, GCC governments and the private sector announced foreign direct investment packages in Africa totalling $53 billion. 

This makes geopolitical sense given the proximity of the GCC to Africa. The Gulf has in return become a business capital for African states. More than 21,000 African companies have a business presence in the GCC, in part thanks to the Gulf’s formidable aviation hubs, Middle East Eye has reported.

In 2023 alone, GCC governments and the private sector announced foreign direct investment packages in Africa totalling $53bn

The African population is forecast to grow from 1.2 billion people now to 2.5 billion people by 2050, so further growth can be safely expected. 

Yet all of this does not come without risk. Gulf investment has sometimes been described as “neocolonial”, especially when GCC countries swept up land resources for their own food security in the years following the 2007-08 global shocks in food prices.

Since then, however, investment has been more diversified. More GCC capital has flowed into energy, logistics infrastructure and water markets to support economic transition. AMEA Power is planning to build a hydrogen project in Kenya, International Resources Holdings has a 51 percent stake in a Zambian copper mine and the UAE has signed a pact with Kenya to invest in digitalisation and technology.

DP World, meanwhile, will invest $250 million upgrading the port in Dar es Salaam, Tanzania, in addition to many other ports it operates in Africa.

However, activists and some politicians in the country oppose the deal, which they say risks “violating Tanzania’s constitution and endangering national sovereignty”. 

Investment risks like these are likely to remain an obstacle for Gulf-Africa deals. 

GCC expertise can fight food-borne deaths

As populations and economies in Africa grow, so will the need for good-quality produce. At present, sub-Saharan African economies suffer the highest number of food-borne deaths and acute illnesses per year.

Over the past decades, the GCC states have invested heavily in food safety, imposing strict inspections on food supplies, which are mainly imported. Food processing has thus become an important industry, with annual growth rates exceeding 4 percent.

In other words, Gulf countries have extensive experience in the upstream food supply chain – and sub-Saharan Africa can be a prime export market for such produce.

For the GCC states, this is a soft power opportunity and an economic one. Engel’s law says that richer people spend more money on food, even as the percentage of income they spend on nutrition decreases.

More affluent people opt for proteins over nutrient-dense starchy food. The GCC has the production facilities and regulations to offer these services. Moreover, GCC states can transfer this technology to Africa.

Such efforts would hardly qualify as neocolonialism, but rather as a practical way to support Africa and garner trust among consumers by reducing mortality and disease.  

Martin Keulertz is a lecturer in environmental management at the University of the West of England, Bristol