UAE believes trade with Africa is worth the risk

Hardly a week seems to go by without UAE’s Amea Power reaching a new milestone on a solar or wind project in Africa.

The Dubai-headquartered renewable energy producer is blazing a trail across the electricity-starved continent with projects planned, underway or operational in 13 African countries, including Togo, Burkina Faso and Mozambique. 

Most recently, it launched construction on the 24 megawatt Ituka photovoltaic solar project in Uganda, the first internationally financed independent renewables project in the West Nile region.

Amea Power is one of many UAE-based companies showing strong appetite for Africa investments, beyond the well-established North African markets.

Others include e& (formerly known as Etisalat, telecoms), International Holding Company (mining), Masdar (clean energy), Metito (water), Elite Agro Projects (agroindustry), Mulk International (real estate), DP World and Abu Dhabi Ports Group (ports and logistics) to name just a few.

What these companies have in common is they appear to share a lower risk perception of Africa than their European and North American peers. 

This probably stems from their home market being situated in a volatile region. Middle Eastern business executives understand better than most that just because your neighbour is having a hard time it doesn’t mean your country is; only a fool would write off all 54 nations in Africa on the basis of a few coups in the Sahel!

What these companies also have in common is that their investments in Africa are being encouraged and supported by the UAE government at the highest level.

Aside from any geopolitical motivations, the authorities recognise that for the UAE’s economy to continue to grow and prosper, its homegrown businesses must expand beyond their limited domestic market of less than 10 million people. And Africa, with its population of 1.5 billion, immense development requirements and abundant natural resources, offers endless potential for investment and expansion. 

Amea Power

Back in 2013, Dubai Chamber launched the first in a series of global Africa business forums to bring together potential business partners, subsequently setting up satellite offices in Mozambique, Ethiopia, Kenya, South Africa and Nigeria, as well as Egypt. Trade between the UAE and sub-Saharan Africa has flourished as a result.

According to the UAE Statistics Bureau, trade (imports, non-oil exports and re-exports) with non-Arab African countries totalled US$17 billion in 2013. By 2023, this figure had grown to $65 billion.

In 2018, Etihad Credit Insurance (ECI), the UAE’s official export credit company, was established to support growth in overseas trade and investment. It has since supported projects in Egypt, Angola, Ghana, Zambia, Gambia and Somalia and has promised to commit $500 million to boost Africa’s clean energy transition.

The UAE has been the largest GCC investor in Africa over the past decade

This commitment forms part of a larger $4.5 billion Africa Green Investment Initiative by the UAE government, led by the Abu Dhabi Fund for Development (ADFD), announced during the Africa Climate Summit in Kenya in September 2023.

The ADFD says it has invested nearly $10 billion in development projects in 42 African countries over the past decade including solar farms in Togo, Sierra Leone and the Seychelles, a road project in Kenya, and hydropower and irrigation schemes along the Senegal river.

According to data shared by the World Economic Forum, the UAE has been the largest GCC investor in Africa over the past decade at $59.4 billion, and the fourth-largest foreign direct investor overall, behind China, the EU and the US.

Speaking at the Tomorrow’s Africa Summit at Dubai in September, Zimbabwe’s ambassador to the UAE, Lovemore Mazemo, said that most of the trade comprised exports of gold, diamonds and tobacco to the UAE. But he also revealed that 30 UAE-based companies were involved in projects in Zimbabwe, including the development of a new administrative capital city at Mount Hampden.

Mazemo said there were plenty of other opportunities for investors in real estate, tourism, energy, mining and agriculture.

Also addressing the summit, Uganda’s ambassador to the UAE, Zaake Wanume Kibedi, said he was preparing to take a group of UAE oil executives to Uganda this month to show them midstream and upstream investment opportunities.

Uganda discovered commercial quantities of oil in 2006, and $8 billion is currently being invested to develop the Tilenga and Kingfisher projects, with production slated to begin in 2025.

• IRH of Abu Dhabi to invest in South Africa
• UAE pledges $30m for Ghana’s biodiversity push
• UAE to build a new airport in Uganda

In December 2023, the Ugandan government signed a memorandum of understanding with the UAE’s Alpha MBM Investments (private investment office of Sheikh Mohammed bin Maktoum bin Juma Al Maktoum) for the development of a $5 billion refinery at Hoima, with a capacity of 60,000 barrels a day.

Three previous attempts with Russian, South Korean and US or European investors failed to secure financing for the project; negotiations on the key commercial agreements are ongoing.

Also in Uganda, Sharjah Chamber of Commerce is leading a project to build an international airport and 15 hotels to boost tourism to Kidepo National Park.

UAE trade with Africa is firmly set on a growth trajectory. 

In August, the UAE’s economy ministry announced it was launching a digital platform called UAE-Africa Gateway to facilitate partnerships and investments in 15 sub-Saharan African markets. Although the website does not yet work, it confirms a clear national-level policy to drive investment in Africa. Watch this space.

Liz Bains is a projects-focused business journalist covering Africa and the Middle East