- Over the last decade, GCC countries have collectively invested over Sh13.2 trillion in the continent. The UAE has invested Sh7.8 trillion.
- Saudi Arabia and Qatar have invested Sh3.4 trillion and Sh953.2 billion, respectively.
Image: PCS
A new era could be in the offing following a recent agreement between Africa and the Gulf that could see the latter challenge Europe and Asia as leading investors in the continent.
Meeting in Riyadh recently for the special meeting on global collaboration, growth and energy for development, several African heads of state and ministers consented to further deals in diversification, investment and sustainable development between the states.
The latest agreement seeks to grow Foreign Direct Investments (FDI) from the Gulf Cooperation Council (GCC), namely the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman.
Shaped by geographical proximity, the deal is focused on addressing critical issues such as food security, the energy transition and infrastructure development.
Latest data from FDI Markets show companies in the GCC announced 73 FDI projects in Africa worth more than $53 billion (Sh7 trillion) last year.
This is from the lows of $10 billion (Sh1.3 trillion) in the past almost 10 years.
Over the last decade, GCC countries have collectively invested over $100 billion (Sh13.2 trillion) in the continent, with the new deal seeking to push the figures higher in the medium to long term.
The UAE has invested $59.4 billion (Sh7.8 trillion).
Saudi Arabia and Qatar have invested $25.6 billion (Sh3.4 trillion) and $7.2 billion (Sh953.2 billion) respectively.
In the period under review, the sum of imports and exports between UAE and sub-Saharan Africa for instance, increased by over 30 per cent, and trade between Saudi Arabia and sub-Saharan Africa is now 12 times the value it was a decade ago.
Notably, during this period, the UAE has been the fourth largest foreign direct investor in Africa, behind China, the EU and the United States.
According to the UN Trade and Development (UNCTAD), the European investors remain, by far, the largest holders of FDI stock in Africa.
This is led by the United Kingdom ($60 billion), France ($54 billion) and the Netherlands ($54 billion).
Notably, the 2023 world investment report shows FDI flows to Africa declined to $45 billion in 2022 from the record $80 billion set in 2021.
The new look and focus into the Arab market seeks to avert the declining figures, with the continental free trade area acting as catalyst.
“The Africa Continental Free Trade Area (AfCFTA) will accelerate this prospect by offering GCC companies access to a larger, unified African market,” the World Economic Forum says in a statement.
“Officially launched in 2021, the AfCFTA creates a single market projected to grow to 1.7 billion people and $6.7 trillion in consumer and business spending by 2030.”
It adds that 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.
Kenya in March signed a Memorandum Understanding (MOU) with the United Arab Emirates on a comprehensive framework for investment co-operation in digitalisation and technology.