Africa is fast emerging as one of the most important markets for Dubai investors and businesses.
As Dubai investors increasingly leverage their proximity and fast access to Africa, the emirate has become a major trading partner for the continent.
Dubai has successfully established itself as one of the main transit points for expanding Gulf commercial dealings with Africa, with annual non-oil trade between the emirate and the continent growing to Dhs91.3 billion dirhams ($25 billion) in 2013 – up 141 per cent from Dhs37.9 billion in 2008.
Key areas of non-oil trade include mining, agriculture, infrastructure and telecommunications, as well as project funding.
According to the Dubai Chamber of Commerce and Industry (DCCI), 6,000 African companies are now operating from Dubai – that’s 171 per cent more than five years ago.
Dubai’s free zones, which make it straightforward for companies to set up and offer tax advantages, have also made the emirate alluring to African businesspeople. Dubai International Finance Centre, in particular, offers an attractive gateway into Africa, both for local firms and global firms.
“In the next 10 years we will be looking to new geographical frontiers in China and Africa,” Essa Kazim, DIFC governor, told local reporters in July.
“We have been very successful in attracting the top companies in finance and trading. These companies of the new global economy see Dubai as the centre of several connecting regions, including Asia and Africa.”
Afshin Molavi, a fellow of the Foreign Policy Institute, writes in his report ‘The Emerging Dubai Gateway to Africa’ that “a new generation of African traders and migrants using Dubai as their base to trade with the continent. They are using Dubai in much the same way mainland Chinese traders used Hong Kong or Singapore in the 80s and 90s: a place to trade more efficiently with the ‘mainland’.”
He also quotes the scholar Akbar Keshodkar as saying: “One of the major attractions Dubai offers to traders from Africa is that it has developed as a prominent location for goods transit and re-export, efficiently facilitating re-distribution of goods throughout the region.”
At the Africa Global Business Forum held in Dubai in October, UAE Prime Minister and Dubai Ruler Sheikh Mohammed bin Rashid al Maktoum hosted six heads of state from West Africa, in an event that led to pledges of $19 billion in infrastructure investments by UAE companies in 17 projects spanning railways, roads, bridges, and power stations.
Mohammad Ebrahim Al Shaibani, head of the emirate’s sovereign wealth fund (SWF), Investment Corporation of Dubai (ICD) said at the forum: “We have been looking at Africa for a long time.”
In a notable move in September, ICD bought a $300 million (Dhs1.1 billion) stake in Nigerian firm Dangote Cement.
Around the same time as the Dangote Cement deal, Emirates airline, which is part of ICD, announced it is taking over the management of Angola’s national airline, TAAG, in a ten-year deal with the African nation’s government.
Tim Clark, Emirates president, told reporters at the forum that the government-owned airline intends to fly to 30 destinations in Africa by the end of the decade. It currently operates to 22 African destinations.
With such a range of industry partnerships forming between Dubai and Africa, the coming years will likely see an influx of project deals across many sectors.