Riyadh, Asharq Al-Awsat—Though often seen through the lens of poverty and homegrown conflicts, sub-Saharan Africa is fast becoming a major destination for global, and Gulf, capital. Investors are now rushing to secure a share of what has been over the past 10 years the world’s second-fastest growing region in economic terms, growing at an average rate of 5.1 percent over the decade.
Despite the real economic privations which still exist in Africa, large swaths of the continent’s population have been able to lift themselves out of poverty, with some 31 million households joining the world’s consumer class since the turn of the 21st century. Consumer spending in Africa’s 18 largest cities is set to reach 1.4 trillion US dollars by 2020, according to consultants McKinsey & Company, offering a massive opportunity for firms to capitalize on this growing consumer market.
Asharq Al-Awsat spoke to Hamad Buamim, director general of the Dubai Chamber of Commerce and Industry, about sub-Saharan Africa as a recent and lucrative destination for Gulf capital and opportunities for bilateral trade between the Gulf Cooperation Council (GCC) and African countries, on the eve of the launch of a new forum to promote economic links between the two regions.
Asharq Al-Awsat: What prompted the sudden Gulf interest in Africa, and what are the most important investment opportunities on which Gulf and African states can cooperate?
Hamad Buamim: The African continent provides the world with huge investment opportunities as a future destination for international investment. It is the home of seven out of 10 of the fastest growing world economies, and consumption in sub-Saharan states registered its highest-ever growth figures of 3.5 percent in the last two decades.
The infrastructure sector is one of the most prominent sectors in which the African and Gulf business communities can cooperate, as the Gulf states have extensive expertise in economic and infrastructure development, while the African continent needs serious investment in this field, in addition to other sectors which are productive, innovative, rich and essential.
Q: Can you give us some idea of the scale of Gulf investments in Africa that are needed?
What distinguishes Africa, as I said earlier, is that it is the land of new and huge investment opportunities, which explains the competition to win the largest share of these investments. The Gulf states represent an important part of the world and its economy, and it is important that they strengthen their relations with Africa due to its geographic proximity and the demographic and religious links [between them]. But in general, and according to World Bank estimates, Africa needs 93 billion dollars annually to cover its investment needs in infrastructure until 2020, while a third of this amount—31 billion dollars annually—is currently available to African governments. Therefore, Gulf companies can fill the void and invest in this profitable sector, with Gulf states allocating 61 billion dollars to investment in Africa annually. According to the Financial Times’s figures, Gulf investments in Africa in the period from 2003–2012 totaled 144 billion dollars, and that means investments are already there, and we as representatives of the business community in the GCC have to look for the best investment opportunities available to Gulf companies in Africa.
Q: What about opportunities for bilateral trade?
Of course trade represents another field of fruitful cooperation between GCC states and Africa. Consumer spending in Africa is expected to grow to more than 1.4 trillion dollars by 2020, which should open the door to Gulf companies to benefit from these prospects by exporting consumer goods to Africa.
Q: What about cooperation with African states in terms of food security, in light of the initiative by the Custodian of the Two Holy Mosques, Saudi King Abdullah Bin Abdulaziz, for agricultural investment there?
Africa remains an important area in the field of agricultural and food production, where the agriculture sector represents one of the most important sectors which Gulf states can look at to deal with the issue of food security. The availability of more than 44 million hectares [109 million acres] of arable land in Africa, with only one third being currently used, prompts us in the Gulf states to look for investment opportunities in agriculture and agricultural industries in Africa. I think the initiative of the Custodian of the Two Holy Mosques is characterized by its strategic dimension in this field, which means its success would mean a great gain and an important source of food for the Gulf region.
Q: In your opinion, what was the effect of the geographic proximity to Saudi Arabia on strengthening investment in Africa and what was its influence on either economies?
Saudi Arabia has made great strides in strengthening its investment and trade relations with African countries. Total Saudi trade with Africa recorded a significant increase of 40.2 percent in the period between 2005–2012, rising from 10.2 billion dollars in 2005 to 14.3 billion dollars in 2012. Saudi imports from Africa also increased from 1.6 billion dollars in 2005 to 4.5 billion dollars in 2012, according to data from UN Comtrade [a UN trade statistics database].
Saudi exports to Africa, meanwhile, reached 9.6 billion dollars in 2012. This interest is due to the geographic proximity of Saudi Arabia to Africa, and the expertise of Gulf states in the sectors essential for the development of African states, such as petroleum industries, infrastructure development, logistical services, communications, tourism and agriculture. Africa, for its part, is considered to be an important source of imports of agricultural products, raw materials and minerals.
Q: What is your plan to develop Gulf–African cooperation effectively?
We are in the process of launching the Africa Global Business Forum 2014 which will be held in Dubai over two days under the title, ‘New Realities – New Connections,’ on October 1 and 2. The forum will discuss investment opportunities between GCC states and the African continent, and will facilitate business operations between the two sides. It will be held under the auspices of Sheikh Mohammed Bin Rashid Al Maktoum [Vice-President of the UAE and ruler of Dubai].
The forum, which is organized by the Dubai Chamber of Commerce and Industry, will discuss the challenges and ways of cooperating in the field of infrastructure, and ways to overcome the obstacles facing bilateral trade, as well as the benefits [to Africa] from Gulf expertise in this field. It will also identify the impact of the position and status of Gulf states on investment links to Africa, and discuss the recent development of expertise in hosting major events, and the redrawing of the world map through the African gateway, in addition to discussing the role African countries are expected to play in the international economy over the next decade. I am confident that this forum will strengthen the status of the GCC states as a gateway to trade with Africa, because it is a leading economic platform in the region for encouraging dialogue between decision makers at the global level and [facilitating] effective participation by concerned parties in the African Union and other economic blocs, in order to reach a constructive dialogue at the highest level on the main strategies related to investment in Africa and the GCC states.
Q: How will the forum be able to accomplish all this?
The Africa Global Business Forum draws its strength this year from its participants, through the participation of 500 high-level decision makers from both public and private sectors, including presidents and ministers from African states, CEOs of prestigious companies, directors of private banks, sovereign wealth funds and private companies, international and Gulf business leaders, and presidents of African investment promotion agencies.
Among the most prominent participants in the forum so far are: Rwandan President Paul Kagame, Mozambique’s President Armando Guebuza, Ugandan Prime Minister Amama Mbabazi, Nigerian businessman Aliko Dangote, who is one of Africa’s richest men, as well as Sheikh Ahmed Bin Saeed Al Maktoum, chairman of Emirates Airlines and the Dubai Civil Aviation Authority, and chairman of Dubai Airports. [Also] Minister of Economy Sultan Al-Mansouri, Minister of State and Member Delegate to Dubai Expo2020 Reem Al-Hashimi, Member of the Board of Directors and CEO of Investment Corporation of Dubai (ICD) Mohammed Al-Shaibani, Chairman of DP World Sultan Ahmed Bin Sulayem, Chairman of the African Development Bank Group Donald Kaberuka, Chairman and CEO of the Blackstone Group Stephen A. Schwarzman, and AirAsia Group Chief Executive Officer Tony Fernandes.
This is an abridged version of an interview original conducted in Arabic.