Spreading rumours and fake news is a serious offence in the UAE, with penalties ranging from Dh100,000 to Dh200,000 in fines and imprisonment
Dubai is fast emerging as the global banking, logistics and trade hub for African business, taking market share from historic hubs such as London, Paris and even Johannesburg. The emirate facilitates trade between Asia and East African states, where an offshore oil and gas exploration and production boom has boosted economic growth. It is no coincidence that major Chinese banks have all opened branches and subsidiaries at the Dubai International Financial Centre and Chinese trading companies use Dubai as their African regional head office.
However, Dubai’s African trade, estimated at $35 billion, has expanded beyond its traditional links with Egypt, the Arab Maghreb, Sudan, Ethiopia, Kenya and Uganda to span West African energy superpowers Nigeria, Angola and Ghana. Economists estimate African trade constitutes 10 per cent of the emirates trade volumes worldwide. Africa is the largest export market for consumer, electronics and IT equipment sourced from Dubai. Dubai’s vast aviation, container shipping and banking infrastructure makes it the ideal 21st-century hub for Africa. Emirates airline is now Africa’s de facto preeminent air freight and cargo airline as well as a catalyst for the rise in African passenger traffic to Dubai. The UAE’s oil exports are primarily headed to the industrial economies of Asia, mainly China, Japan, South Korea, Taiwan, Singapore and India. However, Africa’s oil and gas bonanza is a major strategic opportunity for Dubai’s banks and Abu Dhabi’s energy sovereign investment funds. While no UAE bank can match the pan-African reach of Standard Chartered, Barclays or even South Africa’s Standard Bank, East Africa is a natural growth market for trade finance, mergers (a Dubai trading firm did a takeover deal for Kenya’s leading auto dealership) and project finance.
Dubai is the logistics and procurement hub for many Chinese, Japanese, South Korean and Singaporean trading companies operating in Africa. Dubai now rivals Antwerp as a global diamond trading hub for African miners. The Bank of China’s syndicated lending and project finance team for African governments and clients is based in Dubai. While no UAE bank has built a pan-African branch network, unlike Moroccan and Qatari banks, this is possible in the future since bank credit flows often follow cross-border trade flows. As civil wars rage in parts of the Arab world, Africa is the next natural growth frontier for UAE banking. Dubai Islamic Bank is a strategic shareholder in Sudan’s Bank of Khartoum. Dubai private equity firm Abraaj Capital has made several acquisitions in East, West and North African countries.
Dubai’s linkages to Africa go back decades before the discovery of oil and the birch of the UAE Federation. The dhow trade with the ports of Zanzibar, Somalia, Kenya and Tanzania was once dominated by Arab, Gujarati and other regional traders. Somali cattle have been exported to the bazaars of the Gulf for centuries. Civil wars in Somalia, Ethiopia, Congo, Mozambique, Rwanda, Uganda and Sudan led many African traders, industrialists and bankers to migrate to Dubai. While China is the most important strategic investor in Africa’s energy, banking and infrastructure, Dubai plays a critical role as China’s trans-shipment and logistical springboard for its African trading networks that rivals both Hong Kong and Mauritius. The UAE’s major state-owned companies have committed significant capital to Africa, led by Emaar, DP World, etisalat, Mubadala, Ipic, Emirates and flydubai.
The importance of Africa to Dubai’s economy will only rise now that the emirate emerges as the world’s next multi-modal global logistics hub. DP World, which operates container shipping marine terminals in Djibouti in the Horn of Africa, Senegal in West Africa and Mozambique, the future Qatar of Africa (the fifth-largest LNG exporter in the world), is a natural acquirer of African port infrastructure assets. Such strategic investments mean Africa will become vital to UAE diplomatic, foreign trade and national security interests. Britain called its exit from the Gulf in the 1970s as a “East of Suez” policy. The UAE’s next diplomatic and economic policy in Africa can accurately be termed “South of Suez”!
Africa produces 12 per cent of the world’s oil and gas but consumes only three per cent of its energy, an indicator of the continents economic underdevelopment. Civil wars, terrorism (Boko Haram in Nigeria, Al Shabab in Kenya and Lords Army in Uganda are only the tip of the iceberg), corruption, power shortages, colonial ties to Paris and London, flight capital, ethnic conflicts, dependence on volatile commodities exports, 53 national borders (the African Union is nothing like the European Union!) are only some of the challenges that face Dubai’s merchants, financiers and government-owned companies in Africa.
Dubai’s successful track record in building a tourism hub, an international financial market, an aviation and logistics centre, a cross-border property development empire, one of the world’s top port management companies and fastest-growing airlines is directly relevant to Africa. Even Dubai’s experiment in e-government is relevant to an African crippled by corruption and delays in its foreign trade. Dubai can help boost intra-African trade.
The writer is a Dubai-based research analyst in energy and GCC economics. Views expressed are his own and do not reflect the newspaper’s policy.
Spreading rumours and fake news is a serious offence in the UAE, with penalties ranging from Dh100,000 to Dh200,000 in fines and imprisonment
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