Across the world, oil and gas producing countries are seeking to diversify their economies to reduce their dependence on hydrocarbons. This effort is particularly evident in the Arab world where nations such as the United Arab Emirates (WATER) are investing massively in sectors outside of fossil resources to prepare for their economic future beyond oil. It is in this context that the recent announcement of a commitment by the UAE to invest $3 billion in port development in Africa comes, marking a new phase of its economic expansion strategy on the continent.
Since the agreement with the Morocco, the UAE has made clear its intention to strengthen its presence in Africa. Their target, after the Maghreb, seems to be focused on sub-Saharan Africa. Emirati logistics and port development giant DP World recently announced ambitious plans to meet the growing demand for essential minerals like cobalt and lithium, which are essential for modern technology. This expansion notably envisages significant investments in countries such as Tanzania and the Zambiawhile exploring other opportunities in South Africa and at Kenya.
The UAE’s strategy, centered around improving logistics and port infrastructure, aims to reduce high supply chain costs in Africa, a continent where the cost of logistics services is notoriously high by global standards. This initiative could not only increase the efficiency of African mineral exports, but also boost local economies through job creation and improved infrastructure.
However, this expansion is not without challenges or competition. DP World suffered a setback in South Africa, losing a major contract to International Container Terminal Services, run by Filipino billionaire Enrique Razon. This setback highlights the competitiveness of the sector and the difficulties of navigating complex and regulated markets.
The probable consequences of these massive investments are multiple. In the short term, they can boost local economies through job creation and infrastructure improvements. In the long term, they could help redefine economic relations between the Arab world and Africa, strengthening South-South ties. However, this incursion could also raise questions about foreign influence in Africa and the sustainability of projects in terms of compliance with environmental and social standards.
Thus, as the Emirates continues to redefine its economic presence in Africa, the implications of these investments for the continent remain to be closely monitored, both for their beneficial potential and for the challenges they entail.
