Business News
Transforming Africa’s economic landscape
Nov
Africa has always been an important market for the Gulf, dating back to the origins of the Silk Road trade route between East and West. Asian merchants would travel to Europe via the Arabian peninsula then East Africa, helping to cement relations between the neighbouring regions.
Global hub
Geographic proximity has meant Dubai remains an important place to do business for many African companies, according to Standard Chartered’s Saif Malik, Regional Co-Head, Global Banking, for Africa and the Middle East.
“Dubai has already established itself as a global hub for business and it continues to attract international organisations to set-up-shop in the emirate,” says Malik.
“African organisations are no different. In fact, we have already seen a number of corporations from Africa establish their global offices in Dubai.”
“Africa will be an important growth market for the UAE and, as we move closer to 2020, we would only expect this trend to continue.”
“Dubai’s strategic location, connecting Africa with Europe and Asia, provides African corporations with a gateway towards global expansion. Not to mention easier access to Africa’s two biggest trading partners: China and India,” says Malik.
“Dubai has a major success story to tell and show the world,” according to Emil Rademeyer, Director of Business Intelligence Provider, ABIQ. “Africa considers the Dubai model something to aspire to and is often the focal point of discussions surrounding development strategies.”
Relations also go both ways, says Malik.
“Just as the UAE has been a strategic market for African corporations, Africa will also be an increasingly important growth market for the UAE and, as we move closer to 2020, we would only expect this trend to continue,” says Malik.
“Africa considers the Dubai model something to aspire to and is often the focal point of discussions.”
Non-oil trade between Dubai and Africa has increased steadily in recent years, valued at Dh136.63 billion in 2018. This is attributed to expanding trade ties and growing business confidence between the two regions.
Air networks also continue to expand, there are now several carriers offering links between the UAE and the African continent.
Rademeyer says infrastructure is the limiting factor at the moment, something UAE companies can support considering their expertise in the field. “By 2050, 50 per cent of the world’s working age population will be based in Africa,” he says. “With the continent’s population well above 1 billion, the demand for basic infrastructure is significant.”
Recently, DP World inaugurated Kigali Logistics Platform, serving as a gateway to Africa, connecting Rwanda to neighbouring countries including Democratic Republic of Congo, Burundi, Uganda, Tanzania and Kenya. Chairman and CEO Sultan Ahmed Bin Sulayem says DP World is proud to support Rwanda in its ambitions to establish itself as a key services and trade hub for the region.
“As we inaugurate Kigali Logistics Platform, we are delighted by the impact it has already had on businesses and the community,” says Bin Sulayem. “We look forward to building on our strategic partnership with the Rwandan government to expand the logistics and trade sector.”
The UAE continues to show its support of African businesses and initiatives across all spectrums. One thing that is expected to transform Africa’s economic fortunes is the move towards a single continental market.
Single market
Currently, Africa is a patchwork of regulations and tariffs, and trade between countries has suffered as a result.
The key to unlocking the region’s economic potential is making it easier for Africa’s 55 countries to trade with one another.
According to the African Union, the Continental Free Trade Area (AfCFTA) is a project to bring together all African countries – comprising 1.3 billion people and a combined GDP of over $3.4 trillion – under a single continental market for goods and services, including free movement of business and investments, and expansion of intra-African trade.
Malik says maybe most importantly, the UAE has been a big supporter of the AfCFTA, which will truly be a game changer for the African markets.
Economic outlook 2020
According to the African Development Bank, Africa’s GDP growth is projected to accelerate to 4.1 per cent in 2020, higher than that of other emerging and developing countries (excluding China and India). North Africa is expected to account for
40 per cent of that figure; East Africa is the fastest growing region, is projected to achieve 6.1 per cent growth in 2020; Central African figures are recovering and growth in Southern Africa remains moderate.
The ADB’s latest economic outlook focuses on regional integration, encouraging cross-border cooperation such as shared financial governance frameworks; open skies policies; pooling power; free movement of people, goods, and services. It concludes that macroeconomic and employment outcomes are higher when growth is led by industry.