So investors haven’t given up on Africa after all. Flush with oil wealth and looking for new homes to place it, Gulf money men are eyeing Africa north and south of the Sahara.
More than three decades after the Gulf’s first oil boom brought with it hopes of new investment in the world’s poorest economies, petrodollars are now being channelled through investment funds and into major telecoms, real estate and energy projects across Africa. With any luck, the new capital flows might help offset the shortage of development assistance.
In some cases, private funds are reaching the local businesses that can create jobs and promote a new generation of entrepreneurs and managers: the Abu Dhabi Fund for Development, for example, is making direct investments in private-sector projects in Egypt, Morocco, Tunisia, Algeria, Sudan, Somalia, Mauritania and Djibouti.
Following a decade of economic reform, more efficient African economies offer another route for Gulf money – lucrative business deals. Gulf-Africa trade exchanges have been increasing at unusually rapid rates – underlined by a 12-fold increase in exchanges between Dubai and Ghana between 2000 and 2004.
Investors are excited by the expanding telecoms sector. “Prepaid telephones are just what Africa needed, and so did we, to get paid,” comments one Beirut-based banker.
Emirates Telecommunications Corporation (Etisalat) concluded a strategic partnership with west African mobiles operator Atlantique Telecom in 2005, which gave it direct access to Benin, Burkina Faso, Gabon, Niger, Togo and Cote d’Ivoire. Kuwait’s Mobile Telecommunications Company paid $3.4 billion last year for a stake in Celtel, the go-ahead operator that has established GSM networks in 13 African countries.
In May, MTN – Africa’s largest mobile phone operator in customer numbers, controlled by South African empowerment kingpin Cyril Ramaphosa – bought the Dubai-based Investcom for $5.5 billion, creating further Gulf/Africa telecoms market synergies.
Business exchange with north Africa continues apace, eased by political, cultural and linguistic ties. These have been aided by high-level personal connections between rulers. Other business alliances go back decades: Algeria’s president Abdelaziz Bouteflika spent part of his long exile cultivating relationships with Gulf notables; their families are now investing heavily in his country.
Energy investments
In a business Gulf businessmen know well, new opportunities are being seized in African energy markets, especially on the under-explored margins – such as Senegal and its neighbours – that have become more enticing as oil prices have spiralled.
A major winner in Libya, where there has been intense global competition in oil exploration, is Liwa Energy, a fully owned subsidiary of the Abu Dhabi government’s Mubadala Development Corporation, headed by powerful Crown Prince Sheikh Mohammed Bin Zayed Al-Nahayan. Liwa partnered Occidental Petroleum Corporation and Australia’s Woodside Energy to take nine out of the 15 exploration blocks offered in Libya’s first post-sanctions oil auction. European majors with a history of involvement in Libya were left reeling after failing to win a single contract in the round.
Gulf-based energy groups are staking a place in west African markets, which have become more viable as energy prices have climbed. Jebel Ali, Dubai-based Kampac Oil has negotiated for blocks in Ghana, Chad, Congo, Niger and Angola. It already has two concessions in Senegal – where the UAE-based Al-Thani Investments also has interests – and has signalled it will list its Louga onshore and St Louis offshore assets on a major international market.
real estate & tourism
Tourism and real estate are a major lure. Dubai’s state-owned Emaar Properties – now the world’s largest real estate developer in terms of market capital – started with the estimated $4 billion Cairo Heights development in August 2005, and has since expanded into Morocco and Tunisia. Casablanca’s highways are now lined with Emaar posters promising a brighter future; among its developments is a “four-season” golf and ski resort in the Atlas mountains, which it claims is a first in Africa. In March, Emaar and Dubai Holdings signed 10-year deals worth $9 billion with the Moroccan court, when Emaar president Mohammed Ali Alabbar – one of the architects of the Dubai boom – said his company would create 30,000 jobs in Morocco.
Morocco has become a property boom centre. Less apparent are locations like Djibouti, where another major Dubai property developer, Nakheel Hotels and Resorts, will be teaming up with Kempinski to open its first international hotel. Dubai Ports is investing $300 million to develop a new port terminal in the Red Sea city long dominated by its French military base. Dubai’s glitz is coming to an outpost more usually associated with the Foreign Legion.