Africa: The Newest Arena for Cash-Rich Arab Rivals

UAE’s Strategic Move: Asserting Influence in Africa’s Geopolitical Landscape

In a bid for enhanced geopolitical clout, the United Arab Emirates (UAE) embarked on an ambitious promise in 2021 to expand aggressively into markets beyond its traditional spheres of influence. Since then, it has pledged substantial investment in African economies, surpassing commitments made by any other country. Now, the UAE finds itself vying for influence alongside established players such as China and France.

With both governmental and private sector involvement, the wealthy Gulf state has significantly increased its presence in Africa. A recent notable instance involved a $35 billion deal to bolster Egypt’s economy—an amount equivalent to 7% of the UAE’s annual economic output. According to an anonymous official familiar with the Egypt bailout, the UAE stands prepared to make similar investments in other African nations should new opportunities arise.

Although Foreign Direct Investment (FDI) numbers primarily reflect pledged funds rather than actual expenditures, Africa’s largest bank is confident that the UAE will emerge as one of the continent’s most significant sources of foreign investment within the next five years.

Rassem Zok, CEO of Standard Bank Group Ltd Middle East and North Africa, emphasized that growth trajectories are not linear. He anticipates a substantial surge in investment from the UAE, projecting growth rates in the thirties and above over the next two-to-three years.

As China’s infrastructural funding decreases and Western engagement fluctuates, Abu Dhabi has supplemented its financial investments with a concerted diplomatic effort. This approach mirrors, albeit to a lesser extent, efforts by neighboring states such as Saudi Arabia and Qatar. The UAE’s ambitions have transcended its historic sphere of influence in North Africa, extending from the Horn of Africa to every corner of the continent.

Andreas Krieg, a lecturer at King’s College in London, described the UAE’s approach as “network-centric statecraft.” In pursuit of influence, the Emiratis position themselves as gateways into Africa for global powers such as Russia, China, and Western countries.

In 2022, the UAE pledged $52.8 billion in foreign direct investment, surpassing contributions from Beijing by 20 times and those from the US by seven. Although this figure dipped to $44.5 billion in 2023, it remained nearly double that of China’s investment, securing the UAE’s position as a significant investor in Africa.

These investments primarily focus on renewable energy, logistics, technology, real estate, and agriculture. Following the COVID-19 pandemic, the market experienced a reevaluation of valuations, presenting enticing entry points for investors.

Last month’s Egyptian bailout exemplifies the UAE’s strategy of extending major financial lifelines to African nations. Additionally, Abu Dhabi has signed numerous investment treaties with countries such as Zambia, Zimbabwe, and the Democratic Republic of Congo.

Furthermore, the UAE has wielded influence in Africa’s domestic political affairs by backing various factions in conflicts across the continent. These involvements underscore the UAE’s multifaceted approach to enhancing its influence in Africa.

Emirati companies have primarily targeted Africa’s more developed economies, where robust infrastructure and economic expansion drive demand for energy. Notable recipients of Emirati investment include Egypt, Morocco, South Africa, and Kenya, the latter of which signed a special free-trade agreement with the UAE in February.

Renewable energy projects feature prominently in the UAE’s investment portfolio, with Dubai-based AMEA Power LLC allocating $1 billion for such projects in Africa this year. This investment is crucial for addressing energy deficits, as nearly half of sub-Saharan Africans lack access to electricity.

Furthermore, the UAE’s focus on resources such as copper, lithium, and cobalt aligns with its aspirations for green energy transition and economic diversification. Notably, the UAE’s International Holding Company acquired a majority stake in Zambia’s Mopani Copper Mines for $1.1 billion, signaling its commitment to resource development in Africa.

The UAE’s engagement with Africa extends beyond financial investments, encompassing strategic acquisitions, diplomatic interventions, and efforts to address food security challenges. Through these multifaceted approaches, the UAE aims to solidify its position as a key player in Africa’s evolving geopolitical landscape.