DUBAI, A NEW DOOR FOR TRADE IN AND TO AFRICA
Undoubtedly, Dubai has become over the years a strategic economic hub for many international players. Recently, this city has also managed to establish itself as a springboard for trade from and to Africa. How have these evolved and how important is the relationship between the continent and the city of Emirati today? Elements of answers in this exclusive interview with the President of the Dubai Chamber of Commerce, His Excellency Hamad Buamim.
Interview by Szymon Jagiello, Financial Afrik’s European Affairs Correspondent
Over the last two decades, Dubai has become a major hub for international trade, which in 2017 amounted to 1302 billion UAE dirhams (approximately 304 billion euros). What place does Africa occupy in these operations?
H.B .: Africa certainly occupies a growing place both for the United Arab Emirates and for many Gulf partners. As evidenced by the figures from many research, the volume of direct investment from countries in this region to sub-Saharan Africa has turned around 9.3 billion between 2014 and 2015. To this is added 2.7 billion dollars for the first half of 2015. A sum never reached before in such a short period of time.
Which part of Africa is most focused on these investments and in which sectors in particular?
H.B .: It all depends on which actors we are talking about. If we talk about the countries themselves, the financing of the Gulf States, which is 10 times higher than for the rest of the continent, is mainly concentrated in North Africa. As for investments from the private sector, they have focused for the moment more on East Africa and in key sectors, such as tourism, commercial banks, supermarkets and cars. Thus, they invested in the manufacturing sector in Ethiopia or even recreation in Mozambique and Kenya.
What about trade in non-oil products?
H.B .: These have experienced tremendous development. As proof, trade between Dubai and Africa in non-oil products has so increased to more than $ 191 billion in the last five years.
How many African companies are currently operating in Dubai?
H.B .: In the case of our organization, the number of companies from this continent that register with our Chamber of Commerce continues to grow and have experienced a particular boom recently. For example, between January and October 2015 alone, more than 2,844 African companies out of a total of 13,434 companies affiliated with our institution. In other words, it means that one in five companies came from Africa. Even more broadly, more than 10,000 African firms have decided to settle here and 17,000 of them are operating today.
These figures reflect, in my opinion, the emergence of growing confidence on the part of African businessmen towards Dubai, as a platform to reach new markets. This is a momentum that we want to maintain and we are investing $ 27 million to this end to make investors more aware of the tremendous opportunities that come with trade with Africa.
Given the figures, can we estimate that Dubai will become the hub of trade between Africa and the rest of the world?
H.B .: It would seem presumptuous to say that we will become the main platform of world trade with Africa. However, the potential exists for Dubai to become one of the major hubs. In an international context that sees the appearance of a new Silk Road *, the geographical position of the city certainly gives it a strategic advantage to link a resource-rich Africa with capital-rich regions such as Asia and the Middle East.
Finally, it appears that investments by the Gulf countries have risen sharply in recent years. Nevertheless, many investors still see Africa as a risky market. Why ?
H.B .: Although telecommunications infrastructures and networks are developing, the lack of a qualified workforce impacts investments. Another challenge lies in the lack of appropriate legislation or the ambiguities that flow from it to investors in the Gulf. We can also mention the risks from an operational point of view, the non-respect of the clauses of a contract, the volatility of some currencies even the changes of governments and policies, especially related to the long-term projects. So many points mentioned by the members of our organization on the risks related to the African market.
Notes
* On an unprecedented scale, the new Silk Road project is investing a record $ 1 trillion – eight times the financial volume of the Marshall Plan. It covers 68 countries that account for almost two-thirds of the world’s population and one-third of the world’s GDP. Known by the acronym OBOR (for One Belt, One Road or “A Belt, a Road” in French), the initiative was described as “Project of the Century” by Chinese President Xi Jinping. It aims to build a land-based economic belt, connecting China to Europe via Central Asia, and a shipping route connecting Southeast Asia, the Middle East and Africa. Source: The National Center for Development Cooperation, or CNCD-11.11.11. Note written by Arnaud Zacharie entitled “The New Silk Road: The Chinese Marshall Plan”.
