ZHANN MEYER: The United Arab Emirates and Africa — partners in growth and job creation

The United Arab Emirates (UAE) is the fourth-largest investor in Africa globally, and the biggest among the Gulf Co-operation Council (GCC) states (which include Saudi Arabia, Kuwait, Qatar, Bahrain and Oman). About $1,2bn was invested into Sub-Saharan Africa between 2016 and 2021 by the UAE alone, making up 88% of the GCC’s total investment during the same period.

The reality is that the UAE — which imports 80%-90% of its food — requires an effective, ongoing partnership with Africa to sustain its food security, particularly against the backdrop of the continued effects of the Russia-Ukraine conflict on commodity supplies and prices. Of course, a strategic relationship with the subregion would make sense given that Sub-Saharan Africa is home to 15% of the world’s Muslim population and 40% of the region identifies as Muslim.

It is no surprise then that since October 2021, 1,600 African companies have  registered with the Dubai Chamber of Commerce, highlighting the city’s prevalence as a trade hub and convenient entry point into the continent. While these stats speak to enhanced economic co-operation, what exactly are the benefits for Africa and each country’s national growth priorities?

Commodity traders are increasingly seeking to use GCC countries, specifically the UAE, as a hub for African trade. Why? The UAE has historically been a bastion of calm and peaceful business, and for decades has ensured that its economy is kept open with clear flows of capital and unhindered repatriation of profits. Blessed by geography and supported by logistical advantages as well as abundant oil and gas, the UAE is adding targeted legal, tax and infrastructure policies to create a commodity trading hub that rivals those of Singapore, London and Geneva.

Mutual economic growth

If there is one thing businesses like, it is stability, consistency, transparency, progressiveness and pragmatism — principles the UAE has prioritised as part of its extensive growth ambitions. Unsurprisingly, the UAE has established the most bilateral trade treaties with Africa as a leading exporter, and it is one of the top 10 importers of goods and commodities from as many as 10 African countries, including Kenya. It is estimated that the UAE’s total non-oil trade with Africa is worth $25bn per annum, and this figure is expected to rise in coming years as the UAE authorities make concerted efforts to further diversify their trade and business interests on the African continent and drive the potential for mutual economic growth.

The UAE has invested extensively in African primary agriculture as well as in secondary processing and related infrastructure. One critical African export is lucerne, a plant that is grown for animal feed and vital for the UAE’s dairy industry. Raw milk cannot be transported fresh across large distances and has to be produced locally. With the US imposing heavy taxes on its animal feed exports, Africa has become an even more important trade partner. Consequently, UAE investments have been directed towards the cultivation of lucerne in countries such as Ethiopia and SA.

Here, local producers are not only able to reap the benefits of foreign currency earnings, but are also able to capitalise on technology and skills transfer on a commercial scale. This includes training focused on the latest precision-farming techniques and the empowerment of small-scale farmers, with a view to increase yield and quality with obvious mutual benefits to both producer and off-taker. These projects also allow ample opportunity for farmers to plant food crops such as maize alongside their cash crops, ensuring food security and positively affecting livelihoods.

What’s more, SA is one of the five largest producers of Halal-certified meat worldwide, with the UAE being an important destination for prime cuts supplied to the hospitality industry. SA meat is known for its quality and affordability, making the country a prime competitor to other beef-producing nations, such as the US and Australia. While this significantly enhances trade deals, it also stimulates much-needed job creation within the local industry. It goes without saying that for this to be feasible, bilateral treaty agreements and biosecurity protocols need to be in place and regulated carefully.

An essential component of forging working partnerships with UAE companies is to have a bank that understands these investment flows into, and trade flows from, Africa and is able to assist the continent’s agricultural role players in leveraging opportunities appropriately. 

Where to now? Going forward we are bound to see more long-term commitments and agreements between the UAE and Africa as well as an increase in the number of commercial GCC-sponsored and funded agriculture projects across the continent.

While strengthened economic relations and co-operation are the end goal, shared value and careful consideration of sustainable consumption, production and in-country food security must also play a pivotal role in these engagements for equal economic development to become a reality.

• Meyer is head of agricultural commodities at Nedbank Corporate & Investment Banking.