Historically, the Arabian Peninsula played a key role as a maritime hub connecting East African trade routes to the Middle East. Today, three Gulf Cooperation Council (GCC) members — Qatar, Saudi Arabia, and the United Arab Emirates (UAE) — are asserting themselves as influential middle powers, with stronger economic links across Africa central to their ambitions.
Gulf enterprises and institutions are expanding their footprint in Africa’s resource sectors spanning oil, gas, mining, and agriculture, and are increasingly involved in transport infrastructure, logistics services, and renewable energy. Nonetheless, Africa-Gulf relations illustrate the complexity of balancing opportunities and risks in the evolving multipolar era.
Beyond the ‘extended neighborhoods’
The Gulf States have long regarded North Africa and the Horn of Africa as ‘extended neighborhoods.’ Traditionally, the more robust connections between the GCC and Africa have been with North Africa, with a notable emphasis on Egypt. Yet, despite geographic proximity, shared heritage, and migration and trade links, the ties between the GCC countries and these two sub-regions were not particularly strong until recently.
However, over the past two decades, Gulf Arab engagement in North Africa as well as the Horn of Africa and Red Sea Rim has intensified. Today, the GCC countries — primarily Saudi Arabia, the UAE, and Qatar — are vigorously pursuing economic opportunities and seeking to project their influence across the entire continent. They have increased the number of their embassies in Sub-Saharan Africa (SSA) to support their commercial interests.
Trade between the Gulf states and Africa has recorded steady growth in recent years. The Economist Intelligence Unit reported a significant increase in the value of bilateral trade, reaching a record $154 billion in 2022, placing the GCC well ahead of the US and India as well as closing the gap with China and Western Europe. While oil and gas dominate GCC exports to Africa, and mining products are key imports, trade in other sectors is expanding. The Africa Continental Free Trade Area (AfCFTA) is expected to further boost these ties by offering access to a larger unified African market.
All GCC states, except Saudi Arabia, have concluded bilateral investment treaties (BIT) with African partners. Meanwhile, greenfield foreign direct investment (FDI) announcements by Gulf investors in Africa have surged in recent years, driven by ambitious plans to produce renewable energy like green hydrogen and develop infrastructure such as ports, warehouses, and data centers. According to fDi Markets, GCC companies announced 73 FDI projects in Africa worth more than $53 billion last year. The only year with higher FDI capital expenditure from GCC investors was 2022, with $60 billion across 83 projects.
The UAE and Saudi Arabia are responsible for roughly 85% of the more than $100 billion that GCC countries have ploughed into the continent over the past decade. In fact, the UAE has emerged as one of the largest investors in Africa, with pledges far surpassing those from China, whose infrastructure funding has declined, as well as those from France, the UK, and the US. And Dubai has become a business hub for Africa, hosting 26,500 Africa-registered companies.
Gulf capital flowing into Africa on the rise
Gulf investments in Africa are primarily directed toward three areas: natural resources (hydrocarbons, mining, and agriculture), port infrastructure and transport nodes, and renewable energy and technology.
1. Focusing on Africa’s resources
Leveraging their project finance and expertise, oil and gas heavyweights Saudi Arabia, the UAE, and Qatar are expanding their footprint across Africa’s energy value chain.
During the Saudi-Arab-African Economic Conference last November, Saudi Minister of Energy Prince Abdulaziz bin Salman signed agreements targeting oil sustainability with Chad, Ethiopia, Nigeria, Rwanda, and Senegal. Saudi Aramco plans to invest in the revitalization of four state refineries in Nigeria which have been non-operational for years, forcing the country to rely on imports for fuel.
Last December, the UAE agreed to contribute financially and technically to the construction of an offshore gas pipeline, which will transport Nigeria’s gas to Morocco — the latter having emerged as a major destination for Emirati investments, attracting a total of $30 billion.
It was reported in April that negotiations had “intensified” with Dubai-based Alpha MBM Investments positioned as the lead developer and investor in the proposed construction of a $4 billion refinery in Uganda. The next month, Abu Dhabi National Oil Company (ADNOC) announced that it had acquired Galp’s 10% equity stake in Mozambique’s Rovuma LNG project, complementing the company’s efforts to expand its lower-carbon LNG portfolio.
In addition, UAE state-owned oil and gas giants such as ADNOC and the Emirates National Oil Company Group (ENOC) are broadening their storage and distribution networks across Africa, targeting high-potential markets for boosted refined product sales. In January 2023, ENOC and Tanzania’s Ministry of Energy (MoE) signed a Memorandum of Understanding (MoU) to develop a receiving and storage facility for oil and gas products. Two months later, ADNOC, Aramco, and ENOC signed a contract to supply petroleum products to Kenya. ADNOC and Aramco are also among multiple companies said to be evaluating bids for Shell’s downstream assets in South Africa.
Qatar Gas has teamed up with Jeniks Energy Group to coordinate investment in Africa’s gas sector, focusing on gas reserves acquisition. In May, QatarEnergy and TotalEnergies announced they would buy participating interests in offshore oil and gas blocks in South Africa as part of their joint venture plans to develop the Orange basin area in neighboring Namibia. More recently, QatarEnergy sealed a deal with Exxon Mobil to acquire a 40% participating stake in two ultra-deepwater exploration blocks off the coast of Egypt.
The Gulf countries are burrowing into Africa’s mining industry, notably including its critical minerals sector.
Amid the global drive for sustainable energy solutions and China’s dominance in mineral processing, Gulf nations are aggressively investing in securing copper, nickel, and other minerals needed for power transmission lines, electric vehicles (EVs), and renewable energy.
In July 2023, the UAE and the Democratic Republic of Congo’s (DRC) state-owned Sakima mining company signed a $1.9 billion deal to develop four critical mineral mines, though specific details are undisclosed. In December 2023, International Resources Holding (IRH), the mining investment arm of Abu Dhabi’s International Holding Company (IHC), acquired a 51% stake in Zambia’s Mopani Copper Mines for $1.1 billion. That month, IRH partnered with Jubilee Metals Group in a copper recovery and processing venture in Zambia.
Like the UAE, Saudi Arabia, which is looking to increase mining’s economic contribution from $17 billion to $75 billion by 2035 and to become a processing hub for battery minerals, has emerged as a prominent player in the African mining industry. The Kingdom has signed agreements with four African countries to explore mining opportunities. Saudi Arabia’s Ma’aden — majority owned by the Public Investment Fund (PIF) and the largest multi-commodity mining and metals company in the Middle East — has expanded its reach into Africa, with a network of operations in Malawi, Mozambique, Zimbabwe, and Zambia.
Ensuring food security is a critical priority for GCC countries, which have emphasized agro-investments in Africa.
Traditionally, the Gulf Arab countries have managed their food supply risks effectively. However, the 2007-2008 food crisis — marked by food export restrictions in over 30 countries — spurred efforts to ensure a steady supply of food. The COVID-19 pandemic and Ukraine-war related disruptions of global food supply chains have revived Gulf concerns about food security.
For over a decade, Saudi Arabia and UAE have led the way in investing in African agriculture, in line with their food security policies, through contract farming, the acquisition of agricultural enterprises, and the leasing or purchase of large expanses of farmland. In the past few years, the pace of land acquisitions has accelerated. Emirati companies such as Dubai Investments and Abu Dhabi-based E20 Investments, for example, have secured agricultural land in Sudan, Zimbabwe, and Angola. The UAE has 14 pending land acquisition deals, most of them in Africa.
The UAE and Saudi Arabia are now evolving into countries which have full control of the food supply chain, from crop production to the processing, export of the final product, and its sale.
Gulf companies are developing food and agriculture portfolios with an eye toward generating strong financial returns while bolstering food resilience. Al Dahra Agricultural Company, half owned by Abu Dhabi’s sovereign wealth fund ADQ, runs four extensive agricultural projects in Egypt, primarily serving the local market with wheat and other food crops. Last October, the UAE’s Elite Agro Projects announced plans to establish a wheat farm in Ethiopia and to build a tea factory in Uganda. This past April, ADQ set up a finance and investment framework with Kenya, targeting several strategic sectors, including food production.
Like the UAE, Saudi Arabia’s and Qatar’s strategies for food security involve increasing domestic output while investing in global supply chains to obtain privileged access to vital international commodities. Several Saudi delegations have recently traveled to South Africa and Nigeria, as well as several countries in East Africa to explore agricultural investment opportunities. Companies such as Gulf Saudi Star Agricultural Development and Qatar’s Hassad Food have pursued agribusiness deals in Ethiopia, Uganda, and elsewhere.
It is important to note that UAE’s aspires not just to produce its own food but to become a food trade logistics hub. Accordingly, the various Emirati ventures in Africa’s food and agricultural sectors are increasingly being tied to the UAE through a network of ports and logistics platforms.
2. Targeting port infrastructure and transport nodes
Investing in port infrastructure, managing crucial transport nodes, and partnering with or investing in African transport and logistics companies has been a cornerstone strategy for GCC states.
UAE is at the forefront in developing closer ties with the African transport sector and has a controlling stake in numerous African ports. DP World, the Dubai-based logistics company, has committed over $1.8 billion to Africa in the past decade and plans to inject an additional $3 billion in the coming years. Currently, DP World is one of the largest port operators in Africa. Its marine ports, inland cargo terminals, and other operations are located throughout Africa. In March 2022, DP World acquired the South Africa-based Imperial Logistics — the continent’s biggest distributor — for $890 million. Last October, DP World entered a 30-year concession agreement with the Tanzanian government to operate the multi-purpose Dar es Salaam Port. The next month, DP World broke ground for its $80 million logistics park, which will be integrated with its existing multipurpose terminal at Ain Sokhna Port in Egypt. In June, the company announced plans to invest $3 billion to develop new port and logistics facilities in Africa.
In the past few years, Abu Dhabi has boosted its own investment in African port infrastructures. Abu Dhabi Ports Group has signed concession agreements and cooperation deals with Sudan and Tanzania (2022), Angola, Republic of Congo-Brazzaville and Egypt (2023).
In June, the Federation of Saudi Chambers signed a 92-year contract with Djibouti Ports and Free Zones Authority to develop a logistics free zone at the Port of Djibouti, aiming to enhance the Kingdom’s product and export flow through Africa’s gateway. Investment financing from the Saudi Fund for Development (SFD) has targeted various sectors in over a dozen African countries. Recently, SFD joined forces with the Africa Finance Corporation (AFC) in identifying and co-financing infrastructure projects across the continent.
3. Venturing into renewable energy and technology
Gulf countries are broadening the scope of their activities in Africa’s energy sector, with a focus on renewables, hydrogen, and sustainable fuels.
In late 2022, Riyadh-based ACWA Power signed an MoU with Industrial Development Corporation (IDC) of South Africa to explore a partnership in the development of green hydrogen and its derivatives. The same year, Masdar, Abu Dhabi’s state-owned renewable energy company, acquired a stake in South Africa’s Lekela Power and is currently partnering with Egypt’s Infinity and Germany’s Conjuncta is developing a green hydrogen project on the west coast of Mauritania. URB, a development firm headquartered in Dubai, is investing $20 billion in the construction of the continent’s most sustainable city, dubbed “The Parks,” in South Africa.
At last year’s Africa Climate Summit, the UAE pledged $4.5 billion to accelerate clean energy projects. Masdar, in partnership with Africa50, aims to scale up clean energy initiatives, with support from AMEA Power, Abu Dhabi Fund for Development, and Etihad Credit to address the funding gap. Dubai-based AMEA Power LLC, operating in more than a dozen African countries, plans to spend $1 billion on renewable projects, including the construction of a green hydrogen facility in Kenya. Meanwhile, TAQA Morocco — owned by the Abu Dhabi National Energy Company — plans to invest $1.6 billion in renewables.
Saudi Arabia, the largest investor from the GCC region in South Africa’s renewable energy sector. ACWA Power is the lead shareholder in the country’s Redstone concentrated solar power (CSP) plant. Qatar Investment Authority (QIA), which is also involved in clean energy generation in South Africa, entered a partnership with Enel Green Power SA to supply the country’s industrial sector with renewable energy.
Conclusion
Economic ties between the Gulf Arab countries and Africa are flourishing, driven by mutual aims of economic diversification, investment, and sustainable growth. That said, Africa-Gulf relations reflect the tension between the opportunities and risks inherent to the current multipolar moment.
For GCC countries, investing in Africa provides access to natural resources, new markets, and geopolitical influence. These investments support their food security and economic diversification efforts. However, the drawbacks include exposure to political instability and potential backlash from local communities.
For African countries, Gulf investments and partnerships are timely and much needed. Yet, their downsides are hard to ignore: extensive smuggling networks enabling illicit financial flows; Gulf support for authoritarian regimes and militias; Dubai serving as a sanctuary for numerous African oligarchs; and the potential exploitation of local communities and environments through investments in African mineral and food resources.
Nevertheless, Gulf governments and companies have reputations to uphold, while African leaders have the power to influence outcomes. By promoting transparent trade practices, investing in sustainable projects, strengthening regulatory frameworks to prevent exploitation, and fostering partnerships that prioritize local economic development, both sides can ensure mutually beneficial economic ties.
