Africa: Maritime investment tightens UAE’s grip on the continent

By Sherif Tarek

Posted on Thursday, 14 July 2022 12:21
A man stands opposite the modern port at the harbour in Port Sudan at Red Sea State February 24, 2014. REUTERS/Mohamed Nureldin Abdallah

The United Arab Emirates (UAE) is in a prime position to ramp up its influence on the Red Sea corridor and the Horn of Africa, thanks to billions of dollars’ worth of port projects that empower the Emiratis to stave off competition from other regional powers.   

A new Red Sea port that the UAE will co-develop in Sudan is the latest to be unveiled in a series of maritime projects either planned or executed by Emirati companies.

Through such investments in Africa, the UAE – the fourth biggest global investor on the continent behind China, Europe, and the US – stands to serve its geopolitical and security interests.

Market accessibility and security

“On the commercial side, the UAE is improving its ability to access markets across Africa, drawing on its status as a regional logistics and re-exports hub,” Torbjorn Soltvedt, MENA principal analyst at Verisk Maplecroft, tells The Africa Report.

According to the most recent data by the UAE’s Federal Competitiveness and Statistics Centre, the oil-rich country’s non-oil exports and re-exports to the Economic Community of West African States (ECOWAS) stood at $22.2bn and $39.4bn, respectively, in the first nine months of 2021.

During the same period, the UAE’s non-oil exports and re-exports to the Common Market for Eastern and Southern Africa (COMESA) reached $4bn and $6.4bn, respectively.

“The geopolitical advantages are also significant,” Soltvedt says. “Although the centre of gravity of the UAE’s oil exports is shifting east, European exports still have to transit the Bab el-Mandeb strait. Given the uncertainty over the war in Yemen, and the UAE’s role in the conflict, it is crucial for the latter country to maintain a strong security presence in and around the Red Sea and the Gulf of Aden.

“From a security perspective, Somalia, Djibouti, Eritrea, and Sudan are crucial to the UAE’s ambitions in the region. Many of these states are also important – commercially – as they can serve as gateways to larger markets, such as Ethiopia. Kenya stands out as another key commercial priority as highlighted by ongoing Emirati efforts to invest in several Kenyan ports.”

(By Skilla1st /TAR )

UAE’s vision

Dubai Ports World (DP World) reportedly signed a concession deal last March for three Kenyan ports – Mombasa, Lamu, and Kisumu – having offered to develop, operate, and expand transport logistics services in all three facilities as well as a dry port in Naivasha.

Aggressively expanding its footprint across Africa, DP World boasts investments in Egypt, Algeria, Djibouti, Rwanda, Somaliland, Mozambique, and Senegal. A DP World subsidiary has just acquired a controlling stake in Nigeria’s AFMCG.

“DP World has an immense global reach, but it is looking to devote more resources, specifically toward developing its ports and logistics potential in the Horn of Africa,” says Anna Jacobs, Gulf analyst at Crisis Group, a non-governmental research organisation.

“DP World and Abu Dhabi Ports’ commercial strategies are rooted in the UAE’s national vision and its principles of 50 announced last year – which lays out the importance of domestic economic development and their economic diversification strategy,” she tells The Africa Report.

AD Ports catching up with DP World

Owned by the UAE’s sovereign wealth fund, Abu Dhabi Ports (AD Ports) has recently been seeking to keep pace with its compatriot DP World when it comes to inroads into African ports.

The new port in Sudan will be developed through a partnership between AD Ports and DAL group, the largest private Sudanese company. The $6bn investment “includes a free trade zone, a large agricultural project and an imminent $300m deposit to Sudan’s central bank”, DAL chairman Osama Daoud Abdellatif told Reuters in June.

With both Dubai and Abu Dhabi invested in the region, there is significant scope for the UAE to extend its influence in a range of areas, including logistics, energy, and security

“The emergence of Abu Dhabi Ports as a major player in the Horn of Africa alongside DP World is only likely to strengthen the UAE’s position in the region,” Soltvedt says.

“With both Dubai and Abu Dhabi invested in the region, there is significant scope for the UAE to extend its influence in a range of areas including logistics, energy, and security.”

Competition with Mideast powers

The UAE is not the only country with ambitions in the Horn of Africa, other Middle Eastern powers have similar goals.

“The competition is [between the] UAE, Turkey, Saudi Arabia, Iran, Qatar, and Israel to a degree,” James Dorsey, a senior fellow at the University of Singapore’s Middle East Institute, tells The Africa Report. “All of which have stepped up operations in Africa … but of course, the Horn is the most strategic.”

In recent years, the UAE and Saudi Arabia were subject to drone and missile attacks launched by the Iran-backed Houthis in Yemen, primarily targeting oil facilities and tankers.

“Although Iran’s footprint in East Africa is limited, it remains a potential disruptor, mainly through its influence in Yemen and well-demonstrated ability to target shipping in the wider region,” says Soltvedt.

However, so far, the UAE has derived an advantage from its status as a regional logistics and re-export hub as well as its extensive network of ports, overshadowing other countries’ attributes.

“Both Turkey and Qatar have longer-standing roles as mediators in regional conflicts, but have yet to match the UAE when it comes to logistics and ports,” Soltvedt says. “Saudi Arabia is in a similar position as it has yet to realise its ambition to become a regional hub for trade and logistics.”

Saudi flexes its financial muscles

Last year, Saudi Arabia revealed an ambitious national strategy to revitalise its logistics sector, including expanding its international shipping lines and infrastructure.

Although the world’s largest oil exporter is lagging behind the UAE on port deals and logistics, Riyadh’s financial power may help it, over time, to close the gap with its neighbouring country and close ally.

Saudi Arabia, as the Gulf Cooperation Council’s largest economy, will catch up quickly

“…the announcement last year of the National Transport and Logistics strategy signals the importance of economic diversification and connectivity, the logistics sector, port development, and maritime security within Saudi Vision 2030,” says Jacobs.

“The UAE is really the leader in these sectors at this stage, but Saudi Arabia, as the Gulf Cooperation Council’s largest economy, will catch up quickly if these national strategies are followed up with actionable policies.”

Cooperation after detente

The region has recently witnessed a detente: The US’s withdrawal from Afghanistan last year fuelled fears that the Middle East will suffer a political vacuum, a scenario that, along with economic struggles, urged regional enemies to bury the hatchet and opened the door for more regional cooperation.

Turkey’s rapprochement with Riyadh and Abu Dhabi in 2021, following years of tensions with both Gulf powers, came after the Turkish economy took quite a few hits. The UAE, which Turkey once accused of financing the 2016 failed coup attempt against President Recep Tayyip Erdogan, offered generous support to Ankara following the thaw of ties.

The boycott of Qatar by GCC nations and Egypt, after a falling-out over the Qatari government’s close relations with Iran and political Islam, also came to an end.

“There is … greater scope for cooperation between the UAE, Turkey, Saudi Arabia, Qatar, and Israel as a result of the Abraham Accords since August 2020, and the end of the Gulf-Qatar crisis in January 2021,” Soltvedt says, referring to US-brokered normalisation agreements between the Jewish state and the UAE, Bahrain, Sudan, and Morocco.

Although the economic competition will persist, the de-escalation “could contribute to less pronounced Middle East regional proxy competition in regions like the Horn of Africa”, says Jacobs.

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