How Gulf countries are turning Eastern Africa into a new nexus of global trade

  • The UAE, Saudi Arabia, and Qatar, have poured billions into developing airports, airlines, and seaports across Eastern Africa in the last 10 years.
  • In the latest development, UAE’s Sharjah Chamber of Commerce and Industry is set to build a new international airport just outside Kidepo National Park, in Uganda.
  • These investments are transforming the region into a pivotal stopping ground for global trade, tourism, and travel.

The economic ties between the Gulf Cooperation Council (GCC) countries and Eastern Africa have deepened significantly over the past 10 years, driven by strategic investments in key infrastructure.

The Gulf nations, notably the United Arab Emirates (UAE), Saudi Arabia, and Qatar, have poured billions into developing airports, airlines, and seaports across Eastern Africa.

These investments are transforming the region into a pivotal stopping ground for global trade and travel, enhancing connectivity, and fostering economic growth.

Eastern Africa airports and airlines enhancing connectivity

The UAE has been at the forefront of investing in Eastern Africa’s aviation industry. In the latest development, UAE’s Sharjah Chamber of Commerce and Industry has entered into a deal with Uganda to build a new international airport just outside Kidepo National Park, close to the country’s border with Kenya.

This location is poised to boost tourism, providing direct access to the 1,442-square-kilometer park, which is renowned for its diverse wildlife, including lions, giraffes, buffaloes, and other big game.

President Yoweri Museveni said this investment highlights the UAE’s expanding economic footprint in Eastern Africa.

This landmark investment comes at a time when Dubai Airports and Emirates Airlines have continued to play crucial roles in enhancing connectivity between the Gulf and African countries. Over the period under focus, Emirates Airline has expanded its routes to several key cities in Eastern Africa, including Nairobi, Addis Ababa, and Dar es Salaam, enhancing tourism and business travel as well as increasing cargo traffic, benefitting international trade.

Saudi Arabia’s strategic investments

In the last 10 years, Saudi Arabia has also made huge strides in making a mark in Eastern Africa’s aviation industry. Saudia, the flag carrier, has increased its flight frequencies to the region, connecting cities such as Nairobi, Addis Ababa, and Khartoum with key destinations in the Middle East, significantly promoting tourism, trade, and cultural exchange between these regions.

Moreover, Saudi Arabia has invested in airport infrastructure through its sovereign wealth fund, the Public Investment Fund (PIF). In 2018, PIF announced a partnership with the Ethiopian government to develop the country’s aviation industry, rolling out a plan to expand and modernize Addis Ababa’s Bole International Airport, and turning it into a key hub for air travel in Africa.

Qatar’s expansion in aviation

Qatar Airways has also expanded its footprint in Eastern Africa, launching routes and increasing flight frequencies to cities such as Kigali, Nairobi, and Zanzibar. The Doha-based airline’s strategic expansion has not only enhanced connectivity but also positioned Qatar as a major player in the region’s aviation industry.

Qatar’s investment in Eastern Africa extends to airport infrastructure as well. In 2019. Qatar Airways announced plans to invest in Rwanda’s new Bugesera International Airport, a $1.3 billion project that seeks to create a world-class airport that can handle up to 7 million passengers annually.

In the last 12 months, the Doha-based airline has been working on a deal with RwandAir to acquire up to 49 percent stake in Kigali’s flag carrier as early as starting July this year.

RwandAir CEO Yvonne Makolo told the Financial Times, “It’s been going on for a while, we have been discussing it for almost five years. So, now, we’re really at the tail-end of it.”

Such investments are crucial in transforming Eastern Africa into a critical hub for international travel and trade.

UAE’s dominance in Eastern Africa’s seaport development

The UAE, particularly through Dubai Ports World (DP World), has been a dominant player in the development of seaports in Eastern Africa. DP World operates several key ports in the region, including Berbera in Somaliland, Bosaso in Puntland, Djibouti’s Doraleh Container Terminal, and lately, it secured a deal to develop and run several berths in the Port of Dar es Salaam.

The development of Berbera Port, in particular, has been transformative. In 2016, DP World signed a $442 million agreement with Somaliland to develop and manage the port in a deal that included the construction of a new container terminal and the expansion of the existing facility. This development has positioned Berbera as a critical gateway for trade between Eastern Africa and the Gulf, enhancing the region’s trade capacity and reducing reliance on traditional routes through Djibouti.

Saudi Arabia’s Port Investments

Saudi Arabia has also made notable strides in port development in Eastern Africa. The Saudi Ports Authority (Mawani) has been involved in upgrading and expanding port facilities in the region, too. In 2020, Saudi Arabia announced a $100 million investment in Sudan’s Port Sudan, aimed at modernizing the port’s infrastructure and improving its operational efficiency.

This investment is part of Saudi Arabia’s broader strategy to enhance its trade routes and secure access to key maritime gateways. By improving port facilities in Eastern Africa, Saudi Arabia is ensuring smoother trade flows and strengthening its economic ties with the region.

Qatar’s maritime ambitions

Qatar has also recognized the strategic importance of Eastern Africa’s seaports. Already, Qatar Ports Management Company (Mwani Qatar) has been actively exploring investment with Somalia to develop the Port of Hobyo, an investment that will boost trade between Somalia and the Gulf, offering a vital artery for the movement of goods and services.

Qatar’s investments in Eastern Africa’s seaports are part of its broader strategy to diversify its economy and enhance its global trade networks. By developing port infrastructure in the region, Qatar is positioning itself as a key player in the maritime trade routes that connect Africa, the Gulf, and beyond.

Economic impacts and prospects

These investments by Gulf countries in Eastern Africa’s infrastructure have had a profound impact on the region’s economy. Improved airport and seaport facilities have enhanced connectivity, making it easier for businesses to operate and trade. This has attracted more foreign direct investment (FDI) to the region, boosting economic growth and development.

For instance, the expansion of airport facilities has facilitated the growth of tourism, which is a significant source of revenue for Eastern African countries. Enhanced connectivity has also made it easier for businesses to access international markets, boosting exports and creating jobs.

Additionally, the development of transport infrastructure by Gulf countries has also promoted regional integration in Eastern Africa. Improved connectivity between countries in the region has facilitated trade and the movement of people, fostering closer economic ties. This has been beneficial for landlocked countries such as Ethiopia and Rwanda, which rely on neighbouring countries’ ports for access to international markets.

Moreover, the investments have spurred the growth of regional trade corridors, such as the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor. This project, supported by investments from UAE and other Gulf countries, aims to create a new trade route linking the Indian Ocean with the interior of Eastern Africa thereby promoting economic integration and development in the region.

THE AUTHOR: James Wambua is a seasoned business news editor specializing in various industries including energy, economics, and agriculture.

Spread the love

©NipePesaMagazine. 2024.

Stock Market