GCC wealth funds likely to boost Africa investments, say experts

Sovereign investors from the UAE and wider GCC bloc are likely to ramp up investments across African countries, building on a 50% jump in capital flows from the Middle East over the past five years, said experts.


Agriculture, energy and infrastructure are sectors likely to benefit from multi-billion dollar deals as the UAE accelerates its investment efforts, stated Premeshin Naidoo, the managing director of the Middle East and Asia Corridor at Absa Group (previously known as Amalgamated Banks of South Africa).


Naidoo was speaking to AGBI, a new platform that provides intelligence and analysis around the Middle East’s commercial opportunities and challenges.


There has not yet been anything ‘substantial from sovereign wealth funds from the GCC region. However this would soon change because the continent offers some of the “most attractive growth opportunities” in the world, he stated.


Rassem Zok, CEO, Middle East and North Africa at Standard Bank Group, also believes that Africa is growing in importance for investors and for corporates and remains the last “frontier market”.


The African Development Bank (AfDB) forecasts that Africa will be the second-fastest growing region in the world after Asia in 2023-24.


“When we’ve reached out to the various wealth funds across not just UAE, but the GCC countries, there’s certainly a willingness to engage and willingness to talk about available assets in Africa,” remarked Naidoo.


According to Invesco’s latest Global Sovereign Asset Management Study, 10% of Middle East sovereigns said they would increase investment into Africa last year. 


“I think what is quite clear is that the UAE is suddenly accelerating its efforts in terms of the government to government relationships,” said Naidoo. “No doubt it intends to expand trade and investment activities,” he added.


The UAE is close to signing a new free trade deal with Kenya in what will be its first bilateral agreement with an African nation, and Dubai-based airline Emirates has signed an interline partnership with Kenya Airways to boost its access to the continent.


Naidoo pointed out that South Africa was likely to be next in line to sit down for official talks. “I understand that announcements may be made in due course,” he revealed.


Zok said that the flow of capital from the GCC into Africa is increasing, spreading from only East Africa initially to Angola, Nigeria, Ghana and South Africa.


He added that over the past five years capital flows from the Middle East into Africa have grown by more than 50%. 


“We see it as two-way, but predominantly still it’s still Middle East into [Africa] in terms of magnitude,” he added.