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Source: www.africaecon.org

Africa Economic Institute

Africa- Gulf Seek To Bolster Ties


States of the Gulf have realized the growing importance of Africa as an emerging trading partner, as well as a significant supplier of minerals and other natural resources. There is a growing desire from both sides to strengthen bilateral relationship in order to ensure collaboration in the long term, as…

 

 

States of the Gulf have realized the growing importance of Africa as an emerging trading partner, as well as a significant supplier of minerals and other natural resources. There is a growing desire from both sides to strengthen bilateral relationship in order to ensure collaboration in the long term, as mutual opportunities are vast. While Gulf countries are expected to gain from Africa’s large supply of natural resources, Africa will benefit from investments geared towards infrastructure development. Future goals will also include expanded trade, in order to maximize the full advantages of the potential benefits presented by a strengthened Africa-Gulf collaboration.

 

In the past few years, Gulf investment in Africa has been growing at a rapid pace. In 2008, Gulf members invested over $5.8 million in aid to Africa, according to the UN Financial Tracking System. Some analysts predict this number to be vastly underestimated, as during this year alone, the Kuwait Fund for Arab Development invested more than $210 million in the African continent.

 

The United Arab Emirates has invested heavily in Djibouti, with around $1 billion invested in housing, tourism and port developments in 2007. Earlier this month, Dubai Port World opened a container terminal in Djibouti, said to be the largest and most modern terminal in the whole of East Africa.

 

Qatar has also led investments in the continent during the past few years. In 2008, Qatar Airways began flights to Uganda, in an effort to improve its market share in the area and strengthen the link between the two regions. Qatar also began negotiations with Kenya involving a $3.4 billion loan directed at the development of a new port in the African country.

 

Although investments between the two regions have strengthened during the past few years, Africa-Gulf relations still remain relatively weak.

 

Currently, most Gulf investments are geared towards Africa’s extractive industries such as mineral and oil exploration. Exports from Africa to the Gulf mainly constitutes of primary commodities, while exports from the Gulf to Africa are based on oil, petroleum products and manufactured goods.

 

Other investments are currently concentrated in limited areas such as telecommunications and real state. Additionally, relations have been limited to few countries in the African continent.

 

Therefore, both regions will now aim to expand trade to several different sectors, including tourism, energy, mining and agriculture. Higher investments, along with better quality aid, will boost development in Africa, potentially spurring trade volumes between the two regions, as well as investor confidence.

 

With both regions currently experiencing fast and strong growth, the effort to expand Africa- Gulf cooperation regionally and financially, will greatly benefit both sides.

 

In fact, according to a recent study presented by the Harvard Review, the average return on investment in Africa is between 65-70% higher than any country in the world. Africa stands to benefit greatly from increased investments not only in infrastructure, but also in technology and agricultural development.

 

Africa has the potential to be a strategic political and economic partner for Gulf countries, particularly during a time where both regions do not enjoy a strong international stance. Moreover, both regions plan to expand cooperation in the security area, in order to tackle common issues such as narcotics, human trafficking, terrorism, piracy and arms smuggling.

 

Source: www.AfricaEcon.org
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Source: www.africaecon.org