Africa’s New Major Investor: A Surprising Global Player Emerges

The United Arab Emirates (UAE) has emerged as the largest investor in new business ventures in Africa, which gives much reason to believe that capital shall flow into the continent once again. On the downside, this rise in investment has raised issues regarding concerns for worker rights and low environmental standards.

Between 2019 and 2023, the companies in the UAE released no less impressive $110 billion of projects, out of which $72 billion belonged to the renewable energy industry. Such figures surpass investment flows from the companies in the UK, France, or China, as the FT indicates.

Historically, these three have been the largest investors in Africa’s infrastructure, but many of their projects have not panned out. African leaders have also been disappointed with commitments on climate finance from the West at the COP29 summit in Azerbaijan, when the latter promised only $300 billion a year, half the $1.3 trillion being sought by developing nations.

African leaders have shown optimism towards the UAE’s increased interest; however, some analysts and activists are skeptical. The worries focus on the UAE’s previous history of poor labor rights for migrant workers, a continued reliance on hydrocarbons, and low sensitivity to environmental issues with regards to its investments.

“African countries are crying out for this money [for] their own energy transitions. And they fill huge holes that the West failed to,” said Ahmed Aboudouh, an associate fellow at the Chatham House think tank. “But at the same time, they come in with less attention to labor rights, to environmental standards.”

The UAE has been a key political player in North and East Africa for years, accused of fueling conflicts in Libya and Sudan. As the UAE looks to diversify its economy beyond oil and gas, it has turned its focus to green energy and “critical minerals” like copper, essential for electric cars and batteries.

The first of Dubai-based ports and airlines, it would appear, to spread out in Africa, were Emirates Airline, with its 20 African countries’ flight services, and DP World, controlled by Dubai’s royal family, active since 2006 in managing six ports, with two more under construction. Another port is Abu Dhabi Ports, managing Kamsar Port in Guinea since 2013 and just securing concessions in Egypt, the Republic of Congo, and Angola.

“Angola is, at the moment, the only country where both DP World and Abu Dhabi Ports have a presence,” said Maddalena Procopio, a senior policy fellow at the European Council on Foreign Relations. “This has to do with a growing interest from the UAE in expanding connectivity towards the Americas, in particular Latin America,” she added.

The other businesses that UAE companies have also ventured into include agriculture and telecoms. Since 2022, Dubai royal Sheikh Ahmed Dalmook al-Maktoum has brokered deals to sell carbon credits from forests in Zimbabwe, Liberia, Zambia, and Tanzania.

The UAE is making big strides in the mining sector; however, this comes with its own problems. In recent years, the smuggling of gold from Africa to Dubai has increased. Despite this, African nations are optimistic about the investments. “African countries need all the financing and trade they can get,” said Ken Opalo, an associate professor at Georgetown University. “However, there is also the opportunity for the attention to breed criminality – like we are seeing in the gold sector,” he added.