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Africa's rich resources attract UAE companies |
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8/2/2008 11:31:34 AM |
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The $800 million (Dh2.94 billion) purchase of New York's iconic Chrysler Building by Abu Dhabi last month made headlines around the world.
But away from the media spotlight UAE investors have been quietly snapping up assets much closer to home - in Africa.
Little was made, for example, of a recent visit by DP WorldDP World Chairman Sultan Ahmed bin Sulayem to the port of Dakar, Senegal's busiest container terminal, which is run by the Dubai Government-controlled company.
Similarly DP WorldDP World's purchase of ports in Mozambique, Algeria and Djibouti in the past few years largely went under the media radar. The company has established a firm grip on key shipping points along the coastline of Africa.
Tourism, telecommunications, financial services, information technology and the continent's abundant natural resources have all attracted investment from cash-rich companies in the UAE and elsewhere in the Gulf.
"Africa's time is coming and having first-mover advantage holds the same merit as it does anywhere else," said Fred Sicre, executive director of Dubai-based Abraaj Capital.
"The UAE is strategically located to make inroads into Africa.
"Africa has a number of natural assets to its advantage. It's obviously extremely rich in natural resources, from gold to diamonds to platinum through to copper, gas and oil in countries such as Angola, Nigeria and Gabon.
"Investments in mining and extraction are expected to increase. And the tourism potential of Africa is well known to those who have been on safaris. But a lot more potential exists, such as the 1,200km of white pristine beaches in Mozambique. Infrastructure projects such as roads, ports, energy distribution and smelters will attract large amounts of foreign direct investment. Private equity firms that have already tapped opportunities in Africa have witnessed rates of return of up to 30 per cent on their investments."
Amer Halawi, director of Abu Dhabi investment bank The National Investor, said: "We have already seen very diverse interests in African investments on behalf of UAE companies, from transactions in the financial sector to leisure and hotels, infrastructure or telecoms.
"Investing in Africa allows firms to diversify and tap into emerging markets with significant development potential. It is also possible that the proximity of the Gulf to the continent allows UAE firms to feel more comfortable with the African investment risk than Western companies."
UAE-owned businesses such as IstithmarIstithmar, Dubai Financial GroupDubai Financial GroupDubai Financial Group
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and Emaar PropertiesEmaar Properties have pumped billions into African economies as they look to stave off the effects of a slowdown in the key United States and European markets.
Dubai Investment GroupDubai Investment Group owns 35 per cent of Tunisia's Tunisie Telecom. And IstithmarIstithmar has marched into Africa's tourism industry with a $230m investment in eight Rwandan facilities and the $150m Muyuni Beach hotel project in Zanzibar.
But Africa offers investors return and risk in equal measure, according to Dr Fabio Scacciavillani, director of Macroeconomics and Statistics at the Dubai International Financial Centre.
He said: "African economies offer the possibility of higher returns than mature markets, especially in telecoms, IT, electricity, and tourism. However the risks remain quite high because not all countries in Africa enjoy political stability or have a judicial system that protects property rights and investor interests. Often foreign investors have to deal with widespread corruption and threats of expropriation. But climbing raw material prices have also benefitted African coffers, allowing governments to fund infrastructure and social projects."
Sicre added: "Jomo Kenyatta, Kenya's first president, said, 'He who owns Africa will own the world'. He was alluding to the continent's vast underground riches - and there lies the competitive advantage of Africa."
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Source: Zawya.com |
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