The Middle East & Africa: A powerful partnership for global growth

Introduction

I firmly believe that the strategic alliance between the Middle East and Africa is poised to reshape the global economic landscape. The synergy between these two regions, rich in resources and brimming with potential, offers a unique opportunity for mutual growth and prosperity.

In recent years, the Middle East has been gaining prominence in the global funding space, driven by factors like economic diversification, substantial sovereign wealth funds, and a global funding downturn, leading to a search for new sources of venture capital. With a “roaring comeback” in oil prices since 2021, the Gulf states have been on a spending spree. On the other side of the world, US and European venture capitalists are facing the worst funding crunch in a decade. While the Middle East is a sought-after destination for investment, the interesting news is the region’s increasing interest in Africa.

GCC Investment in Africa

According to a report by White & Case, the GCC countries, including UAE, Saudi Arabia, and Qatar, have witnessed a surge in investment volumes through capital expenditure (capex) and foreign direct investment (FDI) into Africa between 2017 and 2019. Despite the challenges posed by the COVID-19 pandemic and geopolitical complexities, GCC investment has remained robust, reaching a staggering $55 billion in the first 9 months of 2024, on par with pre-pandemic levels. The UAE, in particular, has emerged as a key investor in Africa, ranking as the fourth-largest global investor in the continent after China, Europe, and the United States. Saudi Arabia has also made significant strides in investments, focusing on energy, mining projects, and agribusiness to tackle food security concerns.

Rise of high-potential sectors

A 2022 survey by the Economic Intelligence Unit identified fintech, healthcare, agriculture, and e-commerce as high-potential sectors where revenues are expected to expand in Africa. Fintech stands out with around 90 percent of business leaders foreseeing significant growth in 2022, followed closely by healthcare and agriculture. These opportunities in Africa are further complemented by the UAE’s status as a global hub for business growth, positioning itself as an attractive destination for African companies and entrepreneurs looking to expand beyond the continent.

Opportunities and challenges

While GCC countries see Africa as an excellent source of investment, the African continent also presents unique challenges for them. Burdensome regulations, lack of public amenities, inadequate infrastructure, and weak digital networks pose challenges for bilateral business exchange. However, these issues also present opportunities for GCC investors who possess the financial resources and risk appetite to address and profit from these obstacles. On the flip side, African companies and entrepreneurs can leverage the UAE’s less burdensome regulations, available amenities, robust infrastructure, and digital networks for international expansion.

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Partnerships and collaboration

African firms are actively seeking mutually beneficial partnerships with the Middle East. One notable example is the Africa Founders Immersion Session, where Dubai’s Department of Economy and Tourism partnered with Volition Capital Investments Limited, an African asset management firm, to showcase Dubai as a destination for global expansion and alternative funding for Africa’s innovative entrepreneurs and companies. Dubai’s commitment to public-private partnerships, innovation, world-class infrastructure, and pro-business legislation were presented by the Department as reasons why African entrepreneurs should expand to the UAE.

Seizing the opportunity

With the unpredictability of oil prices and the finite nature of natural resources, it is crucial for Africa to seize the current favourable interest and explore Middle Eastern funding and venture support to rapidly scale ventures. The Middle East and Africa can become an exciting nexus for mutually beneficial investments and business exchange, fostering economic growth and collaboration between the two regions.

Conclusion

The potential for collaboration between the Middle East and Africa is immense. By leveraging their complementary strengths and addressing shared challenges, these regions can unlock new frontiers of economic growth and social development. This partnership has the potential to create a powerful economic bloc, driving innovation, job creation, and poverty reduction.

I am optimistic that this partnership will not only benefit the two regions but also have a positive impact on the global economy. By fostering closer ties, the Middle East and Africa can enhance global supply chains, promote trade, and contribute to global stability.

It is imperative that we seize this moment and work together to build a brighter future. To achieve this, we must prioritise investment in infrastructure, education, and technology. By investing in these areas, we can create the foundation for sustainable economic growth and social progress.

Subomi Plumptre is the CEO of Volition Cap, an African SEC-licensed asset management firm working to bring financial prosperity to middle-class Africans and Diasporans.