Arab investors hunt for new riches off Sahara
Dakar, March 10, 2008
Centuries before European colonialists carved up Africa, Arab traders marvelled at the profits to be reaped in the fabled lands south of the Sahara.
'In the country of Ghana, gold grows in the sand as carrots do and is plucked at sunrise,' wrote Ibn Al Faqih, a 9th-century chronicler.
Arab investors, flush with revenue from record oil prices, once again see golden opportunities in Africa. From waterfront resorts in Cape Town to phone networks in Democratic Republic of Congo, they are pouring in billions of dollars.
'The opportunities which you see in Africa, you don't see them anywhere else in the world,' said Sultan Ahmed bin Sulayem, head of the Dubai World conglomerate, after signing a $800 million deal this year for a free trade zone in Senegal.
Lebanese merchants have been a familiar sight along Africa's western coast for more than a century, earning a living as middle-men trading everything from diamonds to cloth. But the new wave of Arab investment is by big companies from the Middle East and North Africa, well equipped to challenge European rivals that thrived in sheltered post-colonial markets.
Decades of corruption and conflict in Africa have deterred many investors from anything but the easy profits of oil and minerals. But the continent is now enjoying its strongest growth since independence and more than a billion consumers are thirsting for goods and services.
Africa has become the arena for the world's emerging economic powers to flex their muscles. The West has fretted as a phalanx of Chinese and Indian firms sealed multi-billion-dollar trade and investment deals. Now Arab firms are joining them.
Senegal, a former French colony on Africa's western tip, hosts a summit of the 57-nation Organisation of the Islamic Conference this week aimed at boosting ties in the world's Muslim community, which brings together Arab and African states.
'The Arab emirates, particularly Dubai, consider Africa as the future repository of world growth,' said Karim Wade, the summit organiser and son of Senegalese President Abdoulaye Wade.
'We need to develop economic and cultural exchange and the Dakar summit will be a major step,' he said.
Senegal's President Wade has already capitalised on Islamic religious ties to attract investment, easing his country's reliance on Western donors. Saudi loans have rebuilt the roads of the capital Dakar, Iran plans an oil refinery and car plant, and Kuwaiti investors are building luxury hotels.
In a symbolic shift, Dubai World wrestled a $455 million contract to expand Dakar port from France's Bollore, a conglomerate which has flourished under the opaque network known as 'Francafrique' linking Paris and its former colonies.
The French company criticised a 'lack of transparency' in the tender but Wade said Bollore's plans were too slow and bureaucratic compared with the dynamic Arabs.
'African governments are keen to have a different kind of relationship, something less patronising,' said Patrick Smith, editor of Africa Confidential. 'The Chinese and Indians have exploited this, and now perhaps the Arabs can too.'
Foreign direct investment in Africa doubled between 2004 and 2006 to a record $36 billion. Half of the $18 billion for mergers and acquisitions came from developing Asian countries, but Arab investors have been increasing their share, focusing mainly on services, from telecoms to banking and transport.
While Europe suffers an economic slowdown and the United States teeters on the edge of recession with the dollar at record lows, sub-Saharan Africa's economy will power ahead by 6.5 per cent this year, according to the IMF.
'With the US and Europe slowing, it's a chance for emerging countries to increase their presence in Africa,' said Smith. '2008 will be a very interesting year.'
Arab companies have already shown they are more risk-tolerant than their