The FDI angle:

  • Foreign direct investment (FDI) from the Gulf into Africa has been on the rise.
  • Investors from the UAE and Saudi Arabia have been the most active, especially in renewable energy.
  • Why does this matter? African countries have benefitted from a push by Gulf countries to invest abroad and diversify beyond fossil fuels.

Greenfield foreign direct investment (FDI) announcements by Middle Eastern investors in Africa have boomed in recent years, due to ambitious plans to produce renewable energy like green hydrogen and develop infrastructure such as ports, warehouses and data centres.

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Companies based in Gulf Cooperation Council (GCC) countries — namely the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman — announced 73 FDI projects in Africa worth more than $53bn last year, according to the latest data from fDi Markets. 

The only year GCC investors announced more FDI capital expenditure into the continent was 2022, when they pledged $60bn across 83 projects. More than 90% of this FDI came from the UAE and Saudi Arabia, most notably into hydrogen and other renewable energy projects. 

This massive uptick reflects a push by oil-rich Gulf states to diversify away from hydrocarbons and back emerging technologies. Green hydrogen will be vital for decarbonising hard-to-abate sectors such as shipping and steel, but remains years away from full implementation.

Last December, Saudi Arabia-based ACWA Power signed a framework agreement to develop a green hydrogen project in the Suez Canal Economic Zone in Egypt. It will invest more than $4bn into the project, which in its first phase has the goal of producing 600,000 tonnes of green ammonia per year. 

“Egypt is well-positioned to become one of the world’s top producers of green hydrogen and we are elated to be a part of the country’s energy transition,” said ACWA’s CEO Marco Arcelli in a statement. ACWA will also invest $800m to establish a new 442-megawatt solar park in the Northern Cape region of South Africa.

More data trends: 

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Meanwhile, the UAE’s AMEA Power is planning to build a hydrogen project in Kenya, while the Abu Dhabi National Energy Company plans to invest $1.6bn into renewables in Morocco. Another country with a major GCC-backed hydrogen investment is Mauritania, where the UAE’s Infinity Power has signed a memorandum of understanding (MoU) with Germany’s Conjuncta to develop a $34bn project. 

“Africa will be integral to the emerging green hydrogen economy, even if some of the projects fail to materialise,” says Richard Kiplagat, chair of the advocacy taskforce for the African Hydrogen Partnership, an industry body. 

All of the six GCC states, apart from Saudi Arabia, have signed and ratified bilateral investment treaties with African countries. This aids companies from these countries to make investments across multiple sectors with growing demand expectations, such as digital and port infrastructure.

Agility, a Kuwait-based developer of logistics and industrial parks, announced in March 2023 that it would build data centre campuses in both Egypt and Ghana. This came as global tech giants including Amazon, Microsoft and Google announced their intention to add data centre capacity on the continent, as well as other emerging regions. 

UAE-headquartered Gulf Data Hub also signed an MoU in February to develop three data centre complexes in Egypt.

The growing prominence of Middle Eastern investors in Africa comes alongside an uptick in investment from other major source markets. Total announced FDI by Hong Kong- and China-based companies on the continent reached $38.5bn in 2023 — an all-time high which aligned with the $38bn committed by Western European companies. 

Meanwhile, greenfield FDI from the US into Africa was less than $10bn last year — its highest since 2018, but still markedly lower than the Middle East and other regions, according to preliminary fDi Markets figures.

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