Bilateral trade between the Gulf Cooperation Council (GCC) and Africa has been on an upward trajectory, with a compound annual growth rate of eight percent in the past decade. This growth has accelerated significantly, reaching a record high of $154 billion in 2022. The GCC has surpassed the US and India in trade value with Africa and is closing the gap with major trading partners like China and western Europe. Oil and gas remain key export products for the GCC, while investments in the mining sector from Africa are on the rise. However, trade diversification beyond these sectors is expected to continue to grow due to increased GCC investments in Africa.
Major GCC member states like Saudi Arabia, the UAE, and Qatar have been significant investors in Africa, with over $100 billion invested in the past ten years. Greenfield foreign direct investment announcements in Africa from GCC countries reached a record high in 2022, far exceeding commitments from other regions. GCC companies are focusing on expanding their footprint in Africa’s resource industries, logistics services, renewable energy, and financial services. The GCC’s strategic investments in port infrastructure, transport, and logistics in Africa are key to further strengthening trade ties between the two regions.
Food security is a top priority for the GCC states, leading to investments in Africa’s agriculture sector. Long-term land lease agreements are being made with countries like Angola, Egypt, Sudan, and Zimbabwe, despite concerns about the impact on local communities. GCC states are also venturing into renewables and technology sectors in Africa, particularly in solar and green hydrogen projects. The UAE and Saudi Arabia are among the largest investors in African renewables with plans for further expansion in the sector by 2030.
The information and communications technology (ICT) sector in Africa is emerging as a significant area for GCC investment. GCC states are eyeing the fast-growing national markets and regional economic communities in Africa, positioning themselves to benefit from future market potential. African nations see GCC finance as a reliable alternative to Chinese loans and Western aid, due to the speed at which funds can be released and the fewer strings attached. The EIU report emphasizes the growing interest of GCC states in Africa’s markets and the mutual benefits that can be derived from the strengthening trade partnerships between the two regions.
